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Christie Faces Dilemma Over Potential Gas Tax Hike

Christie Faces Dilemma Over Potential Gas Tax Hike

By Scott Conroy - December 10, 2014

As he plans his latest trip to Iowa next month in advance of an expected presidential bid, Chris Christie is being forced to contend with another significant political predicament back in his home state.   

After years of remaining barely afloat, the New Jersey Transportation Trust Fund -- which is used to finance the state’s infrastructure -- is nearly broke, and legislators from both parties agree that it needs a significant cash infusion to address urgently needed repairs and upgrades to crumbling roads, bridges and rail lines. 

With New Jersey’s overall fiscal condition marred in large part by a massive public pension shortfall that has contributed to a dubious record of eight credit rating downgrades during Christie’s tenure, politically palatable options for boosting revenue are few and far between.  

The Democratic-controlled legislature in Trenton has proposed raising the tax on gasoline, which currently stands behind only oil-rich Alaska as the nation’s second-lowest state levy at the pump. 

Christie has publicly opposed an increase in the tax but appeared to soften his stance somewhat in recent public appearances. 

Why would he bend on the issue?

Alternative options are scant and the impending infrastructure crisis is glaring in a state where almost 10 percent of its well-trodden bridges were described as “structurally deficient” in a 2013 report by the American Society of Civil Engineers.    

Christie may survive politically the ongoing investigation by U.S. attorney Paul Fishman into the closure of traffic lanes last year on the George Washington Bridge, but the infinitely higher stakes regarding New Jersey’s infrastructure problems leave little doubt about the need to reach an agreement with the legislature.  

“If someone dies in a tragic bridge collapse, that will be a bridge problem he can’t get out of as governor,” said political analyst Patrick Murray of the Monmouth University Polling Institute.  

For Christie to avoid a ruinous fate in the 2016 Republican presidential primary, he needs to increase revenue while also plausibly denying that he “raised taxes” -- a charge that his GOP opponents would no doubt eagerly trumpet against him.  

That task figures to be a tightrope walk, especially considering his current political standing.  

With Christie’s once sky-high approval rating now underwater in the state, Democratic legislative leaders might be inclined to act as if they have the upper hand in negotiations over the trust fund, which are currently ongoing with the governor in Trenton.  

Yet there is cause to believe that Democrats are willing to provide Christie the political cover he needs to raise revenue for the fund without calling for a “tax hike.”  

The reason has to do with state politics rather than the impending presidential race.    

For instance, Democratic Senate President Steve Sweeney is widely expected to run for governor in 2017 and figures to be hesitant about attaching his name to a gas tax increase that is opposed by two-thirds of New Jersey voters. And thus, it is in both major players’ interest to find a way that allows them to duck the charge of being tax raisers. 

“Everybody in Trenton is going to put their tap shoes on because there’s going to be a lot of dancing,” Murray said.  

Still, with crude oil prices at five-year lows and the cost of gasoline expected to continue to fall, if ever there was an opportune time to persuade the public of the need to pay a little more at the pump, it would be now.   

Christie has argued that boosting the tax would further encumber the residents of a state whose property taxes are the highest in the nation but -- notably -- he has also said that “all options are on the table” when it comes to the shoring up the Transportation Trust Fund.  

In September, he appointed Democratic operative Jamie Fox to head the Department of Transportation. The move was widely perceived as both an extension of the proverbial olive branch to the opposition party and a signal that Christie wanted someone with a political strategist’s skills in that position.

The time may soon come, after all, when the governor could use a seasoned political messenger -- and a Democratic one, at that -- to explain to the public why a compromise that looks an awful lot like a tax hike is, in fact, not one.

One potential compromise would be to extend the New Jersey sales tax to cover gasoline purchases (as is already done in many other states) and then characterizing the resulting boost in revenue as a “tax fairness” or “tax parity” measure. 

The Christie administration did something similar last year in raising the rate by which e-cigarettes are taxed. 

Another possible solution would be to impose a “fee” on petroleum distributors, allowing Christie to retain his claim to semantic purity on not raising taxes. 

Whichever tack Christie and the legislative leaders take will be fraught with risks for the ambitious governor.  

“Politics is going to weigh a lot heavier on this upcoming session than any in the past,” said Carl Golden, who served as press secretary to Republican Govs. Thomas Kean and Christine Todd Whitman. “There are no good options for [Christie] at this point, and when I say ‘good,’ I mean that will satisfy the folks involved in a Republican primary.” 

Christie’s State of the State address is scheduled for Jan. 13, and he is expected to formally submit his budget proposal to the legislature the following month. 

But Democrats have expressed a desire to resolve the trust fund issue -- for the time being, at least -- before the end of this month.  

If the two sides do come to an agreement by then, the likely White House hopeful will have a new addition to his record that he will be tasked with defending to the people of Iowa during his visit there next month.

Scott Conroy is a national political reporter for RealClearPolitics. He can be reached at sconroy@realclearpolitics.com. Follow him on Twitter @RealClearScott.

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