They’ve resolved the impasse blocking replenishment of the flat-broke Transportation Trust Fund — Gov. Chris Christie, Senate President Steve Sweeney and Assembly Speaker Vincent Prieto announcing a late afternoon deal. Here’s the headline: a 23-cent hike in the gas tax. In return for which, the compromise involves tax cuts.
It’s an eight-year deal that will pump $2 billion a year into the transportation projects. That’s the longest transportation funding reauthorization in history. And matching federal funds bring the total to $32 billion.
Now the cuts: the estate tax will be eliminated by January 2018. The sales tax will be gradually cut. The earned income tax credit will be raised for low wage workers and vets. And it includes tax exclusions for retirees.
NJTV News Correspondent David Cruz is doing double duty covering both the Bridgegate trial and this late breaking announcement. He spoke with Anchor Mary Alice Williams.
Williams: Usually bad news gets dropped on a Friday because they want to bury it. Is this bad news?
Cruz: Well, absolutely, Mary Alice. They do call it the Friday news dump for a reason. Usually it is bad news, but today this is supposed to be good news. The Senate president and the speaker and the governor have been at this for really almost three years now and the majority of this deal, with a few exceptions, was really in place a few months ago when the governor talked about an increase in the sales tax, but our long national nightmare is over today at a press conference. Everybody seemed a little bit sheepish:
Sweeney: This agreement is going to allow the Bergen Hudson Light Rail project to start getting funded moving forward. The Camden to Gloucester Light Rail project to start moving forward. Freight rail throughout the state to move forward. And the most important thing that we’re doing now is we’re going to improve the way that we move products and people. And that’s going to bring investment to this state and I’m very happy to be here. I’m sorry it took so long, but we all have strong personalities and sometimes it just takes time to get together.
Christie: As the speaker said, I think it’s important to emphasize … there’s compromise on all sides here. Everybody compromised what their original positions were and off of what we might have in a perfect world as we see it we might have wanted. That’s what you expect from us when we’re doing our jobs the right way. And the fact is that everyone who says over and over again that the government can’t work in this way. It can.
Cruz: So, no questions from the governor or the Senate president or the Assembly speaker. The actuaries are sharpening their pencils. There are budget ramifications to this. Some people we talked to already say that they’re expecting a billion dollar hole in the budget as a result.
Further details about the agreement:
Gov. Christie announced late Friday afternoon that he, Senate President Steve Sweeney and Assembly Speaker Vincent Prieto had come to an agreement on the Transportation Trust Fund, which will increase the gas tax by 23 cents and cut the state sales tax.
The agreement is the longest and largest in history — an eight-year, $2 billion per year deal. Federal match dollars will bring the total to $32 billion over eight years.
The deal will cut the sales tax from 7 percent to 6.875 percent on Jan. 1, 2017. The next year, the sales tax will be further reduced to 6.625 percent.
The Earned Income Tax Credit for the working poor will rise to 35 percent from 30 percent beginning in tax year 2016.
The estate tax will be phased out over the next 15 months, replacing the current $675,000 threshold with a $2 million exclusion after Jan. 1, 2017. The estate tax will be eliminated altogether as of Jan. 1, 2018.
The agreement will also provide a personal exemption on state income taxes for all New Jersey veterans honorably discharged from active service in the military or the National Guard.