NJ’s Gas Tax Hike Hits Snag as It’s Supposed to Take Effect

Gas prices are seen at gas stations in downtown Newark, N.J., Tuesday, June 28, 2016. (AP Photo/Julio Cortez)
Gas prices are seen at gas stations in downtown Newark, N.J., Tuesday. (AP Photo/Julio Cortez)

New Jersey’s fund for road, bridge and transit work inched closer to running dry Thursday after the Democrat-led Senate scrapped any votes on Gov. Christie’s plan to hike the gas tax by 23 cents while cutting the sales tax.

Senate President Steve Sweeney said there just isn’t enough support among senators for a deal backed by Christie and passed Tuesday in the Democrat-led Assembly. That measure would provide for an eight-year plan at $2 billion per year, financed by a 23 cent tax hike on fuel. It would be offset by cutting the sales tax from 7 percent to 6.5 percent in 2017 and to 6 percent in 2018.

“The Senate just doesn’t agree with the Assembly’s bill,” Sweeney said. “The Senate feels it’s too expensive.”

Sweeney and a bipartisan coalition of lawmakers had backed a separate deal that included an identical gas tax hike. But, unlike the Assembly plan, that deal would have phased out the estate tax and also established a charitable tax deduction, among other changes.

The Assembly plan could cost the $35 billion state budget nearly $2 billion in lost sales tax revenue, while the Senate plan clocked in at under $1 billion in lost revenue because of the tax cuts.

Christie, who proposed the legislation that passed the Assembly, said the plan meets his tax fairness test, because it cuts about the same as it raises in new taxes. Both plans call for raising the retirement income threshold to help pensioners.

Democratic Assembly Speaker Vincent Prieto said it’s urgent for Sweeney and Christie to agree soon and that he’s open to meeting with them. But, he said, there are not enough votes to override Christie on the original Senate bill, which the governor said he would not sign.

“I need a bill that the governor will sign,” Prieto said.

The Senate’s stall comes after Sweeney advocated for more than a year for the transportation trust fund to be replenished, only to see his plan put on the back burner and for him to argue that Friday’s deadline isn’t so dire after all.

The current five-year, $1.6 billion plan runs out of authority for new borrowing on Friday. The funds coming into the account cover debt payments while new projects are financed through more borrowing.

Construction projects won’t stop come Friday and there likely is enough cash to take the current fund through August, Sweeney said. The Christie administration had earlier said the same.