Senators Paul Sarlo (D-36) and Jennifer Beck (R-11) debated the best way forward for keeping New Jersey’s depleted Transportation Trust Fund during Tuesday’s Senate Budget and Appropriations hearing, with Sarlo calling for a quid pro quo exchange of phasing out the state’s estate tax in exchange for a gas tax to shore up the Trust Fund. Beck called that move unnecessary, arguing that the legislature will be able to keep the Trust Fund afloat by reining back spending.
There is currently a $1.6 billion hole in the state budget for the Trust Fund, and the Transportation Trust Fund Authority will not be able to borrow from other state agencies like the Economic Development Authority to make up for that shortfall unless lawmakers grant the governor’s office the authority to change that.
Pointing to the failure of previous governors of either party to replenish the Trust Fund, Sarlo called that exchange the state’s best option.
“I’ve taken criticism from members of my own party on this. I believe it. It impacts my district,” Sarlo said of the estate tax, which would be phased out over five years under a bill he introduced in the Senate in February. “I am a proponent of repealing it, and I think the Senate in a bipartisan manner is willing to work with the administration on a repeal of that, along with raising the retirment income, in exchange for a replenished TTF.”
Beck countered that her own detailed plan to merge transportation agencies and reduce the costs of health benefits by increasing co-pays and making the switch to generic pharmaceuticals would be enough to provide the funding.
“There is a way for the legislature to act and implement a TTF with no gas tax increase, and implement a $1.6 billion seven-year plan,” said Beck. “We could take some of the revenue growth from this year and make other changes to reduce the cost of government that would help us fund transportation.”
New Jersey’s projected annual economic growth, Sarlo said, would not bear that out.
“In the short-term, four percent is not going to get us a robust $1.6 billion program on a yearly basis with all of the other built-on errors and increases and insurance premiums and salaries.”
Members of the Office of Legislative Services testified that the phase-put would forgo $550 million over those five years, but could not speak to its effect on the $19 billion of net gross income that has left New Jersey in the last ten years. Those losses, proponents of the phase-out argued, are due to outmigration of wealthy residents due to onerous taxes.
Senator Jeff Van Drew (D-1) said that the combination of New Jersey’s high property taxes, inheritance taxes and pension taxes needs to be addressed along with the estate tax.
“It isn’t just the estate tax, although the estate tax is important. I believe that it is the combination of all of them,” Van Drew said. “I do think that our policies of taxation ultimately do leave folks and certain regulation not to want to establish or stay in New Jersey.”