New Jersey officials recently met with investment bankers to discuss the state's transportation trust fund and a possible new round of debt issuance that the fund will support.

State officials say the New Jersey Transportation Trust Fund Authority will soon run out of revenues to support debt issues. The authority has about $400 million in bonding capacity remaining, but it wants to secure financing for the future.

As a result, the administration of Gov. Christine Todd Whitman is considering an increase in both the state's gasoline tax and tolls on state highways, said Cad Golden, Whitman's director of communications.

The increased revenues would provide money for the trust fund authority, which has sold more than $1 billion of debt since 1985. It could not be determined how much debt the authority will sell in the coming decade.

Golden said a toll or gas tax increase "might be a possibility" to provide additional money for the trust fund authority. Whitman was elected governor on a platform of lower taxes, and observers say a toll or gas tax increase could be politically damaging.

"Right now, discussions in the administration are what methods to employ to capitalize the fund," Golden said. "No decisions have been made at this point"

At the same time, several major municipal bond firms have sent their representatives to meet with New Jersey state officials, including those in the state treasurer's office, to pitch ideas about the trust fund authority's future bonding plans, Wall Street sources say.

Several bankers, who spoke on condition of anonymity, said the state may issue bonds in the spring or summer after the trust fund authority is recapitalized with higher tolls or gas taxes.

"They are talking tolls and various other revenue increases," one banker said. "People are expecting a deal."

The trust fund authority's revenue sources include tolls, a portion of the state's gasoline tax, as well as federal money. Golden did not say that a toll or gas tax increase is likely. But he did say that Whitman is "committed to a renewal of the trust fund."

In May, the transportation trust fund authority, which has financed billions of dollars of road construction throughout the state, reached its legislated debt limit.

The authority sold $400 million of revenue bonds inacompetitive sale, according to Securities Data Co. With the exception of its first bond issue in 1985, the authority is required by law to sell debt competitively.

"We are not in a pressing need for money because we got some in May," said a state official with knowledge of the authority.

State lawmakers must also decide whether to renew the legislation that keeps the trust fund authority in existence. The original enabling legislation is scheduled to expire at the end of fiscal 1995, which falls on June 30, 1995.

Now that an advisory panel appointed by Whitman may be favoring negotiated debt, some Wall Street bankers say they are pushing the idea of selling trust fund authority debt on a negotiated basis.

Whitman's predecessor, Gov. Jim Florio, banned most negotiated sales by state issuers in Executive Order 92, signed in May 1993. Market executives familiar with the trust fund credit said that because the authority is required by law to sell all its debt competitively, legislation may be needed to allow a negotiated deal.

Before a $400 million bond issue in May, the authority sold competitively in October 1993 $61 million of bonds with a feature designed to attract minority-and woman-owned firms.

The special mechanism, similar to the Dutch auctions used by the federal government, failed to attract a single firm.

Several minority- and woman-owned firms had expressed concern before the sale that they would be shut out of state business following Florio's order. Competitive deals generally require higher capitalization levels than most minority- and woman-owned firms maintain.

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