We face a serious problem. For the past month, vital work on New Jersey’s roads and bridges has been stopped by order of the Governor. Our State’s Transportation Trust Fund is running on fumes. The infrastructure will not magically improve. So the time for action is now.
New Jersey families and visitors depend on municipal and county roads to get to where they need to be. Local roads and bridges are absolutely essential to the success of New Jersey commerce and industry. Yet keeping transportation systems in passable shape has become a heavy burden for those who maintain them–and those who travel them–as the Transportation Trust Fund (TTF) is dwindling, leaving taxpayers stranded in more ways than one.
Local officials know that investments in these assets must be made. Failure to do so can compromise the safety of the public, the economic vitality of our communities and the security of our neighborhoods.
The League identified three priorities to address these concerns:
- Reauthorize the Transportation Trust Fund to ensure adequate and reliable funding to meet State and local transportation infrastructure funding needs for the next 10 years.
- Increase Local Aid funding to ensure adequate and reliable funding to better meet local transportation infrastructure needs.
- Increase the municipal share of Local Aid funding and ensure fair funding for all municipalities.
Just last week, Legislative Leaders unveiled a new bipartisan plan (A-10/S-2412 and A-12/S-2411) for an long-term , $2 billion per year Transportation Trust Fund. This represents a commitment to strong, steady investment local infrastructure–thousands of miles of roads and bridges for which local property taxpayers will need to cover all costs without a renewed and reinvigorated TTF.
In the first year of the Transportation Trust Fund (1985), Local Aid funding represented almost 22% of the total Transportation Capital funding. Currently Local Aid funding is about 12% of the TTF capital funding. The proposed increase in local funding addresses an immediate and critical need. As documented by the State Department of Transportation, municipal and county roads and bridges carry an estimated 55% of the State’s overall traffic. Yet inequitably receive only 12% of funding under the State’s current Transportation Capital Program (TCP). Property taxpayers fund the balance. Thus, this bipartisan compromise represents not just needed infrastructure funding but property tax relief as well.
The agreement includes the following revenues for the TTF:
- A 12.5% increase in the Petroleum Products Gross Receipts Tax;
- A $0.04 diesel surcharge; and
- A 7% tax on non-motor-fuel petroleum products.
If the full amount of these increases is passed to consumers, it represents a $0.23/gallon increase at the pump.
Of paramount importance to local governments, the local aid portion will be restored, as was included in earlier TTF reauthorization proposals.
The agreement also includes the following tax relief components.
- Increase in the Earned Income Tax Credit to 40% of the federal benefit, starting in tax year 2016;
- Increase in the NJ gross income tax exclusion on pension and retirement income, phased in over 4 years to $100,000 for joint filers. In the fifth year, seniors earning up to $125,000 can take a 50% credit on up to $100,000 in retirement income. Those making up to $150,000 can take a 25% credit.
- Elimination of the Estate Tax, phased out over 3 1/2 years, eliminating the estate tax altogether as of January 1, 2020.
- An annual income tax deduction on up to $500 in state gas taxes paid for all New Jersey motorists with incomes up to $100,000.
- A $3,000 personal exemption on state income taxes for all New Jersey veterans honorably discharged from active service in the military or the National Guard.
Status and Next Steps:
Both Houses need to vote for TTF reauthorization. Governor Christie opposes this package and instead prefers his plan for a similar $0.23 gas tax increase and a $0.01 sales tax reduction, phased in over 18 months. In fairness, both proposals meet the requirements we sought from the beginning of the process over two years ago.
The League supports the immediate reauthorization of the TTF and suggests that you contact your State Senate and Assembly representatives and the Governor’s Office. Please ask them for their support for TTF reauthorization and the restoration of funding for local purposes. This funding will provide for needed capital improvements and maintenance of local infrastructure and relieve this financial burden from property taxpayers.
The economic case for investment in our long-term infrastructure is clear– we know it will grow the economy, create good jobs, and position us for long-term growth. The moral case for action is just as plain. Will we leave the costs of disinvestment to our children? What will they say when they write their transportation infrastructure reports, 30 years from now?
Jon Moran, Sr. Legislative Analyst at 609-695-3481 x121, jmoran(at)njslom.org
Michael Cerra, Asst. Executive Director at 609-695-3481 x120, mcerra(at)njslom.org