N.J. Assembly Passes Christie-Backed 23-Cent Gas Tax Hike

UPDATE: Senate Democrats said a vote will not happen during the legislative body's session on Thursday, but talks are continuing. Read more: N.J. Senate Delays Gas Tax Hike Vote Past Thursday.

ORIGINAL STORY: The New Jersey Assembly passed a 23-cent gas tax hike overnight that Gov. Chris Christie is set to sign by Friday - if he can get the measure passed by the Senate.

The Democrat-led Assembly passed the Christie-backed legislation to hike the state's gasoline tax by 23 cents per gallon, while cutting the sales tax from 7 to 6 percent.

Motorists could see the hikes take effect by Friday. The state's gas tax would increase from 14.5 cents per gallon to 37.5 cents per gallon under the plan.

One hurdle remains, however. The Senate plans to vote on the plan Thursday, and lawmakers in the upper chamber say they prefer a proposal that would gradually phase out the state estate tax.

That cut would cost about $120 million next fiscal year and $512 million by fiscal 2021, according to lawmakers.

Read more: Christie Defends 23-Cent Gas Tax Hike, Saying 'We're Out Of Money' [VIDEO]

New Jersey's gas price average, meanwhile, was at $2.10 Wednesday, according to AAA Mid-Atlantic.

The vote early Tuesday came after a day of backroom talks between Christie and legislative leaders such as Assembly Speaker Vincent Prieto, according to lawmakers.

Observers said the bill came as a bit of a surprise since there were no experts who testified, and no committee held a hearing on the plan. A bill wasn't even ready until shortly before it was voted on at 12:30 a.m.

Christie, in a statement, highlighted the sales-tax-cut portion of the proposal, saying he was “pleased that the Assembly has heeded my suggestion for tax fairness, which I have been calling for for a long time."

"This is the first broad-based tax cut for all New Jerseyans since 1994," he said. "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."

The Senate must now vote on the plan to fund the state's Transportation Trust Fund at $2 billion a year over the next eight years, a fund which is supposed to go bankrupt by Friday.

The TTF pays for capital reconstruction and repair of roads and bridges, many of which have fallen into disrepair over the past 20 years.

In a 2006 state study, more than half of the state's drawbridges received low safety ratings. The 84-year-old Pulaski Skyway, whose design is considered unsafe, is currently being repaired and replaced. The $1.5 billion project is expected to be completed by 2020.

Prieto, a Democrat from Hudson, said the legislative package would restore funding to New Jersey’s beleaguered Transportation Trust Fund and reduce the state’s regressive sales tax.

The TTF, once regarded as a national model for transportation finance, will run out of money on July 1. The amended legislative package, sponsored by Prieto, sets out an eight-year, $16 billion capital transportation program for the state’s highway and rail infrastructure.

The bills for the hike and sales tax cut were A-10, which passed the Assembly 54 to 22, and A-12, which passed 53 to 23. This would be the biggest addition of revenue to the TTF since 1988.

“We’ve negotiated a new bill for our Transportation Trust Fund," Prieto said. “The bill that we had, we were having difficulties getting support for it as a bipartisan bill. The governor wouldn’t sign it.

“And this bill that we have today is a much better bill," he said. “In talking with the governor, this is a bill that he would sign.

Not everyone was happy with the increase. Republican Assemblyman Jay Webber, from Morris, said all Trenton lawmakers did "was pave New Jersey's road to higher taxes."

"This State Street deal is an instant $850 million tax hike on overtaxed Main Street New Jerseyans, with as much as $4.8 billion more in tax hikes coming in the next few years," he said. "And it doesn't offer taxpayers their money back until five years from now, if it ever comes back at all.

"We have a serious problem and have to fix the Transportation Trust Fund," he added. "But New Jersey's biggest problem is our crushing tax burden, and any 'deal', like this one, that makes the tax burden worse, is just a raw deal for New Jersey."

The Sierra Club, which has pushed for replenishing of the TTF, also blasted the deal.

"This version of the bill mentions rolling back the sales tax from 7 cents to 6 cents eventually. This would make a $700 million in the budget," said Jeff Tittel, director of the New Jersey Sierra Club."

Instead of getting transportation moving, Tittel said, "we’re creating more problems, especially for the middle class. These cuts will threaten important programs for everyday people from education to environment."

"We support funding the Transportation Trust Fund, but not at the expense of other important programs," he said. "This bill sells out New Jersey's future. it is irresponsible and will blow a huge hole in the next budget, tying the hands of the next governor."

Laurie Ehlbeck, N.J. director for the National Federation of Independent Business, said her members are "frustrated" and "fed up" with the plan.

"Instead of focusing on making sweeping structural changes to our Transportation Trust Fund that would reduce costs and solve our funding issues for the long term, lawmakers played their favorite card and raised the only tax in the state that doesn’t break national records," she said in a statement.

"What happened last night to the small business sector, as well as taxpayers throughout our state should not be underestimated," she said. "Our elected officials took a giant economic step backwards last night and demonstrated that they lack the imagination or the creativity necessary to turn this state around."