New Jersey Governor Christie halts road, bridge projects

[July 02, 2016]  By Hilary Russ
 
 (Reuters) - New Jersey Governor Chris Christie ordered a halt to non-essential road, bridge and mass transit projects late Thursday after lawmakers failed to reauthorize the state fund that pays for them.

Christie's executive order calls for the state Department of Transportation and New Jersey Transit to devise a plan before midnight Saturday for the "orderly" shutdown of projects funded by the Transportation Trust Fund.

Federally funded projects will continue, Christie said in his executive order.

The state expects to receive an estimated $906 million of federal transportation aid, according to the state treasurer's annual report.

New Jersey's ability to borrow for new transportation projects ran out on Friday, the start of the new fiscal year. The trust fund already has about $16 billion of outstanding debt for existing road projects.

The fund has roughly $80 million left, said Assembly Transportation Committee Chairman John Wisniewski, who called Christie's executive order "pure theater."

Without new appropriations or bond proceeds, the authority cannot pay vendors for construction. Projects at any stage - procurement, design and construction - are affected by Christie's order, the Department of Transportation said.

About a month ago, lawmakers discussed issuing grant anticipation revenue bonds, or so-called GARVEEs, as a stop-gap measure, but the idea was never acted upon, Wisniewski told Reuters.

The flow of federal money backing those bonds is often uncertain from year to year.

"You can't do an annual capital program on GARVEE bonds," he said.

Christie ordered the remaining money in the fund to be held only for the most essential projects "in order to protect the health, safety and welfare" of New Jerseyans, he said.

New Jersey Governor Chris Christie speaks in a press conference at the State House in Trenton, New Jersey, March 3, 2016. REUTERS/Dominick Reuter

Christie had hatched a late-night deal earlier this week with the Assembly to raise the state gasoline tax by 23 cents to 37.5 cents per gallon to replenish the fund.

In exchange, the sales tax rate would shrink 1 percentage point to 6 percent, which could lead to an annual $1.7 billion shortfall in future budgets.

But the Senate ended its session on Thursday without replenishing the program, which is expected to run out of money in August.

Senators were pushing their own bill, which would have phased out the estate tax on wealthy residents instead of reducing sales taxes.

Christie also stripped several items out of the legislature's budget on Thursday, signing a reduced $34.5 billion budget for fiscal 2017 that is just 2.1 percent higher than that for fiscal 2016.

(Editing by Bernadette Baum and Leslie Adler)

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