TRENTON, NJ – Gov. Chris Christie has shut down state-funded highway construction projects effective Saturday, July 2 after the state Senate balked at an Assembly plan backed by Christie that would have increased the state’s gasoline tax by 23-cents per gallon, money that would used to replenish the state’s battered Transportation Trust Fund.
Without a new source of revenue, the fund will run out of money by mid-August. Federally-funded projects will not be affected by Christie’s order.
New Jersey’s 14.5 gas tax is the second lowest in the nation’ the increase to 37.5 cents would make it the seventh highest.
The Assembly plan has two major components: the gas tax increase, and an agreement to reduce the state’s sales tax from seven to six percent over an 18-month period. It would also raise the retirement income tax threshold.
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 Christie.
The Assembly voted 53-23 in favor of the sales tax cut.
The Senate plan seeks broader tax reductions in return for support of a gas tax increase – elimination of the estate tax, bigger deductions for charitable giving, an expanded a tax credit for the working poor similar to the Assembly plan, an increase in the retirement income tax exclusion.
The Senate version would also phase in the gas tax increase over an unspecified period of time.
“I can’t support a 23-cent increase all at one time,” said State Sen. Christopher “Kip Bateman” R-Somerset, Hunterdon, Mercer, Middlesex. “It’s not fair to the public.
“I’ll take a look at it if it’s more gradual; most of the Senate feels it is too much to ask for all at once.
“The Assembly stripped out all the good elements of the original bill,” he added.
Senate President Stephen Sweeney, D-Gloucester, sent his colleagues home early Thursday afternoon when it became clear a compromise could not be worked out.
“There’s very little support for the Assembly version.” Bateman said. “Steve Sweeney decided to adjourn and said ‘we’ll talk about it in the future.’ ‘’
Bateman said Senate committees are scheduled to return to Trenton for conferences on July 14.
“It’s possible, though, that we could get called back next week,” he said Friday, if Christie, Sweeney and Assembly Speaker Pietro can find common round in the next two weeks.
“They’ll be trying to come up with a compromise,” Bateman added.”They have a little bit of work ahead of them.”
Prieto signaled a willingness to compromise in a statement released by his office on Friday.
“We all know we need a transportation funding plan the governor will sign and we need it as soon as possible,” Prieto said. “This is too important for jobs — especially in our construction industry — and our economy to allow this to continue.”
Christie issued an executive order to halt all state-funded construction projects after a meeting with Sweeney late Thursday.
“Senate Democrats are clearly conflicted over how to appease their public and private-sector union masters, because their union masters also are divided over the bipartisan tax fairness solution that passed the Assembly. The Senate’s inaction ignored the benefits the package would bring to the overburdened taxpayers of New Jersey, who would benefit daily from the sales tax cut it would provide and the retirement income tax elimination for 81 percent of senior citizens,” Christie said.
“The Senate’s inaction also ignored New Jersey’s necessary transportation infrastructure improvements, as well as the hundreds of private-sector workers who came to Trenton today with their jobs hanging in the balance, because the Senate failed to re-authorize this Transportation Trust,” Christie said.
“As Governor, I am entrusted with the responsibility to protect the health, safety, and welfare of the citizens of this State, as well as the responsibility to aid in the prevention of damage, loss, or destruction of property in the event of emergencies affecting the State. As this executive order states, in order to protect the health, safety, and welfare of the citizens of this State, it is necessary that the remaining amounts held by the TTF not be spent on any transportation project that is not absolutely essential,” he added.
Critics of the Assembly plan say the trade-offs will cost the state $2 billion annually in revenues, money the state can ill afford to lose.
Assemblyman Jack Ciatttarelli, R-16th, whose district includes Somerset County and other central New Jersey counties voted against the Assembly verison earlier this week.
“We’re decreasing a tax that affects all New Jerseyans to justify increasing a tax that affects all New Jerseyans,” Ciattarelli said. “The trade-off seems like a shell game. Factor in our structural budget deficits, I voted ‘no.’ Fiscally speaking, I fear we’re only digging a deeper and deeper hole, the sides of which could soon cave in,” he added.
Opponents and supporters of the gas tax increase also had their say, flooding the internet with their conflicting viewpoints throughout the week:
- New Jersey Business & Industry Association: “The bill approved by the Assembly early Tuesday morning did not contain a phase-out of the estate tax and, therefore, does not provide the comprehensive reform that NJBIA continues to call for. NJBIA continues to strongly support estate tax relief. It is a common misconception that the estate tax only benefits the wealthy. In fact, the estate tax has a broad impact on the state’s economy and business succession planning, particularly for family-owned businesses.”
- Americans for Prosperity: “Today was a historical day in Trenton as the public’s outcry has been heard. With today’s impasse in the Legislature, we look to the lawmakers to go back to the drawing board to craft a better transportation plan for taxpayers and enact cost-cutting reforms and real tax relief for New Jerseyans. AFP thanks our hard-working citizen-activists and principled legislators who have stood up for residents.”
- National Federation of Independent Business: “A one percent reduction in the sales tax slowly phased in over 18 months will barely be noticeable to tax payers and will do nothing to offset the drastic increase in the gas tax that will immediately impact anyone in New Jersey buying gas. Elected officials on both sides of the aisle have failed to address the fundamental issues that exist with funding infrastructure improvements in our state and until they are willing to tackle the larger scale issues, our state economy will continue to suffer as our politicians pave the streets of Trenton with more and more poorly spent tax dollars.”
·- Forward New Jersey: “The TTF goes bankrupt tomorrow. After days, weeks, months, years, we have officially reached the end of the line. It is highly disappointing that today came and went with no compromise, as it would have spared New Jerseyans the problems we are about to encounter. After weeks of enormous progress, what has happened these last few days is incredibly disappointing. Every day of inaction threatens thousands of jobs, the economic vitality of our state, cheapens the image of New Jersey and, most importantly, compromises the safety and well-being of millions of New Jersey residents. This cannot be allowed to lag on. The TTF is being hijacked over a debate on which taxes to cut, all of which would be beneficial to the people of New Jersey We need a resolution to the issue and leadership should work every second of every day to get this done.”
·- Engineers Labor-Employer Cooperative: “If we go past today without a plan to replenish the fund, projects to repair and maintain roads and bridges throughout the state will come to a halt, posing an immediate safety hazard to New Jersey residents. There will be absolutely no funds to maintain the 596 “structurally deficient” or 1,714 “functionally obsolete” bridges throughout the state.”