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."
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. In fact, the Legislature has chosen not to fully appropriate the
statutory revenues on several occasions since the program's inception in 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 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 appropriated revenues 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
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:
