State Senator Paul Sarlo (D-36) outlined which tax cuts the upper house is willing to offer the governor in exchange for an increase to the state’s gas tax during Tuesday’s meeting of the Senate Budget and Appropriations Committee. That increase would help fund the Transportation Trust Fund’s $1.2 billion line item in Governor Chris Christie’s 2017 budget. The deadline for coming up with a plan to shore up the Trust Fund is June 30, with the fund for transportation infrastructure expected to run out of money by August without a plan in place.
Sarlo said his own five-year phase-out of the state’s estate tax, an elimination of levies on retirement income for those making up to $50,000 a year, and new deductions for charitable contributions would be paired with any Senate proposal for a gas tax increase. Governor Christie has said that he will only consider a gas tax hike if it comes with greater “tax fairness” in other areas like New Jersey’s estate tax, which has a comparatively low threshold at $675,000 in assets next to other states.
Sarlo’s estate tax phase-out would offer Christie’s successor some latitude in adjusting the pace of the phase-out if the state economy does not grow at a rate offsetting the cuts. Sarlo is sponsoring the phase-out alongside Senator Steven Oroho (R-24).
Saying that he was encouraged by comments from Assembly Speaker Vince Prieto (D-32), who said Monday that he would consider a phase-out plan as long as it was tied to a TTF funding plan, Sarlo also called for the Trust Fund’s allotment to be increased from its current $1.6 billion maximum to $2 billion. Prieto has said that he will not post Sarlo’s phase-out bill in the Assembly if it arrives on its own.
“Although I personally believe in this, I understand from a public policy perspective that it could be very difficult for it to pass this legislature without any conjunction,” Sarlo said during the hearing. “So I agree with the Speaker, a phase-out of the estate tax must be done in conjunction with a Transportation Trust Fund renewal.
“We believe a $2 billion Transportation Trust Fund is needed, and it can’t be a four-year plan or a three-year plan. It’s got to be a dedicated source of revenue, multi-year plan. Whether it’s seven years, a $2 billion Transportation Trust Fund.”
The TTF has had that $1.6 billion cap in place since 2007, a provision that Sarlo said does not account for inflation and rises in the cost of labor and materials. The New Jersey DOT estimates that there are over 300 structurally deficient bridges in the state, but acting commissioner Richard T. Hammer testified that the current funding levels along with the federal government’s contributions would be enough to address those bridges and highways that require immediate maintenance or repair.
Among Republicans, Assembly Minority Leader Jon Bramnick and others have said that they favor the trade-off of cuts to the estate tax for an increase to the gas tax, though Senators Mike Doherty and Jennifer Beck favor funding the trust fund with spending cuts at NJ Transit and mergers of transportation agencies.