volume 6/Issue 14

  • Governor Christie Begins Shutdown of State Funded Transportation Infrastructure Projects
  • FY 2017 Budget Signed into Law

Governor Christie Begins Shutdown of State Funded Transportation Infrastructure Projects

Late last week Governor Christie signed an executive order requiring the Commissioner of the NJ Department of Transportation and the Executive Director of NJ TRANSIT to plan for an orderly shutdown of Transportation Trust Fund projects, as negotiations between his office, the Assembly and the Senate failed to produce a plan agreeable to all parties.

The Governor’s executive order stipulated that the plans be ready by 11:59 p.m. on Saturday, July 2, 2016, and that ongoing TTF-funded shall cease according to the shutdown documents. The order applies to municipal projects funded by the TTF as well, though work that is federally funded may continue.

The Assembly passed legislation earlier in the week that was supported by the Governor, which provides for a 23-cent increase in the gas tax to finance a new 8-year, $16 billion capital transportation program for the state's highway and rail infrastructure. That gas tax increase was partnered with a reduction in the state sales tax from 7% to 6% over a two-year period (cutting it a half-percent each year) and tax relief on retirement income. The bill received the support of some Assembly Republicans while some Assembly Democrats in swing election districts voted against the measure.

The Governor-Assembly bill was met by almost unanimous opposition from the Senate, who expressed concern that it would create a future $1.6 billion hole in the State budget, jeopardizing other state funding priorities.

A number of Senators favored the original TTF plan sponsored by Democratic Senate Budget Committee Chairman Paul Sarlo and Republican Senator Steve Oroho, that contained a 23-cent gas tax increase for transportation infrastructure projects, but coupled it with gradual phase out of the State’s estate tax, new allowable tax dedications for certain charities, an increase in the earned income tax credit and raising the threshold for taxable retirement income.

Neither plan has enough support to achieve both ultimate legislative passage and Governor Christie’s signature. The Governor made it clear that he would not sign the Senate’s proposal, as he didn’t believe it contained enough “tax fairness” to offset the increase in the gas tax. Passage of the Senate proposal also requires enough votes to over-ride the Governor were he to veto the legislation, but Assembly Speaker Vincent Prieto publicly stated he does not have enough support in his house to make that happen. The Senate thus far has refused to act on the gas tax increase/sales tax decrease measure favored by the Governor and Assembly.

The Legislature is expected to address the issue again in mid-July.

FY 2017 Budget Signed into Law

Governor Christie also signed the $34.5 billion FY 2017 Budget into law last week.

According to the Governor’s Office, the 2017 State Budget represents his seventh consecutive with no new taxes or tax increases and includes $2.3 billion less in discretionary spending than the fiscal year 2008 budget, while continuing a sixth consecutive year of the highest amount of aid for public schools and includes the largest pension payment in New Jersey history. The budget holds charter school funding steady.

The Governor eliminated several budget priorities inserted by the Democratic legislature including funding for family planning services, $25 million to expand pre-kindergarten, and $45 million for the Senior Tax Freeze program. He also reinserted a $50 million cut to hospitals for charity care that the Legislature restored. An executive order was issued to freeze half of the State’s Transition Aid to struggling municipalities until public healthcare design committees (that the Governor called for in his original budget proposal) identify $250 million in savings to offset anticipated growth in health care costs for public employees.

Legislative leaders lamented the Governor’s cuts. "New Jersey cannot move forward by leaving its most vulnerable residents behind,” said Assembly Budget Committee Chairman Gary Schaer. “The return on investments like preschool expansion, adult education, charity care, 'breakfast after the bell' and the Senior Freeze is proven.”