An effort at the New Jersey statehouse to link a proposed 23-cent fuel tax rate increase to tax breaks received a huge boost overnight. The effort is underway to shore up the state’s Transportation Trust Fund for the next eight years.
Assembly Speaker Vincent Prieto, D-Hudson, worked out a deal with Gov. Chris Christie to raise $2 billion annually for repairing and maintaining roads and bridges. The $1.6 billion trust fund, which relies largely on revenue derived from the state’s gas and diesel taxes, is set to run out of money by July 1.
Currently, the 14.5-cent per gallon gas tax includes a 10.5-cent motor fuels tax and a 4-cent petroleum products gross receipts tax. The diesel rate is set at 17.5 cents per gallon.
In fiscal year 2016 the fuel taxes are estimated to raise $541 million. The tax on the gross receipts of the petroleum products is expected to raise $215 million.
The Assembly plan approved early Tuesday and forwarded to the Senate would increase the tax rates to 37.5 cents for gas and to 40.5 cents for diesel, respectively, to raise about $1.4 billion annually and also help finance road and bridge work.
To help ease the burden of a more than doubling the state fuel tax rates, the Assembly-approved plan would restructure the state’s tax code. Specifically, the state’s 7 percent sales tax would be cut by one penny over the next two years.
The state income tax would also be cut for retirement income.
In all, legislative estimates show the tax reductions would balance out the fuel tax increase.
The two-bill package, A10 and A12, now moves to the Senate where a similar bipartisan effort includes elimination of the state income taxes paid by most retirees and abolishing the estate tax. A new state income tax deduction would also be created for giving to charities. The earned income tax credit would also be increased.
Christie is opposed to the Senate version, which sparked negotiations with Assembly leaders to instead adopt a sales tax cut.
The Republican governor said he is pleased that the Democrat-led Assembly heeded his suggestion for tax fairness.
“This is the first broad-based tax cut for all New Jerseyans since 1994,” Christie said in a released statement. “It is much-needed while at the same time we are going to have constitutionally dedicated revenue to improve roads, bridges and the mass transit systems in the state.”
Prieto said the Assembly-approved bill helps everybody across the board.
“We will put money into the hands of the people who need it the most so it will be able to have an economic impact a lot quicker than the (Senate effort),” Prieto said in prepared remarks.
Critics say the state cannot afford to offer tax cuts. Assembly Transportation Committee Chairman John Wisniewski, D-Middlesex, said the proposal would put the state into an even bigger budget hole.
Others, including Sen. Ray Lesniak, D-Union, have voiced concern about what the tax cuts would do to the state’s credit rating.
Sen. Jennifer Beck, R-Monmouth, has offered an alternative to a fuel tax increase and other tax cuts. Her seven-year, $1.6 billion transportation funding proposal would rely on borrowing, use existing revenue available in the state’s general fund, and merge transportation agencies to save money.
Christie said he will spend the next three days working with the Democrat-led Senate to “bring this issue to a successful conclusion” before the July 1 deadline.
If signed into law, the 23-cent fuel tax rate increase could take effect on Friday.
By Keith Goble, Land Line state legislative editor
http://www.landlinemag.com
By Keith Goble, Land Line state legislative editor
http://www.landlinemag.com
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