$2 million a mile: Why roads cost so much in N.J.

TRENTON, N.J. — At $2 million a mile, New Jersey spends eight times the national average on its state-controlled highways, a heavy toll that is driving the tax-supported roadway fund dry and forcing officials to rethink how roads are built.

New Jersey's transportation project fund is nearly broke, and a handful of voices are encouraging the state to think about economizing as it refinances its ride.

Most of the talk has been about how to fund road and rail work going forward — a higher gas tax, through the sales tax, probably some borrowing.

The Reason Foundation says New Jersey spends just over $2 million per state-controlled mile on construction, maintenance and administration, triple the roughly $675,000 spent by the next-highest state, Massachusetts, and more than eight times the national average of $162,200.

"This is out of control," said Republican state Sen. Michael Doherty, who made the report an issue at the state Senate's confirmation interview with new Transportation Commissioner Jamie Fox.

New Jersey funds highway, bridge and rail projects through its Transportation Trust Fund, which relies on borrowing and gas tax revenue to contribute $1.225 billion to the state's overall $1.6 billion construction budget this year. By June 30, the fund will exhaust its capacity to borrow further and will be using all its revenues to make payments on $14.4 billion in debt. The state controls 3,338 miles of road; the trust fund also provides aid to counties and municipalities.

"It's just bad deals that have been made by politicians who get political donations from unions. Project labor agreements and prevailing wage artificially inflate the costs of road work," said Daryn Iwicki, state director for Americans for Prosperity.

The reasons don't lie solely with the higher costs for union labor, said Democratic Sen. Paul Sarlo, the chief operating officer for Joseph M. Sanzari Inc., a major North Jersey construction company. The state's dense population, high costs for acquiring land and the expenses for relocating utilities are major factors, he said.

"That doesn't happen in many states, in open areas. When you open up a road, there's so many more utilities," Sarlo said.

The costs incurred when utilities relocate their infrastructure to make way for road work are significant, Fox said. The schedule can also interfere with road contractors' efforts to finish work more quickly.

"It is a problem," said Fox. "The utility costs, relocation costs, is costing the department and the state and the taxpayers a lot of money."

Fox also agreed that the state's population density drives the cost higher. He advocated potential money-saving approaches such as public-private partnerships, under which private contractors build a road that is then publicly operated. The contractors make their profit either through tolls or by beating performance goals.

"We have to be tougher with negotiations. Small things such as making sure when you have a development or a developer who's building something, they should be paying for part of the infrastructure improvements," Fox said.

Republican Sen. Gerald Cardinale says costs are pushed higher by requirements such as the state's prevailing wage law. That's been on the books for more than a century and sets standards, such as salaries, benefits and overtime, for public construction projects.

"It's not just that we're congested. It's the way we do things," Cardinale said.

Fox said he "philosophically agrees" with paying people a prevailing wage. But he said work rules can "absolutely, positively" be changed in ways that safely save money.

"I look at ground zero, for instance, when I was at the Port Authority," said Fox, who was deputy executive director of the Port Authority of New York and New Jersey from 2004 to 2007. "You don't need five people to make sure that the guy's walking up on the ladder correctly.

"You don't want to reduce safety concerns, but at the same time, yes, are there things that we can look at and have to look at in order to make sure that the taxpayers are getting the best bang for their buck? And do we have to change with the times and do maybe some work rules have to change? Yes."