Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto announced that they have reached agreement on a new plan to fund the Transportation Trust Fund (TTF) and enact a series of tax cuts designed to make New Jersey more competitive. For counties and municipalities, the new plan restores Local Aid Allocations to its original percentage at $400.0 million per year, a long term goal and objective of both NJAC and the NSLOM.
The agreement includes a 12.5 percent increase in the Petroleum Products Gross Receipts Tax, a four-cent diesel surcharge and a seven percent tax on non-motor-fuel petroleum products to fund the TTF, which has essentially run out of money for new transportation projects after years of over borrowing. The new gas tax revenue would cover old debt payments, freeing up $347 million from the general fund for other needs. If passed along to motorists, the gas tax would increase by 23 cents a gallon of which an estimated 35 percent would be paid by out-of-state motorists. The dedicated revenue would generate $1.2 billion annually, which would support $2 billion in infrastructure investments each year.
The plan also includes five tax cuts worked out over the past several months during ongoing negotiations involving Democratic and Republican lawmakers from both the Senate and the Assembly. The plan does not include any changes in jet fuel taxation. The tax cuts would provide:
1) Tax savings for the working poor by increasing the Earned Income Tax Credit to 40 percent of the federal benefit amount beginning in Tax Year 2016.
2) Tax savings for retirees by Increasing the New Jersey gross income tax exclusion on pension and retirement income over four years to $100,000 for joint filers, $75,000 for individuals and $50,000 for married/filing separately.
3) Elimination of the estate tax by phasing it out over 3 1/2 years and replacing the current $675,000 threshold with a $2 million exclusion.
4) Tax deductions for NJ Motorists by provide 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.
5) Tax savings for veterans by providing $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.
