TRENTON, NJ – A showdown is expected Thursday when the state Senate opens debate on a contentious plan to increase the state’s gasoline tax by 23 cents a gallon.
The estimated $2 billion raised annually by the gas tax would be used to replenish the state’s battered Transportation Trust Fund over the next 10 years.
The state Assembly voted 53-22 to approve the gasoline tax plan early Tuesday morning following intense give-and-take negotiations between Assembly Speaker Vincent Prieto (D-Hudson) and Gov. Chris Christie.
The governor agreed to support the increase in return for a decrease in the state sales tax from 7 to 6 percent, phased in over three years.
The Assembly voted 53-23 in favor of the sales tax cut.
Christie also demanded an increase in the earned-income tax credit and elimination of the state’s onerous estate tax in return for his support of the increased gas tax.
"In talking with the governor, this is a bill that he would sign,” the assembly speaker said early Tuesday morning after the 1 a.m. votes on the two bills.
"This is a bill that actually takes care of our transportation infrastructure needs by fully funding it for eight years; $2 billion fund every year for eight years. And actually, we would be able to fund our Transportation Trust Fund with new revenue, something that we have not done since 1988. So, this is historical.
"And this plan, it actually is a two-pronged approach. We're reducing a regressive tax - the sales tax - over a two year period at half a percent going then down to six-and-a-half and then to six percent,". Prieto said.
"So, this will be a bill that helps everybody across the board and really, it'll be a win-win for all the residents of the State of New Jersey." Prieto added.
Assemblyman Jay Webber (R-Morris) has spoken out against this increase.
“Tonight, all the Trenton insiders did was pave New Jersey’s road to higher taxes,” said Webber. “This State Street ‘deal’ is an instant $850 million tax hike on overtaxed Main Street New Jerseyans, with as much as $4.8 billion more in tax hikes coming in the next few years. And it doesn’t offer taxpayers their money back until five years from now, if it ever comes back at all.
“We have a serious problem and have to fix the Transportation Trust Fund. But New Jersey’s biggest problem is our crushing tax burden, and any ‘deal’ like this one, that makes the tax burden worse, is just a raw deal for New Jersey,” Webber added.
Middlesex County Assemblyman John Wisniewski, a Democrat and chairman of the Assembly Transportation and Independent Authorities Committee, opposed the bill because of the tax cuts that were included.
“It creates a hole in the budget at a time when we already have difficulty paying bills,” he said.
The 23-cent increase could go into effect as soon as Friday, the first day of the state’s new fiscal year. The 1 percent sales tax cut would be phased in over three years, with full implementation in January 2018.
However, the Senate must weigh in on Thursday, and according to state Sen. Christopher “Kip” Bateman, (R-Somerset, Hunterdon, Middlesex, Mercer) the bill in its present form will have a difficult time wending its way through the Senate.
“It’s not a good bill,” Bateman said. “I’m not supporting it and I don’t know of any member of the GOP caucus that is in support of the proposal,” he added.
Legislative District 27, which includes Florham Park and East Hanover, Assemblymen Mila Jasey and John McKeon both voted in favor of the tax plan on Tuesday. They have stressed that in this political atmosphere, with a conservative, Republican Governor and a liberal, Democratic Legislature, finding a plan that can be signed into action requires great compromise. The bill has already seen changes in the interest of this compromise and while gridlocked, the Transportation Trust Fund continues to remain empty.
“The plan which the Assembly passed has the ability to be signed into law and replenish the TTF. While this is not something that everyone loves, it is the reality of dealing with a divided government.” said McKeon who is a co-sponsor of the bill. “The alternative is to allow our bridges and roads to crumble, put 40-60k people out of work over night and create more gridlock in Trenton.”
New Jersey’s gasoline tax is 14.5 cents per gallon, second only to Alaska as the lowest in the country. The 23-cent increase, if it were to be approved, would mean a 63 percent increase in the state’s gasoline tax to 37.5 cents per gallon, pushing New Jersey to number seven on the list of states with the most expensive gasoline tax. The last gasoline tax increase in New Jersey came in 1989.
The state’s beleaguered Transportation Trust Fund, burdened by debt payment from years of borrowing, will run out of money this summer without an infusion of billions. The TTF pays for bridge, tunnel and road repair projects throughout the state.