Future Financing

The Transportation Trust Fund Authority's (TTFA) financial planning includes short, medium, and long range elements. Planning for the Authority's next bond sale usually begins two to three months ahead of the planned bond sale date. The Authority works with its financial advisor and the Office of Public Finance to develop a detailed plan for sizing and structuring the pending bond sale. If it is determined it is in the best interest of the State to sell bonds on negotiated basis, the Authority also seeks sizing and structuring guidance from its assigned underwriter. On March 1 each year, the Authority must submit a medium range plan to the Legislature that shows how the Authority intends to finance the NJDOT/NJ TRANSIT Capital Program for the upcoming fiscal year. This annual financial plan includes estimated appropriation revenue, bond proceeds, investment earnings, and expenditures, but does not include detailed bond sale plans. The Authority also develops a multi-year projection model to determine the Trust Fund long-range financing capacity. The results of this modeling are shared with Authority board members and policy makers in order to communicate the size and number of future capital programs that can be supported using existing dedicated revenues.

Next Bond Sale

The TTFA plans to sell approximately $1.3 billon in additional bonds in one or more sales during the November-June 2010 time period.

Annual Financial Plan

The Authority submitted a FY 2010 Financial Plan to the Legislature which outlines how it will finance NJDOT/NJ TRANSIT’s requested $1.6 billion capital improvement program. The Financial Plan called for issuing approximately $1.3-1.6 billion in new debt in order to finance the planned program.

Long-Term Financing Capacity

The Authority's financing capacity is constrained by the relationship between its long-term revenue stream and its debt service schedule. Investors who are buying Authority bonds with maturities up to 31 years want reasonable assurance there will be funding available to pay principal and interest when they become due. Accordingly, the Authority needs to ensure that future debt service costs never exceed the $895 million currently dedicated for transportation capital purposes.

The Authority must not only consider its own debt service schedule but also the debt service payments made by NJ TRANSIT from Transportation Capital Program appropriations. While these debt service payments are not legal obligations of the Authority, they cannot be reimbursed by the Authority using bond proceeds. These payments must be financed with the TTFA's appropriation revenue. The Authority must compare the sum of its own debt service and NJ TRANSIT's Economic Development Authority (EDA) debt service with the dedicated appropriation stream in order to determine long-term financing capacity.

The original financing plan developed in 2006 called for a five year capital program of $1.6 billion annually which was to be financed with Current Interest Bonds and Capital Appreciation Bonds up to 31 years maturity. Debt service from these bonds cannot exceed the $895 million appropriation level. Recent market conditions have adversely impacted the Authority's bonding plans. The Authority currently estimates sufficient bonding capacity to support the full $1.6 billion capital program in FY 2010. The Authority is closely monitoring market conditions and evaluating financing strategies in order to determine whether a full $1.6 billion capital program can be supported in FY 2011. The Authority continues to estimate that no new capital program can be authorized in FY 2012 without additional revenue.