In N.J. tax battle, a new script and circling lobbyists

For most of Gov. Christie's tenure, political theater in Trenton has followed a familiar pattern: Democrats, over Republicans' objections, raise taxes to fund New Jersey's pension plans for public employees. Christie vetoes the legislation, presenting himself as fiscally responsible.

Now the equation has changed. Facing pressure to replenish the state's empty fund for roads, bridges, and rail projects before the fiscal year ends June 30, some Democrats are questioning the wisdom of a proposal to raise the gas tax but cut other sources of revenue, and a handful of Republicans are supporting the idea.

Unions representing construction workers, hazardous waste handlers, engineers and others, which have donated millions of dollars to both parties in recent years, are lobbying lawmakers and other state officials to push for a solution.

Business organizations such as the New Jersey Chamber of Commerce and the Business and Industry Association also are lining up behind the emerging plan.

The package includes a headline-grabbing 23-cent gas tax hike, pleasing Democrats who want a robust transportation network they say will help the economy - and provide thousands of jobs to their union allies.

Some Republicans are cringing at the prospect of more than doubling the state's 14.5 cent-a-gallon tax on gasoline - the second lowest in the nation - though others agree with the economic argument. The plan would allocate $2 billion annually for a decade to the Transportation Trust Fund, which now has only enough money to pay for debt.

"This takes a long-term view to fix a very significant problem that has been happening for at least more than a decade," State Sen. Steve Oroho (R., Sussex) said last week.

What's attractive in the package to more Republicans is a proposed phaseout of New Jersey's tax on certain estates of the deceased. The proposal "will retain and attract capital to New Jersey," Oroho said. "That's what it's all about."

Yet some Republican legislators say the repeal of the estate tax - as well as an increased exemption for certain seniors' retirement income, a bigger tax credit for the working poor, and a new charitable contribution exemption from the income tax - would not provide enough relief to taxpayers to justify the higher gas levy.

"Any proposal that increases the tax burden on New Jerseyans is a nonstarter," said Assemblyman Jay Webber (R., Morris). "If there's something that can be revenue-neutral or better, I'll consider it, but it has to be also paired with cost savings and efficiencies in the way in which we build our roads."

"Right now, some of the proposals are limited to certain populations, and I'm certainly looking for an expansion of that" tax relief, said Assemblyman Scott Rumana (R., Passaic).

Some Democrats say they're concerned that eliminating the estate tax, which is expected to collect about $425 million in revenue for the fiscal year that begins July 1, would exacerbate income inequality.

It would be particularly pernicious, they say, given that the gas tax is regressive - everyone pays the same amount, and it therefore hits low-income people the hardest - whereas the estate tax affects only the state's wealthiest families. There were about 3,500 estate-tax filings in fiscal year 2014, the most recent year for which data were available, according to the nonpartisan Office of Legislative Services.

Christie, a Republican, says the plan as currently constituted doesn't represent "tax fairness" for New Jersey residents but didn't specify what needs to change.

"As you know, at the end of any session, miracles happen," Christie told reporters Thursday. "Everybody starts to focus and get to work down the hall."

Negotiations are ongoing, and lawmakers face pressure from various interest groups to reach an accord.

The public-relations push in favor of the legislation is being led by a group called Forward NJ, a coalition of labor and business organizations. Heading the group's communications strategy is Kivvit, a public-affairs firm whose managing partner is Maggie Moran, a veteran Democratic strategist.

Forward NJ spent about $980,000 on cable TV, radio, internet, phone, and billboard advertising in 2014-15, the most recent records show.

It received the bulk of its money from groups tied to the New Jersey Laborers Union and the International Union of Operating Engineers.

The laborers union, along with its political action committee and other affiliates, has donated $3.7 million to Democrats and Republicans in state and local government since 2013, a review of campaign-finance records shows.

The New Jersey Laborers-Employers Cooperation and Education Trust, a labor-management cooperative affiliated with the laborers union, lobbied state government in the first quarter of 2016 to promote the dedication of funding to the Transportation Trust Fund, public records show.

Another Forward NJ donor, Engineers Labor-Employer Cooperative Local 825, is an affiliate of the International Union of Operating Engineers. Groups tied to the union have donated $2.5 million to both parties since 2013, records show.

Other groups that have lobbied legislative and executive branch officials this year in favor of replenishing the trust fund include the Associated Construction Contractors of New Jersey, whose PAC has contributed $126,950 to both parties since 2013; the Utility and Transportation Contractors Association of New Jersey, which has donated $31,850 to political parties, state and local lawmakers over the last decade; and the state AFL-CIO.

Representatives of the engineers and laborers unions appeared at a news conference Thursday in Trenton, where lawmakers unveiled the American Society of Civil Engineers' 2016 report card for New Jersey's infrastructure. It received a D+.

The organization assesses the nation's roads, bridges, energy, dams, and other infrastructure every four years.

Robert A. Briant Jr., CEO of the Utility and Transportation Contractors Association, described the report card as "alarming."

"Our transportation system is on fire, and that's the fire bell," he said, pointing to the report card.

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@AndrewSeidman