Why N.J. Gov. Chris Christie Wants to Double State's Gasoline Tax

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DALLAS -- New Jersey Gov. Chris Christie has challenged Democrats in the state Senate to pass a measure that would more than double the state gasoline tax so that work can begin again on $3.5 billion of stalled infrastructure projects.

"I'm ready to sign a gas tax increase into law to be able to sustainably fund the transportation trust fund," he said Tuesday. "Pass the bill and put it on my desk."

Senate Democrats have balked at a deal between Christie and the General Assembly to add 23 cents to the state's gasoline tax of 14.5 cents per gallon in exchange for a drop in the state sales tax rate to 6% from the current 7% over two years.

The $1.4 billion of new funding each year from the higher gasoline tax would support a 10-year, $20 billion transportation program.

The average New Jersey motorist would pay an additional $100 per year with the higher gasoline tax but would see a $400 per year reduction in sales taxes due to the rate reduction, Christie said.

"I'm the first governor in 27 years to publicly say I was for a gas tax increase," he said.

Christie issued an executive order on June 30 ordering a shutdown of more than 900 road, rail, and bridge construction projects on July 8 to preserve the remaining balance in transportation trust fund until a funding proposal could be passed.

The General Assembly and the Senate had agreed in June on a plan to restore the highway fund, but failure to obtain a veto-proof majority in both chambers led to a deal between Christie and Democratic leaders in the General Assembly that included the sales tax cut.

The General Assembly passed the Christie-approved transportation funding measure shortly before legal authorization for the state's transportation trust fund expired on July 1, but the Senate adjourned without a vote.

"If the Senate had, in a bipartisan way, passed the same bill that the Assembly stayed until 1 o'clock in the morning to pass at the end of June, we wouldn't even be having this conversation," Christie said Tuesday during a press conference in Trenton.

Christie is a Republican, but Democrats have a majority in the legislature with 24 of the 40 Senate seats and 48 of the 80 seats in the General Assembly.

The funding proposal includes a 12.5% sales tax on motor fuels that would be added to the current taxes of 14.5 cents per gallon of gasoline and 17.5 cents per gallon of diesel.

The new sales tax would add about 23 cents per gallon at current prices. The resulting rate of 37.5 cents per gallon would be one of the higher state fuel taxes. New Jersey's gasoline tax is now the second lowest in the nation to Alaska's tax of 12.3 cents per gallon.

The original gas tax measure would have capped the total tax at 52.5 cents per gallon, but an amendment was added to freeze the revenues. The sales tax rate would be adjusted annually by the state treasurer to bring in about the same amount of revenues as in the first year.

"This assures New Jersey drivers that the amount of money they pay out-of-pocket for gas taxes 10 years from now will be the same amount they will pay in the first year," said state Sen. Paul Sarlo, a Democrat who sponsored the amendment. "Not a penny more."

The construction shutdown is costing New Jersey at least $1.3 million a day in lost sales, wages, and economic activity, according to an analysis by the American Road & Transportation Builders Association.

"There are no winners in this situation," said ARTBA chief economist Alison Premo Black. "Important transportation projects that are designed to improve safety and reduce traffic congestion will come to a grinding halt."

The transportation funding issue is involved in a dispute over a pension-reform constitutional amendment between Christie and state Senate President Steve Sweeney, a Democrat, said William Glasgall, director of state and local programs at The Volcker Alliance.

Lowering the sales tax rate to compensate for the gasoline tax increase would cut general fund revenues by $1.6 billion per year, Glasgall said.

"It's not as simple as Chris Christie standing there with a shovel and saying 'Give me the money and I'll start digging,' " he said. "He's willing to raise the gasoline tax only if he gets a cut in the sale tax that will blow a $1.6 billion hole in the general fund."

Part of the problem is that New Jersey's gasoline tax has not been increased or adjusted for inflation in almost three decades, Glasgall said.

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