NEW YORK, Sept 30 (Reuters) - New Jersey lawmakers and Governor Chris Christie on Friday struck a $16 billion deal to fund stalled state transportation projects for the next eight years by hiking the gasoline tax 23 cents a gallon.
The proposal would increase the total state gas tax, which has not risen since 1988, to 37.5 cents a gallon. In exchange, lawmakers would reduce sales taxes and eliminate an estate tax on wealthy residents.
The hard-fought deal comes after months of talks and previous agreements that ultimately fell flat. The Democrats who lead the legislature could not agree among themselves and with Christie about exactly how to replenish the Transportation Trust Fund (TTF), which pays for road, bridge and transit projects and as of July 1 only had about enough money for debt service on existing projects.
In early July, Christie halted all but the most essential projects paid for with the TTF, including $2.7 billion of NJ Transit projects.
Friday's funding agreement also comes in the wake of a deadly NJ Transit crash of a commuter train in Hoboken, an accident that has added scrutiny to the state's transportation funding crisis.
Investigators on Friday examined a black box recorder recovered from the wreckage in search of clues about the cause of that crash the day before.
Christie noted during a press conference on Friday that he had been in discussions with Senate President Stephen Sweeney and Assembly Speaker Vincent Prieto earlier in the week.
"This meeting was scheduled and known by many reporters almost a week before the tragedy," Christie spokesman Brian Murray told Reuters in an email.
Under the deal, the state sales tax rate will drop in phases from the current 7 percent to 6.625 percent after January 2018. Low-income working families, veterans and retirees would also see tax reductions.
Altogether, the tax cuts will cost the state $164 million in 2017 and an estimated $1.4 billion once fully phased in by 2021, Christie's office said.
Both houses of the legislature must still approve the proposal.
Christie also said he would ask voters in November to approve a constitutional amendment mandating that gas tax revenues be dedicated to transportation projects. (Reporting by Hilary Russ; Additional reporting by Jarrett Renshaw; Editing by Cynthia Osterman)