Gas tax to rise 23 cents in deal

Gov. Chris Christie and the state’s top Democratic lawmakers struck a deal on Friday to modernize New Jersey’s fraying network of roads, bridges and railways over the next eight years — a renovation program that will increase costs for commuters, since the state’s gas tax will rise by 23 cents as early as next week.

“While I’ve not authorized any other tax increase during my time as governor, I’m authorizing this one, because of the importance of the Transportation Trust Fund, the tax fairness that we’ve accomplished together and the compromise that we’ve reached, and because we need to responsibly finance this type of activity,” Christie said at a hastily called Statehouse news conference Friday afternoon.

Christie, Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto reached agreement after months of scuttled plans and aborted deals. The state’s Transportation Trust Fund ran out of money this summer and exhausted its legal authority to borrow more funds in July. Thousands of road contractors were suddenly out of work during their busiest season as the stalemate stretched from summer to fall.

Now New Jersey can expect to see $32 billion pumped into the state’s economy and transportation infrastructure over the next eight years, which combines state funds and federal matching funds, Christie said.

To help pay for that, the state’s gasoline taxes will go from 14.5 cents to 37.5 cents a gallon.

Christie had long called for a package of tax cuts to offset the increase in the gas tax and had proposed slashing the state’s sales tax from 7 percent to 6 percent. In the end, the deal he struck would reduce the sales tax by a smaller amount: From 7 percent to 6.625 percent over two years. “This is the first broad-based tax cut for all New Jerseyans since 1994,” Christie said.

In addition, Christie and the legislative leaders agreed to:

■ Eliminate New Jersey’s estate tax, which applies to all estates over $675,000, over 15 months.

■ Increase state tax exemptions over four years for retirement and pension income, to $100,000 for joint married filers, $75,000 for individuals, and $50,000 for spouses who file separately.

■ Institute a new tax break for veterans who were honorably discharged.

■ Raise the state’s Earned Income Tax Credit for the working poor from 30 percent of what the federal government provides to 35 percent.

“All of these things are going to lead to a more affordable state … and they’re going to lead to infrastructure that is even better than what we have today,” Christie said.

“While it took us some time to get here, in the end everyone worked together and compromised to create a plan we could all coalesce behind — one that puts safety first, puts residents back to work and provides broad-based tax cuts for all New Jersey residents,” said Prieto, D-Secaucus. He added: “Our road infrastructure is crumbling.”

Prieto and Sweeney said they plan to call a special session on Wednesday to approve the deal, and they added that they expect to have enough bipartisan support in both chambers to pass the legislation.

The total cost to New Jersey’s beleaguered, $34.5 billion state budget — which is already struggling to pay for all of the education, pension, health care and other costs written into law — would be $1.4 billion after all the tax cuts are fully phased in, according to Christie’s office.

The revenue loss would complicate the state’s ability to keep up with ballooning pension payments and a range of other fixed costs. The cash shortfall would largely be the next governor’s problem.

Christie announced the deal — one of the most significant of his governorship — one day after an NJ Transit train crashed into Hoboken’s rail station, killing one commuter on a platform and injuring more than 100. The announcement also came in the middle of the federal criminal trial of two former Christie associates in the George Washington Bridge scandal, and at a time when Christie’s approval rating in state polls is at record lows. Christie said he was proud to make the transportation deal part of his legacy.

“I’m happy to be a governor now who is going to be able to say that we have responsibly financed for a long period of time — the longest period that the state will ever see,” Christie said. “The great news is that future leaders of the state are not going to have to deal with Transportation Trust Fund financing again until 2025. That’s really good news. That’s good news for whoever the next governor is. That’s good news for whoever the next leaders of the Legislature are.”

Among the projects that would be funded by the new, $2-billion-a-year transportation program is an extension of light rail into Bergen County, according to Sweeney. A full list of projects was not released Friday.

The deal garnered a mixed reaction. Public polling shows that most New Jersey residents oppose a hike in the gas tax.

“Residents, drivers and commuters rallied against this $2 billion gas tax plan the first time it was proposed in June,” said state Sen. Jennifer Beck, R-Monmouth. “Offering a recycled plan that tinkers around the edges doesn’t change the fact that the public massively opposes a 23 cent per gallon gas tax hike.”

Motorists interviewed at the Wall rest stop on Garden State Parkway were disappointed by the pending gasoline tax hike.

”It’s sad because as someone who lives out of state I like to come get gas in New Jersey,” said Tim Madeira, 35, of Baltimore. “I feel at the end of the day most tax increases are an excuse for poor money management."

Paul Scozzafava, 46, of North Arlington, said he wished the sales tax cut was at least one percent. "I wouldn't mind it if the trade off was a little better."

His wife Susan agreed. “It's a lot of money just to be going for the highways. It's not just a nickel," she said.

But Greg Lalevee, chairman of the Engineers Labor-Employer Cooperative, which represents thousands of contractors, engineers and other workers, welcomed the deal.

“This deal provides an essential, dedicated and long-term source of revenue for the TTF that ensures our transportation system can compete in a 21st-century economy, and will help us to avoid another catastrophic transportation shutdown,” Lalevee said.

Laurie Ehlbeck, state director of the National Federation of Independent Business, a conservative group, welcomed the estate tax repeal but said the gas tax hike was too steep. “In the end, lawmakers in Trenton went back to the script of raising taxes and penalizing the small business sector,” she said.

Jon Whiten, deputy director of the liberal think tank New Jersey Policy Perspective, said Christie, Prieto and Sweeney “foolishly” agreed to cut taxes on wealthier New Jerseyans at a time when the state budget is strapped for cash.

“While it is absolutely essential that New Jersey invest in its transportation infrastructure, that investment should not be held hostage to some warped idea of so-called ‘tax fairness’ that will cost the state well over $1 billion a year,” he said.

Contributing: Staff writer Andrew Ford

Contact:rizzo@northjersey.com

$170

Estimate of what gas hike

will costs families annually.

$2 billion

Amount to be spent on

transportation funding.