Three months after ordering a shutdown of most New Jersey road and transit projects, Republican Gov. Chris Christie and leaders of the legislature's Democratic majorities forged an agreement to fund the state's Transportation Trust Fund through a gas tax hike.
Christie announced late Friday with Senate President Steve Sweeney, D-Gloucester, and Assembly Speaker Vincent Prieto, D-Secaucus, a plan to fund the TTF for eight years at $2 billion annually by raising the state's gas tax by 23 cents a gallon.
The proposal, which still needs to pass both houses of the state legislature, would also phase out the state's estate tax over the next 15 months and cut the sales tax to 6.625% from 7% by 2018. The TTF had last been authorized at $1.6 billion annually in 2012 and Christie noted that eight years will mark the fund's longest authorization period since it was formed in 1984.
"When we combine the funds that will be contributed by the state and the funds that will be contributed by the federal government that over $32 billion will be invested in infrastructure improvements and modernizations in the state of New Jersey over the next eight years," said Christie in a late Friday press conference. "That will be good for the state's economy; that will be good for the citizens of our state."
Christie ordered a halt in early July to $3.5 billion of transportation projects paid for by the TTF after lawmakers failed to reach agreement on a plan to replenish the fund following the June 30 expiration.
The governor then issued an executive order in mid-August for state officials to utilize money from the general fund for "essential" projects when the TTF was days away from exhausting its available funds.
Christie initially pushed for a full 1% cut in the sales tax, but ran into opposition from Sweeney because of concerns that it would cost the state at least $1.7 billion in yearly revenue.
In addition to eliminating the estate tax and cutting the sales tax by 0.37%, the proposal would provide tax savings for the working poor and veterans. The tax cuts would lead to an estimated $164 million drop in taxes for 2017 and $1.4 billion in 2021 once fully phased, according to Christie.
New Jersey, which last raised its gas tax in 1988, currently has the second lowest gas taxes in the nation with only Alaska at a lower rate.
The plan would increase the gas tax to 37.5 cents a gallon if approved. New Jersey voters will decide on Nov. 8 whether to approve a constitutional amendment that if approved would mandate gas tax revenues be dedicated solely to the TTF.
Friday's TTF deal announcement occurred a day after a New Jersey Transit train crashed into the Hoboken, N.J. terminal killing one person, which put transportation infrastructure funding in the spotlight. Christie's summer freeze on TTF projects included $2.7 million allocated for NJ Transit. Investigators have not yet announced what caused the deadly accident.
New Jersey has the second lowest credit rating of the U.S. states at A2 from Moody's Investors Service and A from S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency due largely to a rising unfunded pension burden.
