New Jersey’s Investment in Infrastructure is Fifth Lowest in Nation

New Jersey’s investment in all types of capital improvements has also been declining, from 1.76 percent of the state’s economy in 2004 to 1.4 percent in 2013.

Published on Feb 25, 2016 in Tax and Budget

New Jersey is among the states investing the least on public infrastructure that is vital to creating good jobs and promoting full economic recovery. The Garden State has spent the fifth lowest amount on transportation, water treatment systems, and other forms of essential infrastructure in the past ten years, when measured as a share of state’s economy.

New Jersey’s investment in all types of capital improvements – which is vital to creating good jobs and promoting a full economic recovery – has also been declining, from 1.76 percent of the state’s economy in 2004 to 1.4 percent in 2013. That’s a 20 percent drop that helped move New Jersey seven spots down the rankings of state investment, from 12th lowest in 2004 to 5th lowest in 2013.

These figures come from It’s Time for States to Invest inInfrastructure,” a new report released this week by the Center on Budget and Policy Priorities, a national partner of New Jersey Policy Perspective. The author, Senior Fellow Elizabeth C. McNichol, shows that now is the time for New Jersey to reverse years of decline and step up investment in better highways, public transit, and ports.

The report, which comes about four months before New Jersey runs out of money to invest in transportation infrastructure projects, illustrates the clear need for the Garden State to not only renew the Transportation Trust Fund but to increase the paltry amount of investment it’s been making in transportation infrastructure – an increase that can only occur if New Jersey increases its second-lowest-in-the-nation taxes on gasoline. It’s clear that the modest impact of the increased tax on most New Jerseyans would be a wise investment that would pay enormous dividends for the state’s economy.

The one asset that no competing state can match is New Jersey’s location in the middle of the largest consumer market in the world with access to both New York and Philadelphia. But that asset only counts if the state invests heavily in modernizing, improving and expanding it transportation networks. Our future prosperity depends on it.

The report’s findings make clear that investment in unmet infrastructure needs will improve New Jersey’s economy now and in the future. Modernizing transportation systems and other infrastructure boosts productivity by supporting businesses and residents, improving the education and job readiness of future workers, and helping communities to thrive. Key infrastructure improvements also will provide immediate job opportunities for New Jerseyans who are working less than they would like and making less than it takes to get by. Infrastructure investments typically bring higher wages and better quality of life for years in the future.

The report finds that every state needs infrastructure improvements that have the potential to significantly boost private sector investment and long-term economic growth, and warns that neglecting infrastructure has serious consequences for a state’s growth and quality of life.

“States must turn their attention back to the type of infrastructure investments that will boost productivity, support business growth, create jobs, provide a healthier environment, and improve opportunities for all of their residents,” McNichol wrote. “States continue to ignore needed investments at the country’s peril.”

Despite dramatic evidence of the benefits of infrastructure investment, decades of neglect have led New Jersey’s residents and businesses to grapple every day with crumbling roads, outdated public transit systems, and unsafe bridges. The annual cost of New Jersey’s repair-thirsty roads alone is $3.6 billion, or $605 per motorist each year, according to the American Society of Civil Engineers. Add to that the costs of New Jersey’s rickety commuter train network, which had more than 200 major breakdowns in 2014 (four times worse than the national average) on top of countless major delays, and it’s clear that the lack of investment in transportation is costing the Garden State serious dollars and harming the state’s business climate.

Despite the fact that New Jersey’s low fuel taxes haven’t been increased in 26 years, state policymakers have delayed action on fixing this transportation-funding mess, and many are now insisting on “trading” a desperately-needed fuel tax increase with an elimination of, or major cuts to, taxes on inherited wealth in the name of “tax fairness.”

This is not only the polar opposite of “fairness” – a proposed elimination of a tax that only the wealthiest 4 percent of New Jersey estates pay in exchange for a tax increase that would affect poor and working families the most – it’s also a poor strategy for economic growth and a poor choice for New Jersey because tax cuts take resources away from public universities, and other investments that produce a talented workforce and support business’s needs. The report warns that paying for infrastructure improvements by cutting support for other services is a short-sighted choice that reduces the long term benefit.