Assembly Speaker Vincent Prieto (D-32) and state Senate President Steve Sweeney (D-3) announced that they have finally reached a compromise on a $16 billion, eight-year Transportation Trust Fund plan.
By John Heinis/Hudson County View
â€œWe have an agreement on a plan that is needed to address the stateâ€™s critical transportation needs at the same time it provides targeted tax savings for retirees, the working poor and middle class families,â€ Sweeney said in a joint statement.
â€œThis is a bipartisan plan that supports a $2 billion a year Transportation Trust Fund and provides affordable tax cuts that will allow us to meet the stateâ€™s pension obligations without creating a fiscal crisis. This is an investment plan that will create jobs and support immediate and long-term economic growth.â€
Sweeney made it no secret that he opposed the Assembly-approved TTF plan that passed last month, which Prieto said would save the average New Jersey driver $335 a year, stating it would create too large of a hole in the budget.
He offered a counter proposal to Gov. Chris Christie (R), which was shot down and met with yet another counter offer yesterday (h/t Burlington County Times).
â€œThe Assembly acted to fund transportation, but this stalemate cannot continue. As Iâ€™ve been saying for more than two years, New Jersey needs a viable Transportation Trust Fund or we risk economic disaster,” added Prieto via the joint statement.
“With efforts to negotiate a compromise with the governor stalled, Iâ€™m pleased to reach this new compromise that will provide much-needed investment in our stateâ€™s infrastructure and tax relief.”
Prieto added that he will now seek the support of the Republicans in the Assembly to solidify the revised plan.
In a similar vein, Sweeney also noted that he is calling on the Senate Budget and Appropriations Committee to convene next week to amend the bill passed by the Assembly.
The agreement includes a 12.5 percent increase in the Petroleum Products Gross Receipts Tax, a four-cent diesel surcharge and a seven percent tax on non-motor-fuel petroleum products to fund the TTF, which has essentially run out of money for new transportation projects after years of over borrowing.
The new gas tax revenue would cover old debt payments, freeing up $347 million from the general fund for other needs, based on the parameters of the new bill.
If passed along to motorists, the gas tax would increase by 23 cents a gallon, which was in the original Assembly bill. An estimated 35 percent would be paid by out-of-state motorists. The dedicated revenue would generate $1.2 billion annually, which would support $2 billion in infrastructure investments each year, officials said.
A sustained investment of $2 billion annually would produce an estimated $4.7 billion a year in economic activity and create more than 34,000 jobs directly and indirectly, with annual payrolls of $1.4 billion. Each dollar spent from the TTF is expected to generate $2.35 in economic activity.
The plan also includes five tax cuts worked out over the past several months during ongoing negotiations involving Democratic and Republican lawmakers from both the Senate and the Assembly. The plan does not include any changes in jet fuel taxation.
The tax cuts would provide:
Â· Tax Savings for the Working Poor: Increase the Earned Income Tax Credit for the working poor to 40 percent of the federal benefit amount beginning in Tax Year 2016. Total tax savings of $137 million annually.
Â· Tax Savings for Retirees: Increase the New Jersey gross income tax exclusion on pension and retirement income over four years to $100,000 for joint filers, $75,000 for individuals and $50,000 for married/filing separately. In the fifth year, seniors earning up to $125,000 can take a 50 percent credit on up to $100,000 in retirement income and those making up to $150,000 can take a 25 percent credit. Total tax savings of $75 million the first year and $164 million annually when fully phased in.
Â· Eliminate the Estate Tax To Make NJ More Competitive: Phase out the estate tax over 3 1/2 years, replacing the current $675,000 threshold with a $2 million exclusion after January 1, 2017, going to the federal $5.4 million level from January 1, 2018, to December 31, 2019, and eliminating the estate tax altogether as of January 1, 2020. Total tax savings of $109 million the first year and $552 million annually when fully phased in.
Â· Tax Deductions for NJ Motorists: Provide an annual income tax deduction on up to $500 in state gas taxes paid for all New Jersey motorists with incomes up to $100,000. Total tax savings of $20 million annually.
Â· Tax Savings for Veterans: Provide a $3,000 personal exemption on state income taxes for all New Jersey veterans honorably discharged from active service in the military or the National Guard. Total tax savings of $23 million annually.