Fight brewing over higher N.J. gas tax

TRENTON - Gov. Christie on Monday suggested that he wasn't ready to support a proposal to revise New Jersey tax policy, including a hefty gas tax hike and phaseout of a levy on estates of the deceased.

His remarks came as a coalition of Democratic and Republican lawmakers - backed by organized labor, business, and other groups - heralded the plan as game-changing legislation that would fund critical investments in roads and bridges while also saving taxpayers about $1 billion annually through other policy changes.

The legislation would increase a tax credit for the working poor, increase a tax exemption for retirement income such as pensions and 401(k)s for seniors with $100,000 or less in annual income, and add a charitable contribution exemption to the state's income tax.

It would effectively more than double the state's tax on gasoline - the second lowest in the country - from 14.5 cents to 37.5 cents per gallon.

"I've said all along: I will not sign a gas-tax increase unless it represents tax fairness for the people of New Jersey," Christie, a Republican, said Monday at the Morris County Chamber of Commerce. Lawmakers have "work to do," he said.

Christie said there were not "nearly enough" tax reductions in the plan, called for an expedited estate tax phaseout so it is fully repealed by the time he leaves office in 2018, and accused lawmakers of wanting to increase municipal aid for transportation projects "to protect their political backsides."

At a Statehouse news conference, Senate President Stephen Sweeney (D., Gloucester) responded, "He should offer up a plan."

The legislation, announced Friday, is supported by Sweeney, Assembly Majority Leader Louis D. Greenwald (D., Camden), and other top Democratic lawmakers, as well as at least two Republicans, Sen. Steve Oroho of Sussex County and Sen. Joe Kyrillos of Monmouth County. They were joined Monday by Jamie Fox, a Democrat and Christie's former transportation commissioner, who praised the plan.

Speaking at the news conference Monday, Kyrillos described the proposal as "maybe the most significant legislative package" in Trenton of the last 15 to 20 years, arguing, among other things, that it would reduce the number of people moving out of state to avoid high taxes.

Currently, all gas tax revenues are used to pay debt on bonds, a consequence of the state's reliance on borrowing to pay for road, bridge, and rail maintenance.

That has forced the state to redirect about $550 million annually from the general fund to the Transportation Trust Fund, Oroho said.

The fund was created in 1984 by Gov. Thomas H. Kean to provide a stable and secure funding source for infrastructure projects. But over time the state has eschewed pay-as-you-go financing for borrowing. It will hit its statutory borrowing limit this summer.

Under the legislation, new gas tax revenues would go to the Transportation Trust Fund. A question on November's ballot will ask voters to amend the constitution to ensure gas tax revenues for transportation.

Supporters of the legislative package say that new dedicated revenue for transportation will add jobs and boost the economy, while also giving lawmakers the chance to reduce other taxes. About one-third of the gas tax is paid for by out-of-state motorists, according to the consumer group AAA.

Lawmakers say the 10-year, $20 billion plan would help pay for a long-awaited light rail from Camden to Glassboro.

In addition to Christie's skepticism, another potential political hurdle may be winning the support of Assembly Speaker Vincent Prieto (D., Hudson).

He released a plan on Friday that was similar to Sweeney's, but the two have clashed all year, most notably on legislation to help Atlantic City stabilize its finances.

"I've been discussing the need for replenished transportation funding for more than two years, so I'm very pleased to finally see this progress," Prieto said in a statement Monday. "As I've said, I look forward to working with Minority Leader [Jon] Bramnick, the Assembly Democratic caucus, and the Senate on devising legislation that we can get to the governor's desk by month's end."

New Jersey and Maryland are the only states that tax both estates and inheritances. A New Jersey estate is exempt from taxation up to $675,000, the lowest among the 16 states that impose the levy.

About 5 percent of deaths in the Garden State result in an estate-tax liability, according to the nonpartisan Office of Legislative Services.

The plan discussed Monday would phase out the tax over three years. It also would increase the Earned Income Tax Credit for the working poor from 30 percent of the federal benefit to 40 percent. A married couple filing jointly who have two children and earn less than $49,974 could save $5,548 through the federal credit, according to the IRS, plus an additional $2,219 through the state credit.

In addition to raising the gas tax, the legislation would impose annual fees on electric cars and tax jet fuel.

aseidman@phillynews.com 856-779-3846

@AndrewSeidman