No gas tax … for now; Christie orders halt to construction work
TRENTON — Lawmakers didn't pass a gas-tax hike Thursday, unable to come to an agreement on what taxes to reduce as part of the bargain. Negotiations will likely extend into July.
Late Thursday night, Gov. Chris Christie ordered the Department of Transportation and New Jersey Transit to adopt a plan by 11:59 p.m. Saturday for an immediately, orderly shutdown of all state-funded construction projects.
The Transportation Trust Fund's authorization expired at midnight, leaving it unable to borrow more money and needing to devote all its revenues toward repaying $16 billion in existing debts. Christie said in an executive order that it's necessary to ration the TTF's existing funds, which will be depleted in August.
Democratic lawmakers had cited the early-August estimate for when the TTF actually goes broke in explaining why they didn't have to vote on a plan Thursday. There are two competing plans currently, and neither has support from all quarters.
“The fund for the TTF, from the budget’s perspective, we have until Aug. 1 for the fund to completely run dry. So we still have some time,’’ said Sen. Paul Sarlo, D-Bergen. “We’re making progress and discussions will continue.”
“I tell you guys in the press all the time these deals get done in the 11th hour, and it’s more like 10:30 right now. So I think we’re OK,” said Assembly Majority Leader Louis Greenwald, D-Camden.
On Wednesday, the governor said lawmakers shouldn’t delay.
“The Transportation Trust Fund expires on July 1. Now, if they don’t do anything, then all the steps I have to take to continue to keep transportation projects going and the costs associated with it will be on them,” Christie said.
He announced those steps at 11:13 p.m. Thursday. He wants shutdown plans by the end of Saturday, which will then be implemented. State-funded municipal projects also must cease. State or local projects that are federally funded will be allowed to continue. State transportation officials can choose to continue projects needed for safety protection.
Advocates for replenishing the TTF, which the state uses to finance its road, bridge and rail projects, had worried that the failure to reach a deal before July 1 would lead to the idling of all construction work.
“That’s what I’m hearing: Projects stop, work stops. It’s not good,” said Tom Bracken, chairman of the Forward New Jersey coalition and president and chief executive officer of the New Jersey Chamber of Commerce.
“It will eventually, sure. The jobs will shut down if there’s no money to pay the contractors working out there,” said Greg Lalevee, business manager of International Union of Operating Engineers Local 825. He doesn’t know what the timeline would be for shutting down projects.
Greenwald had anticipated there wouldn’t be an immediate impact on construction.
“It depends on how long the delay is reaching a compromise,” Greenwald said. “If it’s a couple weeks, there’s no harm. If it’s a couple months, it gets more dicey. If it goes into next year, you end up borrowing more money. It ends up costing the state more money. It ends up when the gas tax will eventually be presented will have to be a higher number. So the sooner we do this, the better.”
Assemblyman John Wisniewski, D-Middlesex, said Wednesday it would cost $175 million a year to make the repayments if the state borrowed the full cost of the construction program.
There wasn’t talk in Trenton of scuttling the gas tax increase of 23 cents. The argument was about corresponding cuts in taxes. Senators opposed the deal Christie and the Assembly struck to reduce the sales tax. They’re advocating for modifications to their original approach – cuts in taxes on the working poor, wealthy estates, charitable contributions and retirement income.
Senate President Stephen Sweeney, D-Gloucester, said mid-afternoon that the Senate wouldn’t be voting on either tax plan Thursday. As of that time, Sweeney hadn’t spoken with Christie.
“We’re going to go talk to the Assembly because we don’t feel there’s enough support in the Senate to do the Assembly bill. So we have to go to the Assembly with what we feel is a bill that can pass. So it’s a negotiation, and we’re going to go try to negotiate with the Assembly when we leave here. But we’re not going to take action on either bill today because this is trying to get something done.”
Sweeney said he didn’t think a vote would be held during the Fourth of July weekend but that the negotiations could continue over the holiday. He said that first the Legislature would come to a deal, which they’ll then take to Christie.
“A bill as complicated as the TTF needs Republican and Democrat votes to pass. There are Republican votes to pass the Senate version. There wasn’t the votes to pass the Assembly version. So we’re going to go sit with the governor and try to figure out what we can do,” Sweeney said.
“At the end of the day, it’s easier if the governor is in agreement. I’ve worked on a lot of things with the governor over the last several years, this is one where I hope we can find a solution, too,” Sweeney said. “If we can’t, we have even a greater crisis.
Sweeney said the Christie/Assembly bill “is too expensive” and that’s he’s not sure senators would be willing to stretch the tax cuts much farther than the $870 million, once fully implemented, from their original plan.
Assembly Speaker Vincent Prieto, D-Hudson, said the Senate’s proposals included a faster phase-out of the estate tax, which was among Christie’s preferences earlier in the deliberations. Under the Senate’s current plan, it would be phased out in 2020. Christie suggested eliminating it by 2018.
Prieto said Christie won’t sign the Senate’s bill, and the Assembly lacks the votes to override a veto.
“We have passed a bipartisan bill, and hopefully along the framework of this bill that maybe we can get something accomplished,” Prieto said.
Prieto said he is away next week, as is Christie. He said discussions would pick up in earnest the following week.
Christie defended the gas tax plan on New Jersey 101.5 Thursday in at-times insult-laden exchange with morning host Bill Spadea, an ardent opponent of the plan.
Christie accused Spadea of fudging math on the gas tax and being dismissive about the savings residents would see through the sales tax break. Spadea has said the single percent off the sales tax — first phased in as half a percent in six months, then a full percent after 18 months — wouldn't compare to the 23-cent gas tax hike for most residents.
“If you think the comparison is 1 cent to 23 cents, then you really would have failed fourth-grade math,” the governor said — telling Spadea a moment later, “You sound like a fourth-grader.”
The gas tax is meant to fill the coffers of the state's Transportation Trust Fund, which is set to run out of money July 1.
— Associated Press and Staff reports