The Christie Crisis

New Jersey Governor Chris Christie proposed a counteroffer to the state Assembly today to find funding for hundreds of road and bridge projects that he shut down by executive order nearly two weeks ago. By suspending $3.5 billion in “nonessential” road construction work, he is likely going to cost the state far more money than he is saving.

New Jersey occupies the unenviable position of having the highest construction costs per road mile (according to Reason Foundation’s 21st Annual Highway report) coupled with the second lowest gas tax in the nation. As many states move to fund transportation projects on their own, knowing federal funds won’t cover the necessary expenses, New Jersey has continued to use debt to fund projects, and it has finally caught up with them. For instance, in 2013, almost half of the $7.2 billion transportation budget for New Jersey went to pay for debt accrued on prior work.

Earlier this month, Christie reached a deal with the state Assembly to raise the state’s gas tax by 23 cents a gallon to replenish the trust fund. In exchange, the state’s sales tax would be cut from 7 percent to 6 percent by 2018. But the Senate opposed the deal, saying it would create a nearly $2 billion hole in the state budget. Another plan to raise the gas tax 23 cents-per-gallon with a phasing out of the estate tax, increasing the retirement income tax exclusion threshold, and creating new tax deductibles for charitable donations was also rejected.

According to an analysis by ARTBA, the shutdown cost the transportation construction industry and New Jersey taxpayers $41 million in its first week and could continue to cost as much as $9 million per week in lost sales, wages and economic activity in the state. Between 1,300 and 1,700 workers have been displaced.

Unfortunately for the residents and commuters of New Jersey and surrounding areas, summer is prime construction season and there’s no way to turn back the clock on lost days once a resolution is reached. The effects of the shutdown have already had major impacts as cities such as Summit saw local businesses forced to lay off workers while they wait for construction to resume on a century-old crossing.

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