In effort to rectify its suffering state transportation trust fund, NJ Transit is looking north—to Canada—for an infusion of $300 million. The loan would bind the gap between paying for federal grant-covered projects and the actual receipt of that grant money.
“This would authorize NJ Transit to obtain a line of credit,” said NJ Transit Chief Financial Officer Kathleen Sharman. “It would be used to pay for preventative maintenance expenses eligible to be reimbursed by federal funds.”
NJ Transit's board is expected to vote on the credit agreement with the Royal Canadian Bank at its May 13 meeting; if approved, a grant anticipation note will secure the arrangement.
NJ Transit borrowed $214 million from the state trust fund this past fiscal year to cover the federal funding gap, a measure that has many in both NJ Transit and the state legislature concerned over the sustainability of such a practice. Executive Director Veronique Hakim said NJ Transit planned to repay the loan in September when the agency would receive money from the federal government. At a state Senate budget committee hearing, Transportation Commissioner Jamie Fox said NJ Transit normally borrows money from the Trust Fund and repays it, that such practice is not exactly new; however, the concern moving forward is that the trust fund won’t have money to lend in the coming year. All the trust fund revenue from the state motor fuels tax and other taxes will be consumed by debt payments.
Borrowing could cost the agency as much as $900,000 for a commitment fee, which reimburses the bank for the expense of reserving funds, if NJ Transit needs to draw on the loan money, Snyder said. “We may or may not make any draws depending on the timing of the receipt of our federal funds,” she said.
Federal reimbursements make up some 22% of NJ Transit’s overall operating budget.