A proposal to increase New Jersey’s gas tax by 23 cents a gallon would replenish the state’s Transportation Trust Fund.

New Jersey legislative leaders and Gov. Chris Christie have reached agreement on a compromise gas tax hike plan to keep the state's Transportation Trust Fund afloat that would be offset by a sales tax cut.

The state assembly approved a bill with the backing of Christie early Tuesday morning in a 53-23 vote that would raise the gas tax by 23 cents a gallon and slash the sales tax from 7% to 6%. The gas tax increase, which now heads to the State Senate, would establish a $16 billion TTF for an eight year period funded at $2 billion yearly. The current TTF funded at $1.6 billion per-year expires on July 1.

"We're going to have constitutionally dedicated revenue to improve roads, bridges and mass transit systems here in the state," Christie told reporters early Tuesday. "I look forward to working with the senate between now and Thursday to hopefully bring this issue to a successful conclusion."

The press office for State Senate President Steve Sweeney, D-Gloucester, didn't immediately respond to a request for comment on the assembly bill. The package retains a senate proposal to increase retirement income exemptions included as part of a $20 billion 10-year TTF program that would also raise the gas tax by 23 cents a gallon. The legislation doesn't include the senate's plan to eliminate the state's estate tax and establish income tax deductions on charitable contributions.

The TTF was formed in 1984 to help New Jersey pay and borrow for transportation-related construction projects. The program was last authorized in 2012 for five years at $1.6 billion annually. Most of the current $1.26 billion state appropriation to the trust fund is earmarked for debt service.

"This is a bill that actually takes care of our transportation infrastructure needs by fully funding it for eight years." said Assembly Speaker Vincent Prieto, D-Secaucus, in a video message posted by Assembly democrats. "We would be able to fund our transportation trust fund with new revenue."

New Jersey's current gas tax at 14.5 cents a gallon is the second lowest rate of the 50 U.S. states behind only Alaska, according to the Tax Foundation. The state's gas tax was last raised in 1988.

Prieto estimates that cutting the sales tax down to 6% would leave a $1.3 billion revenue gap. Christie said the sales tax would be brought down to 6.5% on Jan. 1 and then drop to 6% in 2018 under the plan. New Jersey's current sales tax ranks 24th nationally, according to Tax Foundation data.

New Jersey's credit rating is the second worst of the 50 U.S. states at A2 by Moody's Investors Service and A by Standard & Poor's, Fitch Ratings and Kroll Bond Rating Agency.

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