Lawmaker: Higher NJ gas tax may be inevitable

AP News
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Posted: Dec 09, 2009 8:01 AM

New Jerseyans could see a gas tax hike despite Gov.-elect Chris Christie's pledge not to raise taxes in the year ahead, property tax rebates might disappear and business owners should brace for an increase in unemployment insurance taxes that could amount to $200 to $1,000 per employee.

State legislators presented New Jersey's dire economic outlook to 250 business owners at an annual policy forum hosted by the New Jersey Business and Industry Association on Tuesday.

Sen. Ray Lesniak said a gradual increase in the gas tax may be inevitable to prop up the state's nearly depleted Transportation Trust Fund.

Lesniak, D-Union, said he planned to introduce legislation that would "gradually and incrementally" increase the gas tax to fund transportation projects. Though he was not specific on how much or when, he called the step "absolutely necessary," and other lawmakers on the panel did not disagree that a new stream of revenue is urgently needed to keep road, bridge and rail projects from coming to a standstill.

Gov. Jon Corzine crafted a stopgap fix for the fund in 2006, which restructured some debt and cleared the way for additional borrowing to ensure the continued receipt of federal matching funds, but the fund is about to run out of money again.

Assembly Speaker Joe Roberts Jr., D-Brooklawn, said a gas tax increase might be the best choice of several politically undesirable options for keeping the state's infrastructure safe. Other choices include more borrowing, siphoning Motor Vehicle Commission surplus from other programs, or increasing tolls, he said.

During an appearance on New Jersey 101.5 FM on Tuesday night, Christie said he opposes raising the gasoline tax and criticized Democrats for proposing it now that a Republican is about to take office.

"Speaker Roberts, if he felt so strongly about it, was speaker for four years. Why didn't he propose a gas tax hike?" Christie said. "Now all the sudden they are going to say I have to do it because they didn't?"

New Jersey's 14.5-cent per gallon tax is the nation's second-lowest, behind Wyoming, according to the Tax Foundation, a tax education group. New Jersey's gas tax is 20 to 30 cents lower than in neighboring states, Roberts said.

Assemblyman Jon Bramnick, R-Westfield, said Christie might approve of more borrowing to keep his no-tax pledge in the short term. But Bramnick acknowledged the "imminent crisis" in funding road projects may force the governor-elect's hand in the long-term.

Christie has said he would not raise taxes and that he would push lawmakers to adopt a pay-as-you-go approach to spending. Neither he nor Corzine attended Tuesday's business forum.

The lawmakers also suggested that property tax rebates could disappear in the budget year that starts in July, because Christie faces a multi-billion-dollar shortfall. Rebates add about $1 billion to the state budget.

The state's business owners got even more bad news: They were told a growing shortfall in the Unemployment Insurance fund could trigger tax hikes of up to $1,000 per employee. Tax increases are triggered when the fund's balance dips below a certain level as measured every March; the shortfall currently exceeds $800 million and is growing.

Bramnick said employers could see an increase of 100 percent or more in their unemployment tax on July 1, unless the fund is infused with state or federal money.

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Associated Press writer Beth DeFalco in Trenton contributed to this report.