New Governors Facing Transportation Quandaries

The new governors that recently took office in Virginia and New Jersey are facing a challenging fiscal environment. Chief among thorny issues are the looming shortfalls on the transportation front for both states.

Governor Christie is facing the reality that by 2011 all the revenue flowing into the New Jersey’s Transportation Trust Fund will be going toward debt payments. Virginia’s “three-alarm” transportation crisis is part of a $1.8 billion mid-year budget gap for fiscal 2010 that new Governor Bob McDonnell has to fix. Beginning next year Virginia will have scarce funding for primary, secondary, urban, and unpaved roads.

What’s to be done? The obvious answer to many is raise the state motor fuels tax. After all, neither state has raised its gas tax in over 20 years. Both are below the 50 state average of 20.8¢ per gallon. New Jersey’s, in fact, is the third-lowest in the nation (10.5¢). As a result, the most recent federal highway data shows that only two states have a lower share of their highway revenues coming from the gas tax than does the Garden State.

On the other hand–and as anyone who’s driven through the state can attest–New Jersey also takes advantage of tolling more than any other state. Nearly 30 percent of the revenue the state uses for highways comes from tolls, principally on the New Jersey Turnpike. Virginia is heavily-reliant on the gas tax but also depends on a range of state imposts.

The bottom line is that there will have to be a range of responses to deal with the transportation funding shortfalls. No good idea should be off the table.

That said, Governor McDonnell’s plan to dedicate 80 percent of the state’s proceeds from his yet-to-be-approved call for offshore natural gas and oil drilling is not a good idea. At least not one that should be looked to for solving the state’s transportation funding woes. Not only is there too much to be determined about authority, quantity, and environmental impact, the proceeds may reach only $69 million. Not negligible, but about $820 million less than the state gas tax pulls in each year. Governor Christie has not come up with his own solutions yet but has ruled out raising taxes or tolls. His transition team assembled a comprehensive and blunt report about the options and realities facing New Jersey.

Let’s hope the new governors heed the advice they’re getting on their states’ transportation future. Whether these leaders ride into office on a national wave or not, they now have no choice but to face their state’s biggest challenges. Sensibly addressing their transportation shortfalls would be a great first step.