The flow of funds for the Transportation Trust Fund Authority (TTFA) begins with a series of revenue sources that have
been dedicated by the State Constitution or by the 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
General Sales Tax. Statutorily dedicated revenues include
"Good Driver" vehicle
registration surcharge fees,
heavy truck registration fees, and contractual
contributions by NJ Turnpike Authority
and South Jersey Transportation Authority.
The State Constitution does not specifically direct the dedicated revenues to the Transportation Trust Fund Authority. Instead,
the constitutional language directs the revenue be used only for the purpose of "paying or financing the cost of planning,
acquisition, engineering, construction, reconstruction, repair and rehabilitation of the transportation system."
Although the Legislature has appropriated most of the dedicated revenues to the Transportation Trust Fund Authority in past
years, the amount provided from the motor fuels tax does not match the full yield from the tax. Approximately $45 million of motor
fuel taxes each year are currently being directed to NJ TRANSIT's operating subsidy for work that meets the "repair and rehabilitation" definition.
Unlike the constitutional dedication of revenues, the statutory dedication is not binding on the Legislature in any given year. The
annual Appropriation Act has always been treated as having 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 since the annual Appropriation Act
takes precedence over dedication language under the Trust Fund. In fact, the Legislature has chosen not to fully appropriate the
statutory revenues on eight different occasions since 1985.
Once the TTFA has received its appropriation revenue 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 Transportation Trust Fund Authority, 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 revenue is left over after TTFA and NJ TRANSIT debt service payments are considered becomes available for
transportation capital project payments. This amount is commonly referred to as the "pay-as-you-go" portion of the Transportation
Trust Fund Program.
Determining what amount of bonding is needed to supplement "pay-as-you-go" financing requires a cash flow analysis of all active
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 Trust Fund Authority 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 fiscal year.
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:
