N.J. Lawmakers Agree To New 23-Cent Gas Tax Hike Plan

New Jersey lawmakers say they've agreed to a new 23-cent gas tax hike plan that wouldn't include a sales tax cut, as Gov. Chris Christie wanted.

Senate and Assembly leaders say the dedicated revenue would generate $1.2 billion annually, which would support $2 billion in infrastructure investments each year and replenish the Transportation Trust Fund that is supposed to run empty by August.

They also hope to restart projects that were effectively shut down by Christie earlier this month when Senate lawmakers passed on his own 23-cent per-gallon gas tax hike plan. Christie reached an agreement with Assembly leaders to cut the sales tax by 1 percent.

Read more: $3.5B In N.J. Road Projects To Shut Down Friday: See The List Here

Christie’s press secretary Brian Murray released a statement, saying:

“The Senate President and the Assembly Speaker must be more interested in publicly pretending that they have accomplished something on TTF before they go off to the Democratic convention rather than actually accomplishing something. They have not shared the specific details of their joint proposal with the governor beyond the vague generalities contained in their press release.

"The governor will review those specifics if he receives them from Senator Sweeney and Speaker Prieto. Only then can he determine if their plan to fund the TTF with an increased gas tax offers tax fairness to the people of New Jersey in the form of significant broad-based tax relief.”

Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto on Friday said the new plan to fund the Transportation Trust Fund would include a series of tax cuts designed "to make New Jersey more competitive."

“We have an agreement on a plan that is needed to address the state’s critical transportation needs at the same time it provides targeted tax savings for retirees, the working poor and middle class families,” said Sweeney.

The new plan includes these tax cuts:

• An increase of the "Earned Income Tax Credit" for the working poor to 40 percent of the federal benefit amount, beginning in 2016. Total tax savings of $137 million annually would be expected.
• An increase of the New Jersey gross income tax exclusion on pension and retirement income over four years to $100,000 for joint filers, $75,000 for individuals and $50,000 for married/filing separately.
• Phase out the estate tax over three and a half years, replacing the current $675,000 threshold with a $2 million exclusion after Jan. 1, 2017, and then phased in after that.
• Provide an annual income tax deduction of up to $500 in state gas taxes paid for all New Jersey motorists with incomes up to $100,000.
• Provide a $3,000 personal exemption on state income taxes for all New Jersey veterans honorably discharged from active service in the military or the National Guard. Total tax savings of $23 million annually would be expected.

“This is a bipartisan plan that supports a $2 billion a year Transportation Trust Fund and provides affordable tax cuts that will allow us to meet the state’s pension obligations without creating a fiscal crisis," Sweeney said in a statement. "This is an investment plan that will create jobs and support immediate and long-term economic growth.”

Prieto noted that the the Assembly, with Christie's blessing, acted to fund transportation, "but this stalemate cannot continue."

“As I’ve been saying for more than two years, New Jersey needs a viable Transportation Trust Fund or we risk economic disaster," he said. "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."

Sweeney said that he is calling in the Senate Budget and Appropriations Committee to convene next week to amend the bill passed by the Assembly at the end of June to reflect the new plan.

The agreement includes a 12.5 percent increase in the Petroleum Products Gross Receipts Tax, a 4-cent diesel surcharge and a 7 percent tax on non-motor-fuel petroleum products to fund the TTF. The new gas tax revenue would cover old debt payments, freeing up $347 million from the general fund for other needs, according to lawmakers.

The plan also includes five tax cuts worked out over the past several months during ongoing negotiations involving Democratic and Republican lawmakers from both the Senate and the Assembly. The plan does not include any changes in jet fuel taxation.