Oct. 4 (Bloomberg) -- New Jersey Democrats allowed a $1.4 billion transportation bond issue to proceed after their delay in approving the deal led Governor Chris Christie to halt road and transit construction across the most densely populated U.S. state.
The suspension, which the administration estimated idled about 2,000 workers for one day, was lifted immediately, according to Michael Drewniak, a spokesman for Christie.
“Things will be back to normal tomorrow,” Drewniak said today after the Legislature’s Joint Budget Oversight Committee approved the bond issue. The panel, which had to approve the refinancing portion of the transaction, voted 4-1, with one abstention. With today’s approval, the sale is scheduled for Oct. 13 and 14, said William Quinn, a state Treasury Department spokesman.
Christie, 48, a Republican who took office in January, on Oct. 1 ordered the suspension of all state-funded transportation-construction projects, effective today. He blamed the failure of the Democratic-led Legislature to act on a bond sale for the Transportation Trust Fund that was originally scheduled for last month. The committee scheduled an emergency meeting for today in response to the work stoppage.
Democratic Senator Paul Sarlo, co-chair of the joint oversight committee, abstained from today’s vote. Assemblyman Lou Greenwald, the other co-chair, voted against the plan. Two Democrats joined the committee’s two Republicans in supporting the measure, allowing the borrowing to proceed.
“We have just dug ourselves a deeper hole,” Greenwald, a Camden County Democrat, said before casting his vote. “We have exhausted every dollar in the Transportation Trust Fund.”
Sarlo had said he would withhold consideration of the borrowing until Christie presents a long-term plan for replenishing the Transportation Trust Fund, which is due to run out of money for new projects next year.
“I voted to support this plan with the understanding that the administration will move forward expeditiously and work collaboratively with the Legislature and others to devise a real plan for the state’s transportation future,” Assemblywoman Nellie Pou, a Passaic County Democrat who voted for the measure, said in a statement.
Passage of the bond measure followed a two-hour hearing during which Transportation Commissioner James Simpson and State Treasurer Andrew Sidamon-Eristoff told lawmakers the fund may run out of money for new projects by March, three months sooner than projected earlier.
“The fund itself is functionally in deficit,” Sidamon-Eristoff said.
The roadwork fund will have no money for new projects as payments on more than $12 billion in debt consume the $895 million paid into it annually, Trust Fund projections show. Eristoff said the borrowing approved today is the last the fund can support, and will keep highway and transit projects funded through February or March.
Christie had said he planned to release a plan for replenishing the fund this month. Simpson told lawmakers today that he couldn’t promise when a proposed solution would be delivered to lawmakers.
“Hopefully before the end of the year,” he said.
Paying it Back
The proposed bond sale calls for refinancing about $483 million in debt, giving the state more borrowing capacity. The state also plans to issue $990 million in taxable Build America Bonds to repay the general fund advance and continue paying for continuing construction, according to Sidamon-Eristoff and bond documents.
The state general fund has advanced the Trust Fund $383 million to cover operating expenses, Sidamon-Eristoff said. The fund has $50 million on hand, which is needed for salaries and debt service payments, Simpson told the committee. He said the fund spends $125 million a month to support work in progress.
“The Trust Fund is broke,” Simpson said. “The bottom line is you can’t pay the bills when you don’t have money.”
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