Gov. Chris Christie and state legislative leaders are discussing a reduction in the state sales tax, potentially by half a percentage point, as part of a deal to replenish the Transportation Trust Fund, POLITICO New Jersey has learned.
Two sources with knowledge of the negotiations between Christie, Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto said a sales tax decrease is a key part of the framework being discussed in what may be the most promising development yet in ending a months-long stalemate that has shut down road and rail projects and forced layoffs of some construction workers.
The negotiations also include other tax cuts that had been put forward by the state Senate in its original plan advanced by the budget committee, which stalled after Christie and Assembly leaders cut and passed a late night deal in late June that traded a full one point sales tax cut for a 23 cent gas tax increase.
That deal found virtually no support in the Senate because of its estimated $1.7 billion loss of revenue in the state budget, while the Senate’s original plan would have cost just under $900 million, according to Office of Legislative Services estimates. The Assembly and Senate have since come together on a plan, but Christie is not on board.
The sources requested anonymity because of the confidential nature of the negotiations. The final details of other tax cuts Senate Democrats and Republicans have pushed as part of the package — including change to the estate tax, retirement income and an expansion of the Earned Income Tax Credit and — remain unsettled, though the gas tax increase under discussion remains 23 cents per gallon.
And until a deal is struck, it’s impossible to tell how much revenue it would cost the state treasury.
New Jersey’s Transportation Trust Fund is currently out of cash. Christie issued an executive order last month allowing state officials to tap program revenue to pay for emergency infrastructure projects.
Tom Bracken, the president of the New Jersey Chamber of Commerce who is heading a business and labor coalition pushing for a solution to the Transportation Trust Fund, said he’s also heard that a half cent sales tax cut is part of the Transportation Trust Fun negotiations. And he’s encouraged by it.
“Everything that’s being talked about is a positive for the State of New Jersey,” Bracken said. “From my perspective, if what you’re hearing and what I’m hearing is true, I think you’d have a lot of people lining up to endorse that plan.”
That line would not include the chairman of the Assembly Transportation Committee, Assemblyman John Wisniewski.
“Still a bad idea,” said Wisniewski, who was an early proponent of raising the gas tax. “We could just do a bill to authorize additional borrowing and set up a program that lasts for 16 or 20 months and allow a more rational occupant of the front office to address this when the new term of a governor begins … We’re kind of continually doubling down on carving a huge hole in our budget.”
New Jersey’s gas tax, currently 14.5 cents per gallon, is the second lowest in the nation and has not been increased since 1988.
Spokespersons for Christie and Sweeney did not immediately return calls or emails seeking comment. A spokesman for Prieto said only that there are "ongoing discussions."