Nov. 5 (Bloomberg) -- Republican Chris Christie’s election as New Jersey Governor stymied plans by the Democratic Legislature to raise the fourth-lowest gasoline taxes in the U.S. to finance the state’s depleted highway trust fund.

The pending arrival of the first Republican governor in New Jersey since 1997 also has renewed hope among some Democratic lawmakers that they can overhaul the state’s pension system for public employees, which is underfunded by more than $34 billion.

Christie swept first-term Governor Jon Corzine, a former Goldman Sachs & Co. co-chairman, out of office Tuesday amid discontent over a recession that has left New Jersey, the 11th biggest state by population, with its highest unemployment rate in 32 years. He became the first Republican to win a statewide election in 12 years.

Democrats scaled back their plans for the legislation they will consider during the 76 days between now and Christie’s Jan. 19 inauguration, a legislative term called the “lame duck” session.

“A lot of things we’re just not going to do,” said Senate President Richard Codey, an Essex County Democrat who served as governor for a year after the resignation of former Governor James E. McGreevey in 2004.

Christie’s first act as governor will be to sign an executive order suspending all new state regulations for 90 days while his administration reviews their impact, he said.

Post-Election Priorities

Codey and Assembly Speaker Joseph Roberts, a Camden County Democrat, met on Wednesday to map out their priorities for post- election sessions to begin near Nov. 23, Codey said. They decided to leave consideration of the gasoline-tax increase to Christie. They will only propose a vote on a bill to legalize gay marriage if there’s enough support to pass, a prospect that Codey said would be impossible if Christie convinces Republicans otherwise.

“What used to be certain to pass I think now has a lot of uncertainty about it,” said Sen. Ray Lesniak, a Union County Democrat who is sponsoring the gay marriage bill. “That’s the first and foremost issue that’s been impacted by this election.”

A strategy for generating new support for the Transportation Trust Fund, which borrows $1.6 billion a year to support highway and mass transit projects in New Jersey, has also been dropped from consideration, Codey said.

“I think we have to wait for the new governor,” said Codey. “We have to get direction from him. He’s the governor.”

Cordial Relationship

Christie, 47, a former U.S. Attorney whose office won criminal corruption convictions against four former members of the Senate he will now be negotiating with as governor, said he expects a cordial relationship with the Democratic controlled Legislature.

“I hope what we’ll see is a spirit of cooperation,” Christie said at his first post-election news conference, held at the Robert Treat Academy, a charter school in Newark, New Jersey’s largest city. He has tried to speak with Codey and Roberts, he said. David Samson, founding partner of the Roseland, New Jersey law firm Wolff & Samson and attorney general under McGreevey, a Democrat, will be chairman of the transition team, Christie said.

Democrats had proposed raising the state’s gasoline tax, currently 14.5 cents per-gallon, to replenish the trust fund for road repairs. After this year the fund will not be able to support new projects, because the $895 million in gasoline and toll revenue dedicated to it annually will be needed to pay debt service on $10 billion that has already been borrowed.

Bond Yields

The trust fund priced its latest bonds to yield between 6.23 percent and 6.4 percent for maturities of 23 years to 30 years on June 3 2009. At the time, the average yield on 25-year revenue bonds was 5.63 percent according to the Bond Buyer 25- Year Index.

During the campaign, Christie opposed raising the gasoline tax, saying he supports finding ways to pay for transportation projects without borrowing.

Lesniak and other lawmakers are in no rush to push matters such as expanding charter schools and overhauling public employee pensions, because they say the incoming governor’s priorities match the Legislature’s.

New Jersey’s pension fund was underfunded by $34 billion in June 2008, before last year’s stock market collapse drained another $15 billion from it. The $68.2 billion pension fund provides benefits for about 700,000 working and retired teachers and public sector workers.

Potential Budget Gap

Democratic lawmakers need to stay away from any proposal that would add to the state’s potential $8 billion budget gap, Republican Senate Minority Leader Tom Kean Jr. said.

“The Legislature needs to be on notice the next two months are not a time of spending bills,” Kean said. “I think now is the time to start a transition toward a more responsible fiscal policy.”

The expansion of charter schools and education reform will be priorities for the new administration, Christie said. He will press for a cap on local government spending, and has directed his Lt. Governor Monmouth County Sheriff Kim Gaudagno, to report back within the first 90 days in office on unfunded state mandates that raise local government costs, he said.

“I like Chris as a person,” said State Sen. Stephen Sweeney, a Gloucester County Democrat who said he expects to unseat Codey as Senate president for the forthcoming legislative session. “We’re not going to be obstructionists. We won’t do that.”

Christie also pledged cooperation, to a point.

“Am I willing to fight?” he asked at his press conference. “Of course I am. But I don’t go into it with that assumption.”

To contact the reporter on this story: Dunstan McNichol in Trenton at dmcnichol@bloomberg.net.

Last Updated: November 5, 2009 00:00 EST