Sweeney, Prieto agree on gas tax; deal omits sales tax cut Christie wants

New Jersey's top two Democrats say they have reached an agreement to replenish the state's fund for road and bridge repairs by raising the gas tax, possibly breaking a political impasse that has brought construction on transportation projects to a halt.

Senate President Stephen Sweeney (D., Gloucester) and Assembly Speaker Vincent Prieto (D., Hudson) announced a plan Friday to more than double the gas tax to 37.5 cents per gallon while also cutting taxes on estates and retirement income for seniors, and boosting a tax credit for the working poor.

The state's 14.5-cent-per-gallon tax on gasoline is the second-lowest in the country.

The plan would allocate $2 billion annually for at least eight years to the nearly depleted Transportation Trust Fund, which finances road, bridge, and rail maintenance and projects. It would include a mix of cash and borrowing to invest in infrastructure.

The plan closely mirrors legislation the Democratic-controlled Legislature had advanced in June, before Gov. Christie offered a last-minute proposal to raise the gas tax in exchange for a 1 percent reduction in the sales tax.

That cut, from 7 percent to 6 percent, was to take effect by the time Christie, a Republican, left office in January 2018. The Assembly passed that legislation, but the Senate balked, arguing that the sales tax reduction would open a gaping hole in the budget.

Christie then issued an executive order calling for a shutdown of all nonessential construction projects in the state financed by the fund, saying it was necessary for the safety and welfare of New Jersey residents.

Brian Murray, a spokesman for Christie, said Sweeney and Prieto had not shared "specific details of their joint proposal with the governor beyond the vague generalities contained in their news release."

If Christie receives more detailed information, Murray said, the governor will assess whether the plan "offers tax fairness to the people of New Jersey in the form of significant broad-based tax relief."

Democrats are not expecting the governor to support their plan, and will try to attract support from Republicans in the Legislature to build a veto-proof majority, according to people familiar with the strategy.

"With efforts to negotiate a compromise with the governor stalled, I'm pleased to reach this new compromise that will provide much-needed investment in our state's infrastructure and tax relief," Prieto said in a statement. "I will now look for a firm commitment of strong support from Assembly Republicans to keep our roads and bridges safe and workers on the job. This is too important for our economy."

Sweeney said he and the Senate Budget Committee would meet next week to vote on the plan.

The new Democratic plan provides an exemption of $3,000 in personal income taxes for veterans who have been honorably discharged from active service in the military or the National Guard.

It also includes an income tax deduction of up to $500 in gas taxes paid by New Jersey motorists earning as much as $100,000.

The plan would result in nearly $900 million in lost revenue annually by the time the tax cuts take full effect. However, the projected $1.2 billion in new gas tax revenue would allow lawmakers to reallocate some $350 million in general fund revenues currently used to help cover debt payments.

All current gas tax revenue goes toward debt service.

Supporters say that phasing out the estate tax will keep more wealthy residents from leaving New Jersey, stemming some of those losses. They also argue that the investment in infrastructure will add jobs and boost the economy.

The state's business community and influential building trades have been lobbying lawmakers for months to solve the funding crisis.

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@AndrewSeidman