| Q. What is the current financing capacity of the Transportation Trust Fund Authority? |
A. The Transportation Trust Fund Authority was provided with new financing capacity as as a result of reauthorization legislation passed in March 2006. The legislation increased annual appropriation revenues from $805 million to $895 million annually, bonding authority from $650 million to $1.6 billion annually and maximum bond maturities from 21 years to 31 years. In addition, the Authority restructured a major portion of its existing debt. Based on these actions the Authority estimated it would have the revenue and bonding capacity to support a five year capital program (FY 2007-2011) at $1.6 billion annually. The Authority noted that by the end of FY 2011 projected debt service would exhaust nearly all of the $895 million revenue appropriation and preclude any new projects in FY 2012 without additional revenue. Recent market conditions have adversely impacted Authority bonding plans. The Authority is closely monitoring market conditions and evaluating alternate financing strategies in order to determine whether the planned $1.6 billion capital program in FY 2011 can be fully supported.
|
| Q. What is the difference between the Transportation Trust Fund and the Transportation Trust Fund Authority (TTFA)? |
A. The Transportation Trust Fund is also referred to as the Special Transportation Fund or the Transportation Capital Program. It is the project list that is submitted to the Legislature each year by the Commissioner of Transportation on March 1 and is approved in the Appropriation Act by June 30 of each year. The project list is the spending or contract authority that allows the New Jersey Department of Transportation (NJDOT) and New Jersey Transit Corporation to advance capital projects up to a specified limit. The Transportation Trust Fund Authority (TTFA) is an independent agency that actually finances the cash disbursements to contractors as they occur for Transportation Trust Fund projects. The TTFA uses appropriated revenues and bond proceeds to finance the disbursements. The TTFA is a financing agency only with no involvement in the selection of capital projects.
|
| Q. What are the sources of revenue for the Authority? |
A. The revenue equivalent of 10.5 cents on the motor fuels tax, the petroleum products gross receipts tax, a portion of the general sales tax, "good driver" registration surcharge fees, heavy truck fees, and contributions from the New Jersey Turnpike Authority and South Jersey Transportation Authority.
|
| Q. Which revenues are dedicated for transportation capital purposes in the State Constitution and which are not? |
A. The motor fuels tax, petroleum products gross receipts tax and general sales tax revenues are dedicated to transportation capital by the State Constitution. The good driver registration surcharge fee, heavy truck fees and toll road authority contributions are dedicated by statute only.
|
| Q. What is the difference between constitutional dedication and statutory dedication? |
A. Constitutional dedication is binding on the Legislature, statutory dedication is not. The Legislature can use the annual Appropriation Act to override funding references in general statutes.
|
| Q. Do the constitutionally dedicated revenues flow directly for transportation capital purposes or do they still need to be appropriated? |
A. All revenues in New Jersey must be appropriated annually by the Legislature, even those dedicated by the State Constitution.
|
| Q. Is it possible for the constitutionally dedicated revenues to be appropriated for a purpose other than the Transportation Trust Fund Authority? |
| A. Yes, the State Constitution only directs dedicated revenues for the purpose of "paying or financing the cost of planning, acquisition, engineering, construction, reconstruction, repair, resurfacing, and rehabilitation of the transportation system in the State." There is no reference to the dedicated revenues flowing directly to the Authority. Of the estimated $551 million currently collected from 10.5 cents on motor fuel consumption (excluding 3 cent diesel differential), $483 million is specifically directed to the Transportation Trust Fund Authority. The remaining $68 million is appropriated to NJ TRANSIT for "rehabilitation and repair" costs included within its state-funded operating budget subsidy. |
| Q. What is the current motor fuel tax rate? Does the Authority receive all motor fuel revenues? If not, where do they go? |
A. The current tax rate on gasoline is 10.5 cents per gallon and 13.5 cents on diesel. The State Constitution dedicates the revenue equivalent of 10.5 cents on both the gasoline tax and diesel tax for transportation purposes. Revenues from the remaining 3 cents of the diesel tax are dedicated by statute only under the heavy truck fee category that was implemented in 1984.
