Deal Set in New Jersey to Raise Gas Tax 23 Cents
01 October 2016 - 2:01AM
Dow Jones News
By Leslie Brody and Josh Barbanel
Republican Gov. Chris Christie reached a sweeping deal with
Democratic legislative leaders Friday that would boost gasoline
taxes by 23 cents a gallon while cutting sales taxes and eventually
eliminating the state's estate tax altogether.
He said all the additional gas-tax revenue would go toward
fixing the state's roads and bridges.
The agreement still needs the approval of both houses of the
Legislature but it signals what is likely to be a significant shift
in the state's tax system and a step toward fixing the state's
infrastructure. It would result in a $2 billion a year
reauthorization of the Transportation Trust Fund, which funds
highway repairs and provides capital funding for the NJ Transit
rail system over the next eight years.
Political observers said it was no coincidence the deal came a
day after an NJ Transit train crashed into the Hoboken terminal.
Causes of the crash are still under investigation. A state
Department of Transportation commissioner wrote a column saying,
"It is irresponsible for anyone to suggest possible causes, let
alone suggest safety-related or routine maintenance projects at the
station or approaching the station were affected by the shutdown of
Transportation Trust Fund (TTF) financing."
Mr. Christie, Democratic Senate President Stephen Sweeney, and
Democratic Assembly Speaker Vincent Prieto have spent months
sparring over the infrastructure-funding issue. Many commuters had
been frustrated by the impasse, especially after the governor
ordered a shutdown of nonessential transit projects including road
work when the trust fund authorization expired June 30.
Mr. Christie's office said the deal also phases out the estate
tax over the next 15 months. It cuts the sales tax, currently 7%,
to 6.875% in January, and down to 6.625% in 2018. The deal also
increases tax credits for the working poor, and creates a personal
income tax exemption for honorably discharged veterans.
Mr. Christie called the deal the "first broad-based tax cut" for
all New Jerseyans since 1994. His office estimated the gas tax
increase would cost the average resident between $186 and $276 a
year, but said the other tax cuts would more than offset that.
The current gasoline tax at the pump in New Jersey is 32.9 cents
a gallon, the second lowest in the nation after Alaska, according
to the American Petroleum Institute. That total includes 14.5 cents
in state taxes and 18.4 cents in federal taxes.
Mike Anderson, a financial trader who lives in Hawthorne, N.J.,
was shocked by the prospect of higher gas taxes. "It means the
price of gas went up by 15% in one day. That's ridiculous," he
said. Mr. Anderson added that he just moved to New Jersey from New
York over the summer. "I think I'd rather now live in New York, "
he said.
Mr. Prieto, the Assembly speaker, said the compromise would put
road work back on track.
Mr. Sweeney, the Senate president, said the deal would boost the
economy, bring investment into the state, and allow work on the
light-rail projects in Bergen, Hudson and Camden counties.
The question of how to fund road and bridge repairs has figured
in some of the pivotal decisions of Mr. Christie's governorship.
When the governor canceled a planned NJ Transit rail tunnel under
the Hudson River to Manhattan, citing rising cost estimates,
critics accused the administration of doing so in order to
replenish the highway fund without having to take the politically
risky step of raising the gas tax. Mr. Christie defended the
cancellation on the merits.
Tom Wright, president of the Regional Plan Association, a
think-tank that deals with infrastructure issues in the
metropolitan region, called the tax deal reached Friday "huge."
"It never should have taken this long," he said, noting that
critical project were put on hold in a state that relies on its
ports and transit systems for commerce. "Cutting funds for its
infrastructure projects was going to kill the state in the long
term."
He noted that New Jersey will still have lower gas prices than
neighbors, and much of the tax will be paid by out-of-state drives
traveling through.
--Charles Passy and Ted Mann contributed to this article.
Write to Leslie Brody at leslie.brody@wsj.com and Josh Barbanel
at josh.barbanel@wsj.com
(END) Dow Jones Newswires
September 30, 2016 20:46 ET (00:46 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.