Government

Stalemate Continues Over 23-Cent Gas Tax Increase

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Gov. Chris Christie Credits: courtesy photo
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TRENTON, NJ — The stalemate between Gov. Chris Christie and state legislators over the beleaguered Transportation Trust Fund continues as the latest compromise proposal cobbled together by lawmakers was flat out rejected by Christie on Monday.

The latest plan would increase the state’s gas tax by 23 cents per gallon; Christie’s approval hinges on a series of tax cuts - elimination of the state’s estate tax, an increase in the ceiling for retirement income taxes; an increase in the Earned Income Tax for the working poor and new tax breaks for commuters and veterans.

But, Christie said the plan is a no-go, saying it was “dead on arrival.”

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An earlier plan also rejected by Christie included those cuts, as well as a three-year reduction in the state income tax from 7 to 6 percent.

State Assemblyman Jack Ciattarelli, R-16th, also criticized the latest proposal.

“While we absolutely need a reliable, pay-as-you-go funding source for the TTF, most in Trenton still willfully ignore the other side of the equation – innovative and fair approaches to better control and prioritize spending.  Until we get serious about both, we will not fix the state’s fiscal crisis” Ciattarelli said. 

“Certainly, there is something in this new TTF deal for everyone – the poor (EITC), the well-off (estate tax), retirees, veterans ... However, what we really need is comprehensive tax reform that is revenue neutral and economy stimulating.  Yes, eliminating estate taxes and increasing retirement income exclusions are a good start.  A great finish would be allowing for the carryforward of capital losses, never taxing the gain on the sale of a primary residence (or second home if it has never been used for commercial purposes) and making the first $1 to $5 million of gain on the sale of a small/family business tax-free,” he continued. 

“These tax cuts can be paid for by restructuring our tax rates and closing the combined reporting loophole for corporations.  We should then look to phase out the corporate business tax over a 10-year period.

“In addition, we need reform school funding, modify post-retirement healthcare benefits for public employees and make our pension system solvent. This would ultimately reduce property taxes, which is everyone’s #1 concern,” he said. 

Ciattarelli, a resident of Hillsborough and former Somerset County freeholder characterized the proposal “more seductive than compelling.”

“I cannot bring myself to solve the TTF, which is in crisis due to the irresponsibility of Trenton politicians, by now increasing the gas tax 23 cents. That is 164 percent. This increase will also significantly raise the cost of numerous products and services New Jerseyans buy every single day,” Ciattarelli said.

“The new TTF deal is also terribly flawed,” he continued. “For example, a retired couple making $100,000 in annual retirement income will pay no income tax, but a middle class couple with two kids making $80,000 annually will pay income tax?  Where’s the social and economic justice in that?  Only in Trenton.”

Senate President Stephen Sweeney (D-Gloucester) and Assembly Speaker Vincent Prieto (D-Hudson) on Friday delivered the latest proposal to Christie.

Lawmakers are under pressure to produce a new funding plan for the Transportation Trust Fund, which will run out of money in a few weeks. Christie ordered a halt to all construction projects statewide two weeks ago, shutting down $3.5 billion in projects; there is about $3.5 billion available available for emergency repairs.

Christie, who had earlier struck a deal with Prieto to raise the gas tax by 23 cents a gallon in exchange for cutting the 7 percent sales tax to 6 percent, said this plan doesn't cut taxes enough. 

“I proposed a significant plan for tax fairness, one that included a reduced sales tax and retirement income tax cuts to offset any increase in the gas tax. The Assembly overwhelmingly approved that plan,” Christie said. “The Democrat Senate responded by doing what Democrats always do on taxes: impose an immediate massive tax hike with a promise of future tax relief long after I am out of office. It is unfortunate that Speaker Prieto has now given in to this failed approach.

“As I have said for two years, any solution for a Transportation Trust Fund must have as its foundation tax fairness. This proposal does not. Hopefully when they return to New Jersey after the Democrat National Convention in Philadelphia, the Democrats will put forward a plan consistent with that principle.”

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