On Friday, Sept. 30, Gov. Chris Christie and the legislative leadership announced that a deal had been struck to reauthorize and replenish the depleted Transportation Trust Fund (TTF). The TTF pays for road and bridge construction/repair in New Jersey. Although funded from several sources, it relies mainly on the state gas tax for revenue.
Through the announced compromise, the gas tax will increase in New Jersey by 23 cents per gallon.
The second part of the compromise includes multiple tax cuts that will decrease revenues for the state general fund, the source of state aid for schools. These include:
- A sales tax cut of 0.125% for 2017 and an additional 0.25% (0.375% total) by 2018.
- An increase of the Earned Income Tax Credit to 35 percent of the federal benefit amount beginning in tax year 2016.
- Increasing the New Jersey gross income tax exclusion on pension and retirement income incrementally over four years, to $100,000 for joint filers, $75,000 for individuals and $50,000 for married/filing separately.
- Phasing out the estate tax by 2018.
- Providing a personal exemption on state income taxes for all New Jersey veterans honorably discharged from active service in the military or the National Guard.
It is estimated these tax cuts will result in $164 million less in revenue for 2017 and, when fully phased-in by 2021, an estimated $1.4 billion annually. Education spending has consistently comprised about 38 percent of the total state budget. The current year is no different, with $13.3 billion being spent on education from the $34.6 billion budget.
To date, the legislative language enacting the TTF compromise has yet to be made public. NJSBA is awaiting these details to emerge to further review the proposal and its impact on local school districts. Both houses of the Legislature are scheduled to meet Wednesday, Oct. 5 in special session to consider this compromise.