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The Impact on Infrastructure User Fees When Congress Doesn't Act on SLG Fiscal Aid

Writer's picture: Tom CochranTom Cochran

Fee Revenue

Whenever we talk about the state and local fiscal crisis resulting from the Greater Recession of 2020, we have continued trying to include user "fees" with "taxes" whenever we discuss the revenue shortfalls being experienced by the states, localities and their special purpose semi-autonomous (and self-supporting) authorities, responsible for delivering key transportation, water and other basic services to the public. Here is a case study illustrating how the federal government's failure to replace non-recoverable fee losses is already forcing up regressive user fees.


Most - and in many cases all - of the revenue supporting these authorities' operations and infrastructure investments is some kind of user fee revenue. In past posts and in a forthcoming Institute paper by NEMW Institute Policy Research Intern Zanagee Artis (Brown University '22) working with NEMW Senior Fellow for Transportation Dr. Jack Wells, we've been focused on public transit authorities semi-dependent on the fare box, gasoline tax and other regressive user fee revenue streams, as well as multi-modal transportation system operating entities like the Port Authority of NJ & NJ with similar revenue raising systems. So let's look at what's going on in the highway sector .


Today's poster child for fee revenue shortfalls is New Jersey, specifically the New Jersey Turnpike Authority which owns and operates the New Jersey Turnpike and the the Garden State Parkway, both of which have suffered enormous declines in vehicular traffic and the toll revenues. And supporting non-tolled highway and road construction, maintenance and repair the New Jersey Transportation Trust Fund Authority ( which also helps support the NJ Transit capital program). According to New Jersey Spotlight's analysis of the Turnpike's data, traffic dropped by about 38 million vehicles, comparing year-to-date numbers for June 30, 2020 (228.7 million vehicles) and June 30, 2019 (266.9 million). The Garden State Parkway's reduction in traffic by the same June to June year-year-on-year measure was even greater at roughly 48 million.



According to the Authority's latest data dump, The NJ Turnpike's January to August, 2020 fee revenues, are falling short by about $194 MM compared with the same 8 months of 2019, a drop of nearly 25%.The Garden State Parkway's revenue decline for the same 8 months was $66 MM or about 24%.


Because toll highway authorities must operate with substantial reserves per their revenue bond indentures, don't expect any immediate crisis. In fact, the NJ Turnpike Authority is now plowing ahead with an ambitious (and environmentally controversial) $24 billion capital improvement plan:15 highway widening or bridge replacement projects, totaling at least including $16 billion, as well as a host of other maintenance, repair and replacement projects. All of this work will be underwritten by what I think is the largest toll increases in either highway's history: 36% on the NJ Turnpike, with an average trip increasing from $3.50 to $4.80. Tolls on the Garden State Parkway will increase by 27%, increasing an average trip of $1.11 to $1.41.



A Sprint Into More Tax Regressivity During a Recession Impacting the Least Wealthy the Hardest


So once again, a toll-dependent public authority is doing it's bit to make a state's overall revenue generation structure more regressive, and this time it's in the midst of the Greater Recession of 2020, which is hitting the poor and middle class workers so much harder than those (mostly white collar) workers at the higher end of the income ranges.


And this has in a state where another transportation system user fee -the gasoline excise tax - has just been (October 1) increased by a whopping 9.3 cents automatically due to the pandemic-induced drop in gasoline purchases and the state's legal requirement to keep the state's own Highway Trust Fund - itself another semi-autonomous public authority - solvent and continuing to fund non-tolled highways and roads in the state. If Washington had carried out its fiscal stimulus responsibilities in a timely fashion and if that had included passage of significant assistance to states and localities making up for their non-recoverable fee as well as tax revenue, this sprint into Regressivity might have been prevented.

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