|
| Q. What is the Authority's current debt service level? |
A. The Authority's current FY 2010 debt service obligation is $733 million. In addition, the Authority must reimburse NJ Transit for $111 million of debt service it pays on Economic Development Authority (EDA) bonds from their Trust Fund capital program appropriation. The total for both types of debt service is $844 million. Although the NJ Transit debt service is not a legal obligation of the NJTTFA, the Authority uses its current revenues ($895 million) to pay the NJ TRANSIT debt service in order to ensure bond proceeds are not in any way used to support NJ Transit debt service.
|
| Q. What percentage of the annual Transportation Trust Fund Capital Program is currently being spent on Authority debt service? |
A. None. The Transportation Trust Fund Capital Program is a spending authorization for NJDOT/NJ TRANSIT capital projects. There is no line item for Authority debt service in the NJDOT/NJ TRANSIT capital program. Debt service is a function of the Transportation Trust Fund Authority which is separate and distinct from the NJDOT/NJ TRANSIT capital program. The critical question regarding level of debt service is how it compares with the long-term revenue stream of the Authority.
|
| Q. The Legislature appropriated $895 million to the TTFA and authorized a capital program of $1.6 billion. Is the difference between the two figures the amount of bonds to be sold? |
A. No. The $1.6 billion appropriation is a spending authorization for capital project contracts. It does not represent the actual cash outlays that will be generated from the $1.6 billion project list and any prior projects that are still under design or construction. The Authority only finances actual cash outlays to vendors, not contract authority. The amount of bonding required each year is calculated by subtracting available pay-as-you-go revenue (appropriation less debt service) from total estimated project cash outlays (all active capital projects).
|
| Q. How does the Authority go about selecting capital projects to finance? |
A. The Authority has no role in selecting capital projects. NJDOT and NJ TRANSIT select the projects and submit them to the Metropolitan Planning Organizations and the Legislature for approval.
|
| Q. What exactly does it mean when people say the Authority's "pay-as-you-go" component has declined dramatically? What is the current pay-as-you-go percentage? |
A. The "pay-as-you-go" component is equal to the appropriation revenue received by the Authority in a given year less the debt service payment for that same year. The difference represents the current year revenue that is available to pay capital project costs. Bond proceeds are added to "pay-as-you-go" revenue to cover total capital project costs for the year. The current estimated FY 2010 pay-as-you-go component is 4%.
|
| Q. Why is the Authority bonding so much that the entire $895 million in appropriations will be consumed in debt service by 2011? |
A. The Authority's annual bonding requirement is a function of capital program size and the level of revenue appropriations provided each year. Both levels are recommended by the Governor and approved by the Legislature. Once these two variables have been determined by the Legislature, the bonding requirement becomes a fixed value which the Authority has little or no discretion to change.
|
| Q. Where is the Authority in reference to its current bond cap? |
A. The Authority currently has $2.801 Billion in statutory bonding authority available until the end of FY 2010. By current statute, another $1.6 billion will be added on July 1, 2010 (FY 2011) .
|
| Q. What is the maximum maturity of TTFA bonds? |
A. 31 years.
|
| Q. When does the current capital program authorization expire? |
A. There is no specific expiration date to the current capital program authorization which was established in the 2006 Reauthorization Legislation. The statute limits the Commissioner of Transportation to requesting no more than $1.6 billion annually for FY 2011 but is silent to program funding after FY 2011. Furthermore, the Authority estimates that current revenues cannot support a support a $1.6 billion capital program after FY 2011.
|
| Q. When does the Authority expire? |
A. Never. All reference to Authority expiration dates were removed from the TTFA statute in the 1995 Legislative Reauthorization.
|
| |
