HOT lanes get a push in New Jersey

Two powerful New Jersey senators are backing a proposal that could bring high occupancy toll lanes to heavily congested highways.

Senate President Steve Sweeney, D-Gloucester, and Senate Budget and Appropriations Committee Chairman Paul Sarlo, D-Wood Ridge, have endorsed a concept mentioned in an Aug. 9 report by the New Jersey Economic & Fiscal Policy Workgroup, in which single-occupancy cars would pay tolls to access high-occupancy carpool lanes on highways such as Interstate 78 and Interstate 80.

Emile Wamsteker/BLOOMBERG NEWS

The lawmakers see high occupancy toll lanes, which are allowed on federal interstates, as a route toward boosting funding for New Jersey’s $16 billion Transportation Trust Fund without forcing residents to pay extra.

“HOT lanes are a way of easing congestion on highways and allowing motorists to move more quickly,” said Sweeney. “For a high-density state like New Jersey, it can increase capacity on existing roadways.”

Eight states currently operate HOT lanes that have variable toll ranges from $0.25 in the off-peak hours to $9.00 in heavily congested periods, according to the Federal Highway Administration. Highways offering the lanes include I-15 FasTrak in San Diego; US 290 Northwest Freeway in Houston; I-394 and I-35W MnPass in Minneapolis; I-25 Express in Denver; I-15 Express in Salt Lake City; SR 167 in Seattle; I-95 in Miami; I-680 in Alameda County, California, and I-85 in Atlanta.

Policy experts suggested in the report that new revenue generated through express lanes with variable toll rates could be used toward combating the state’s heavy pension burden. The report also proposed transferring ownership of the New Jersey Turnpike to the pension system to address mounting liabilities.

“This proposal would have the added benefits of easing financial pressure on the Transportation Trust Fund at the same time it generates revenue for the state’s pension system,” Sarlo said. “This is an option for motorists who choose to make use of it.”

Regina Egea, president of the Garden State Initiative, said HOT lanes are worth exploring and could present an opportunity for a public-private partnership. Gov. Phil Murphy signed legislation last month expanding the state’s usage of P3s to include transportation infrastructure projects.

“I like that HOT lanes are optional and not mandatory,” said Egea, who was chief of staff to previous New Jersey Gov. Chris Christie from 2016 to 2016. “It’s less capital risk to for the state.”

HOT lanes aren't always popular with drivers and voters -- a P3 project that is adding such lanes to a Charlotte-area highway is under fire in North Carolina.

Frank Chin, managing director of the consulting firm American Public Infrastructure, said HOT lanes around the country have had mixed results and a “comprehensive study” would need to be undertaken before determining if New Jersey is an adequate area to implement the service. He said the concept is worth exploring given the expected higher usage of electric vehicles, which will cut down on future gas tax revenues for transportation projects.

“[HOT] lanes gives them some protection against fuel changing technology,” said Chin, who was one of the outside policy experts tapped by Sweeney in February to examine the state’s tax and fiscal landscape. “New Jersey has a lot of highways and a lot of parties competing for transportation money.”

New Jersey funds many of its transportation capital projects through its TTF, which was first established in 1984 and had $19.6 billion of outstanding bonded debt at the close of the 2017 fiscal year. The TTF nearly became insolvent in 2016 before lawmakers agreed to replenish the fund at $2 billion annually for eight years funded largely through a 23-cent-per-gallon gas tax increase. State Treasurer Elizabeth Maher Muoio announced in late August that the gas tax would rise by another 4.3 cents a gallon starting Oct. 1 because lower-than-projected fuel consumption levels over the last two years were not bringing enough revenue to support the transportation fund.

S&P Global Ratings downgraded the state one notch to A-minus a month after the TTF reauthorization in part due to revenue risks from the transportation agreement created by accompanying tax cuts. The deal Christie cut with state lawmakers cut the sales tax to 6.625% from 7% and phased out the estate tax. The Garden State incurred 11 credit downgrades under Christie and now has ratings of A-minus by S&P, A3 by Moody’s Investors Service and A by Fitch Ratings and Kroll Bond Rating Agency.

Municipal Markets Analytics analyst Lisa Washburn said utilizing HOT lane revenue for transportation infrastructure upgrades could be a workable solution in New Jersey and a simple selling point for users since they would see physical improvements from their extra expenses. She said using the express lanes for pensions would be harder selling point, but noted that boosting the TTF would enable the state more flexibility to combat its growing liabilities burden.

“If the HOT lanes were to work as designed and alleviated traffic on New Jersey’s most congested roadways I could see people using them,” said Washburn, who is based in New Jersey. “If the HOT lanes can help pay for transportation infrastructure spending and free up some of the current budget spending those funds could be used to increase spending in other areas like funding pensions or education.”

Washburn added that improving traffic flow for HOT users can also have added economic benefits for the state from increased business productivity and making state more attractive to new residents. She said building the lanes without major traffic disruptions would be important as well as successfully marketing the initiative.

“Exploring and implementing new revenue streams is a good idea, especially in a high–taxed state like New Jersey,” she said. “If you can tie new fees or revenue to receipt of a user benefit that is a reasonable idea.”