The flow of funds for the Transportation Trust Fund Authority (TTFA) begins with a series of revenue sources that have been dedicated by the New Jersey State Constitution or by the Transportation Trust Fund statute for transportation system capital improvement purposes.
Constitutionally dedicated revenues include the Motor Fuels Tax, the Petroleum Products Gross
Receipts Tax, and a portion of the Sales and Use Tax. Statutorily dedicated revenues include contractual contributions by the highway toll road authorities, the "Good Driver" vehicle
registration surcharge fees, and the heavy truck registration fees.
The New Jersey State Constitution does not specifically direct the constitutionally dedicated revenues to the TTFA. Instead, the constitutional language directs the revenue be used only for the purposes of "paying or financing the cost of planning, acquisition, engineering, construction, reconstruction, repair and rehabilitation of the transportation system."
Unlike the constitutional dedication of revenues, the statutory dedication is not binding on the Legislature in any given year. The annual Appropriation Act takes precedence over any other dedication language found in general statute. The Legislature can choose to appropriate all, part, or none of the statutorily dedicated revenues. In fact, the Legislature has chosen not to fully appropriate the statutory revenues on several occasions since the program's inception in 1985.
As noted previously, debt service payments on the Transportation Program Bonds are payable solely from constitutionally dedicated revenues appropriated by the Legislature for such purpose. Debt service payments on the Transportation System Bonds or Prior Bonds are payable from the statutorily dedicated revenues as well as the constitutionally dedicated revenues appropriated by the Legislature for such purpose.
Once the TTFA has received its appropriations from the Legislature, it must first reserve whatever is necessary to pay current year debt service. In addition, NJ TRANSIT has incurred debt through the Economic Development Authority (EDA) for rail equipment purchases on the Hudson-Bergen Light Rail Line and the River Line. NJ TRANSIT funds the debt service on the EDA debt using its share of Transportation Trust Fund capital program appropriations each year. Although the NJ TRANSIT debt payments are not a debt service liability of the TTFA, the Authority must ensure these payments are not reimbursed from Trust Fund Authority bond proceeds. Accordingly, the Trust Fund Authority must also reserve appropriation revenue to reimburse NJ TRANSIT for its EDA debt service payments.
Whatever appropriation remains after payment of TTFA and NJ TRANSIT debt service payments is available for transportation capital project payments. This amount, which is commonly referred to as the "pay-as-you-go" portion of the Transportation Trust Fund Program, may be supplemented with appropriations derived from the State's toll road authorization as designated in the annual Appropriation Act.
Determining what amount of bonding is needed to supplement "pay-as-you-go" financing requires a cash flow analysis of all active Transportation Trust Fund projects. The annual Trust Fund capital program appropriation provides the New Jersey Department of Transportation (NJDOT) and NJ TRANSIT with obligation authority to sign contracts and issue purchase orders to vendors. With the exception of special multi-year agreements, all capital project appropriations are designated for the full value of the contracts. The actual cash payout to project vendors in any given year is usually much less than the total contract value. This is particularly true of large construction projects, which may take three or more years to complete. The TTFA must estimate the actual cash flow for the current year capital program and all active prior year programs to determine the total anticipated project cash payout for the FY.
The Authority solves its bonding requirement by simply subtracting "pay-as-you-go" appropriation revenue from the anticipated cash payout. The total flow of funds is graphically depicted below: