Gov.-elect Christie will borrow more than $1 billion to pay for highway improvements and public transit projects, agreeing today to expand a scheduled bond deal by six times over. The move comes after Christie said he would review all planned borrowing by the state, which owes nearly $34 billion and counting. This latest borrowing would go to the state’s Transportation Trust Fund, an account that’s nearly bankrupt. Christie, however, has so far opposed calls to raise the state’s gasoline tax, money that would go to keep the fund afloat. Christie endorsed borrowing $1.2 billion for the fund on Tuesday after consulting with the Corzine administration in recent weeks, said Tom Vincz, a spokesman for the Treasury Department.
The borrowed money will fund previously approved projects through June 2010, Vincz said. Money is available for future transportation projects, but the Transportation Trust Fund is expected to be empty by mid-2011, Vincz said.
“This is what we mutually agreed upon as the prudent way to go,” he said.
Maria Comella, Christie’s spokeswoman, declined to discuss details of the decision.
State officials acknowledged last week that New Jersey owes $33.9 billion, with about $10 billion more scheduled to be borrowed in the coming years.
Christie said he was shocked by that debt, which needs nearly $2 billion in tax dollars each year to cover the payments.
“Any projections of future borrowing that is scheduled to happen after Jan. 19, if you’re the investment bank on that, don’t spend the fees yet,” Christie said last week. “We’re going to re-evaluate everything and make sure that we have folks look at it and tell me whether or not this is something that is absolutely necessary in light of that burgeoning debt problem.”
Prior to the election, Christie called borrowing money to replenish the Transportation Trust Fund “unconscionable” saying it undercuts the fund’s purpose: providing a stable, long-term financial resource for large-scale transportation projects without adding to the state’s debt.
Christie said he opposed repeating what Corzine did in 2006: borrowing more than $6 billion and extending the trust fund for five years.
The state Transportation Trust Fund Authority initially planned to consider issuing only $225 million in new bonds, but the Corzine administration wanted to ensure continuity and “meet the needs” of ongoing projects after the new governor takes office on Jan. 19, Vincz said.
He said he’s unsure which projects will benefit from the bond sale. But, Vincz said, Christie’s staff never raised any objection to the Treasury Department about the transition.
The new bonds will add $3.2 billion in debt service payments through 2041.
New Jersey’s Transportation Trust Fund pays for large-scale road and transit projects mostly from tolls and the state’s gasoline tax. But because of years of borrowing and refinancing, the fund will run out of money for such projects in 2011. Star Ledger.