Will New Jersey Drivers Pay More at the Pump to Refuel Transportation Trust Fund?

Meir Rinde | February 5, 2015 | Politics, Transportation
Sweeney, Dems close to proposal to bring to governor; state transportation commissioner optimistic deal can be struck

gas pump fuel pump
Legislators may meet with Gov. Chris Christie as soon as this week to negotiate a hike in the gas tax that would put new money into the state’s depleted Transportation Trust Fund. Meanwhile, Republicans remain resistant to a tax increase that Democrats say is the only way to fund badly needed bridge and road maintenance, along with improvements to the state’s aging transportation infrastructure.

Senate President Stephen Sweeney (D-Gloucester) said that he and the Assembly speaker are close to agreeing on a proposal to bring to Christie, who returned yesterday from a trade mission to Britain as he gears up for a potential presidential run. Transportation Commissioner Jamie Fox said he was optimistic a deal could be reached.

“We’re probably on the 10-yard line to get some kind of package that the majority of people can support,” Fox said yesterday. He and Sweeney made their comments during an annual legislative day event for mayors held by the New Jersey State League of Municipalities in the Statehouse.

Fox, a Democrat, was added to the Republican governor’s cabinet in September with the specific charge of coming up with a solution, and soon after began calling for a new tax. Christie has not yet endorsed the tax hike but presumably has discussed the broad parameters of a possible deal with Fox.

“It really now comes down to where the governor stands,” Sweeney said. “Hopefully we’ll be in communication shortly.”

But while Fox and the Democrats said a new source of revenue is urgently needed, Republicans including Assembly Minority Leader Jon Bramnick (R-Union) expressed resistance to a gas tax.

Bramnick, who just launched a campaign to win more Assembly seats by advocating for lower taxes, said the state should consider alternatives, including cuts in education spending. During a panel discussion with Sweeney and other legislators, he repeated a Republican complaint that the state’s school-funding formula disproportionately favors 31 poor districts without leading to significant improvements in student achievement, and said $1 billion could be “saved” by cutting that spending.

Assembly Speaker Vincent Prieto (D-Hudson) and Deputy Speaker John Wisniewski (D-Middlesex) rejected that argument, saying schools are already underfunded and cutting education spending would only further burden cities and towns.

“If you think you’re going to take money from that for the Transportation Trust Fund, I think you’re really mistaken,” Prieto said.

Later in the day Bramnick and Wisniewski traded dueling press releases, with the Republican saying Wisniewski “does not have veto power over ideas” and the Democrat responding that the suggestion of education cuts showed “a skewed set of priorities” and was “dead on arrival.”

Sen. Jennifer Beck (R-Monmouth) also expressed opposition to the gas tax. She acknowledged the state’s limited options, saying she is “not a genius with a million different solutions,” but argued that the state should instead push for more federal transportation dollars since New Jersey is a net contributor to federal coffers.

Sweeney responded that federal funding is calculated by a formula the state has not succeeded in getting changed, and said Beck’s suggestion represents a broader reluctance to acknowledge the difficult but more realistic solution of a gas tax. That stance could endanger the approval of any new funding for the Transportation Trust Fund, he said.

An unpopular tax hike

The TTF is funded by a tax of 14.5 cents per gallon of gas, the second lowest in the nation, and most of that money is committed to debt payments for current and past projects. Cash for new projects will be exhausted by the end of the fiscal year on June 30, prompting increasingly urgent calls from business groups, local officials, and many others for funding that will maintain and expand a transportation network that is showing signs of strain.

“Yesterday morning I met with probably the 20 largest business leaders in state. Every one of them said they need to get this done or else they can’t grow,” Fox said during the League of Municipalities event.

“If they are unsure about moving their goods across an unsafe bridge, or have to wait an hour and a half to do it, or go around for another hour and a half because the bridge is closed or doesn’t have the truck capacity to go over it, that affects their business. Because then they’re going to start looking at, when the time comes, do they stay here or not stay here,” he said.

Fox and Democratic leaders say the only solution that would provide a needed $1.6 billion to $2 billion in additional annual funding is a higher gas tax. Christie has remained reluctantly open to an increase, saying last year that “everything’s on the table” and implicitly not ruling out a gas tax hike in his State of the State address last month.

The idea of paying more for gas is very unpopular, with 68 percent of state residents opposing an increase in a Fairleigh Dickinson University poll last month. Though Fox may have the governor’s blessing to push for the tax nonetheless, Republicans remain chary of declaring their support.

“More taxation is really not an option in the state of New Jersey,” Beck told the audience of mayors at yesterday’s event.

But Sweeney said the alternatives offered by the Republicans, like cutting education funding or asking for more federal money, will simply not provide the needed funds.

“Here’s the problem. I think you’ve just seen it,” Sweeney told the audience. “There are people up here who … support fixing transportation. They just don’t want to do it ‘that’ way. There is no magic solution, wish and close your eyes and hope it’s going to get better. I always look at it as, what can you actually do and accomplish? Washington isn’t going to do anything, and they haven’t in a whole lot of years.”

Afterward he expressed exasperation over the debate and suggested Democrats are unwilling to bear on their own the political heat from voting for a gas tax.

“Our bridges are in trouble, our roads are in trouble. If they think it’s going to become a partisan issue, where it’s just going to be Democrats, well, the governor’s going to have to deal with his party on that,” Sweeney said. “If this isn’t a bipartisan solution, there won’t be one.”

A broader tax deal

Despite his criticism of a gas tax increase, Bramnick also hinted that Republicans would ultimately come around, saying, “This will get fixed. We are not going to allow bridges to be closed.” He said discussions of the bill are going well behind closed doors, and he urged the mayors listening to the discussion to back up legislators who eventually vote for an unpopular measure.

“If something is done, you have to stand behind the legislators to support them, because it’s not going to be perfect for either side. If they know you’re with them, regardless of the compromise, they’re more likely to get behind legislation,” he said.

The details of the expected legislative package have not been released. Some Republicans say they would be more willing to support a gas tax increase if it is accompanied by a bill eliminating the estate tax, which might also make the package more palatable to Christie as he prepares to run for president as a fiscal conservative.

On the left, New Jersey Policy Perspective has said the state’s Earned Income Tax Credit should be increased to blunt the impact of a gas tax hike on low-income households. Asked about the prospect of including measures to protect poorer motorists, Fox said, “I’m hopeful that the package we’ll put forward will have a variety of different pieces to it, involving both transportation and other issues.”

In addition to sparring over transportation funding, Sweeney and Beck also argued about the state’s unfunded pension liability yesterday.

The Senate president criticized Christie for not funding a promised makeup pension payment last year and later defending the move by arguing the law he signed mandating the payment is unconstitutional. Beck said it had been clear even when the bill was originally approved that the payments it requires were extremely high, even unrealistically so. The state was supposed to pay $2.25 billion last year, and Beck said that when the payment tops out in 2018 it will reach $7 billion.

“We have a moral obligation to fund these pensions. People worked, they retired or they’re still working, we’ve made commitments to them,” she said. “We do need to figure out, realistically, how we fund $7 to $8 billion a year in our budget. We have a real challenge in front us.”

Sweeney said he and Christie discussed the plan and its requirements thoroughly, and he blamed the administration for not doing a better job of boosting the state’s economy and bringing in more taxes to cover the pension payments.

“To say that no one knew, or the numbers are too tough — we knew they were tough,” Sweeney said. “The governor and I walked into this thing eyes wide open.”