No Gas Tax Hike in New Jersey Friday

Republican Gov. Chris Christie has proposed raising the gas tax by 23 cents to 37.5 cents a gallon to fund road projects

What to Know

  • Drivers would have had to start paying 23 cents more per gallon starting Friday
  • Under the proposal, the sales tax would gradually be reduced to 6 percent and there would be a cut in retirement income taxes
  • The Democrat-led Assembly approved the measure on Tuesday

New Jersey's fund for road, bridge and transit work inched closer to running dry Thursday after the Democrat-led Senate scrapped any votes on Republican Gov. Chris Christie's plan to hike the gas tax by 23 cents while cutting the sales tax. 

Senate President Steve Sweeney said there just isn't enough support among senators for a deal backed by Christie and passed Tuesday in the Democrat-led Assembly. That measure would provide for an eight-year plan at $2 billion per year, financed by a 23 cent tax hike on fuel. It would be offset by cutting the sales tax from 7 percent to 6.5 percent in 2017 and to 6 percent in 2018. 

"The Senate just doesn't agree with the Assembly's bill," Sweeney said. "The Senate feels it's too expensive." 

Sweeney and a bipartisan coalition of lawmakers had backed a separate deal that included an identical gas tax hike, but cut the estate tax and established a charitable tax deduction, among other changes. 

The Assembly plan could cost the $35 billion state budget nearly $2 billion in lost sales tax revenue, while the Senate plan clocked in at under $1 billion in lost revenue because of the tax cuts. 

Christie, who proposed the legislation that passed the Assembly, said the plan meets his tax fairness test, because it cuts about the same as it raises in new taxes. Both plans call for raising the retirement income threshold to help pensioners. 

Democratic Assembly Speaker Vincent Prieto said it's urgent for Sweeney and Christie to agree soon and that he's open to meeting with them. But, he said, there are not enough votes to override Christie on the original Senate bill, which the governor said he would not sign. 

"I need a bill that the governor will sign," Prieto said. 

The Senate's stall comes after Sweeney advocated for more than a year for the transportation trust fund to be replenished, only to see his plan put on the back burner and for him to argue that Friday's deadline isn't so dire after all. 

The current five-year, $1.6 billion plan runs out of authority for new borrowing on Friday. The funds coming into the account cover debt payments while new projects are financed through more borrowing. 

Constructions projects won't stop come Friday and there likely is enough cash to take the current fund through August, Sweeney said. The Christie administration had earlier said the same. 

Sweeney said he plans to negotiate behind the scenes with the Assembly on a path forward, but he did not say when exactly a vote could come or how the legislation might change. 

"We have to go to the Assembly with what we feel is a bill that can pass. So it's a negotiation," he said.

Copyright AP - Associated Press
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