AASHTO Journal

NJ Leaders Agree to Hike Fuel Fees for Transportation Fund, Cut Other Taxes

Gov. Chris Christie and New Jersey legislative leaders announced an accord that will raise motor fuel taxes by 23 cents a gallon to fund a $2 billion annual Transportation Trust Fund program over the next eight years – $16 billion in all – while cutting a number of other taxes on state residents.

That cleared the way for the Legislature to end a months-long standoff, during which the trust fund's revenue stream dried up and Christie ordered a halt in July to hundreds of state transit and roadway projects while limiting the fund's scant remaining resources to projects deemed critical.

The agreement also came at the end of a week that saw a deadly NJ Transit accident when a train crashed into the Hoboken station at a high speed, killing one and injuring more than 100.

dollarpump.jpgChristie announced the accord Sept. 30 with Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto, saying it will cut taxes for every New Jersey resident even as it fixes the state's transportation fund.  

Christie said the eight-year TTF funding measure "will be the longest reauthorization for the Transportation Trust Fund in its history" and its largest ever. When combined with federal funding, Christie said, "over $32 billion will be invested in infrastructure improvements and modernizations in the state of New Jersey over the next eight years."

Both houses of the Legislature convened in special session starting Oct. 5 to approve the deal, which could quickly raise New Jersey pump prices as the new excise tax level kicks in. The state has not raised that tax since 1988, and this increase comes after several years of falling pump prices nationwide.

The Senate approved the package the afternoon of Oct. 7, and the General Assembly was expected to approve it soon after.

Sweeney told reporters the fuel tax hike will still leave New Jersey with the lowest gasoline tax in the region.

And when counting the tax cuts in the accord, "the average New Jersey family will see annual net savings of several hundred or thousands of dollars in taxes and repairs," the governor's announcement said.

"I am pleased to present a plan that represents tax fairness for the residents of New Jersey," Christie said. "This is the first broad-based tax cut for all New Jerseyans since 1994, which is much needed. At the same time we are going to have constitutionally dedicated revenue to improve roads, bridges and the mass transit systems in the state."

Christie said he would ask voters in November to approve a constitutional amendment that would require gas tax revenues to be dedicated to transportation projects, Reuters reported.

The announcement said: "New Jersey families will see broad-based tax cuts that exceed the dedicated gas tax increases." And with the infrastructure improvements the plan will fund, "the average New Jersey driver will see a potential reduction of an estimated $600" a year, it said, which is the estimated average cost of vehicle repairs caused by bad road conditions.

The plan includes a Jan. 1 cut in the state sales tax from 7 percent now to 6.875, followed by a further cut a year later to 6.625 percent.

In addition, starting with the current tax year New Jersey will increase the earned income tax credit for the working poor. The plan will increase the state's gross income tax exclusion on pension and retirement income over four years, phase out the estate tax over the next 15 months and provide a personal exemption on state income taxes for all honorably discharged veterans.

Questions regarding this article may be directed to editor@aashtojournal.org.

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