Print Page   |   Sign In   |   Register
News & Press: Recent News

Is There a Bi-Partisan Light at the End of the Transit-Funding Tunnel?

Monday, June 13, 2016   (0 Comments)
Share | 06/13/16

The Transportation Trust Fund renewal initiative unveiled by state Sens. Paul Sarlo (D-Bergen) and Steve Oroho (R-Sussex) on Friday would replace a five-year, $8 billion finance plan that expires at the end of the month with a more ambitious 10-year, $20 billion plan that would take effect on July 1. Both senators said their plan would mean upgrading the state’s crumbling roads and bridges while also adding to the infrastructure by expanding light rail into Bergen and Gloucester counties. The transportation spending is also intended to provide a boost to the state’s economy and keep local governments from being forced to raise property taxes to pay for road and bridge maintenance. The plan would be funded with a blend of revenue raised from borrowing and from a set of proposed fuel-tax hikes that, though largely levied at the wholesale level, would likely result in the state’s current, 14.5-cent per-gallon gas tax increasing to 37.5 cents per-gallon. Jet-fuel taxes would also go up, and all of the new revenue from the fuel-tax hikes -- an estimated $1.36 billion annually -- would be constitutionally dedicated to road, bridge, and rail-network projects. Electric car owners would also face new $150 annual fees as part of the senators’ plan.

The proposed legislation to enact the gas-tax plan also includes a series of proposed tax cuts that are designed to make New Jersey more affordable, particularly for seniors, low-wage workers, and others who would be hit the hardest by the increased fuel taxes. The senators’ plan to renew the fund would leave the current tax 10.5-cent tax on gasoline at the pump untouched, but a new 7 percent tax would be levied at the wholesale level on motor fuels that would function much like sales tax. At current gas prices, that new 7 percent tax would equal about 13 cents more per-gallon.At the end of the day, if passed without any changes, the proposed fuel-tax changes would likely increase New Jersey’s per-gallon gas tax to 37.5 cents, which would be seventh-highest among all states. But the senators stress New Jersey would still charge less than what motorists pay at the pump in Pennsylvania, where the state gas tax is 51.60 cents, and in New York, where the state gas tax is 45.99 cents. That gap, Sweeney said, would still remain large enough to entice out-of-state motorists to fill up in New Jersey. And since an estimated 30 percent of the current revenue comes in from out-of-state drivers and truckers, the senators argue it would also require those motorists to contribute toward maintaining New Jersey’s infrastructure for the next decade.

But it’s the tax-relief components of the plan that the sponsors and supporters are hoping will get much more attention in the coming weeks, including a proposed doubling of state transportation aid for county and local governments. The local governments have had to operate within a 2 percent cap on property tax hikes since 2011, but they’ve been able to borrow for road and bridge repairs outside of that cap. The senators’ plan would increase the annual transportation aid from $200 million to $400 million, and also create a local infrastructure bank, all with the goal of helping local governments control property tax bills that rose to a record-high average of $8,353 last year. Also on the tax-relief side of the plan is a proposal to increase the Earned Income Tax Credit for low-wage workers from 30 percent of the federal credit to 40 percent of the federal credit. For retirees, the state would lift its income-tax exemptions on pensions, annuities, 401(k) plans and other sources of retirement income over the next several years. That would mean exemptions that are set right now at $15,000 for individuals and $20,000 for couples would eventually rise to $50,000 and $100,000. But the biggest proposed tax cut would phase out New Jersey’s estate tax by the end of 2019. Right now, New Jersey has the lowest estate-tax exemption in the nation, at $675,000, and the tax itself generates an estimated $400 million to $500 million annually.

Sign In

Latest News