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A new report from the Regional Plan Association (RPA) says that New Jersey lawmakers need to confront head-on the problem with the Transportation Trust Fund, which is expected to be insolvent by mid-2011. At that point, it is projected that 100 percent of the $883 million collected each year in tolls, taxes and other fees will go towards paying off debt. When that happens, the state Department of Transportation and NJ Transit will both lose their primary source of funds for construction projects, a major source of operating money, and up to $1.6 billion in federal matching funds.

“The state’s transportation systems are looking into the abyss of disrepair, just as the New York City transit system did when shortsighted politicians failed to maintain mass transit in the 1970s,” RPA executive director Tom Wright says. “New Jersey cannot go down this road.”

Just how did we get here, you ask? The answer is complicated, but we’ve been brought to this point largely by a combination of mission drift and passing the buck.

The Trust Fund was created in 1984 as a way to ensure the funding of state transportation projects, which had long suffered inconsistent financing at the whim of yearly legislative appropriations. The program was originally to be limited in size and subject to pay-as-you-go financing. But instead, the financing has increasingly come in the form of debt via bonds. This is partly because the fund began paying for not only capital improvements, as was first intended, but for routine maintenance that used to be funded by the state’s general budget.

As the total debt accumulates, the amount of money the trust fund allocates to pay it off increases (it has risen 59 percent since 2005). But revenue has not kept pace. So each year, the state issues even more bonds to cover costs.

“The bonds issued to cover the gaps commit the Trust Fund to higher annual debt payments, further increasing the Trust Fund’s expenses,” the report reads. “This is the spiral of debt from which New Jersey now has to break free.”

The RPA makes several suggestions on how to tackle this problem. But refinancing the debt isn’t one of them. The state did just that the last time the fund was on the brink of insolvency — just four years ago.

Instead, the RPA says the fund needs to be scaled back and transitioned to more of a pay-as-you-go funding mechanism, while finding other dedicated ways to fund DOT and NJ Transit’s operating expenses. The report also calls for containing costs and equally sharing the burden of raising new revenue.

“Drivers and riders should pay transportation-related fees and taxes in proportion to their use and to the environmental and other costs they impose on the system,” the report reads. But while the RPA clearly advocates for a raising of the state’s gas tax, which it points out is the fourth-lowest in the nation and hasn’t been raised since 1988, it rightly points out that an additional gas tax won’t be enough. It projects that if the only action taken to “fix” the trust fund was a six cent increase in the gas tax, we’d be right back here in just three years.

Lastly, the RPA says the state needs to constitutionally dedicate a new funding source to the trust fund, and gives a wide array of ways that other states do just that — everything from congestion-pricing styled variable toll pricing to additional fees for development projects that will generate significant vehicle traffic.

“It would be an understatement to say that breaking this cycle of debt will be politically difficult. Gov. Chris Christie has been vocal about not raising taxes, but without several hundred million dollars in new revenue dedicated to the Trust Fund, New Jersey will lose the transportation system that our economy depends on,” the report concludes. “Governor Christie and the legislature have a responsibility to acknowledge this imminent crisis and adopt real, effective solutions.”

You can read the full report here.