TRENTON — New Jersey's long saga on how to raise cash for transportation projects took a new twist last week when the chairman of the state Senate budget committee came up a compromise designed to end the stalemate.

Under Sen. Paul Sarlo's plan, gas taxes would go up but lawmakers would ditch the estate tax on heirs, allow residents to deduct charitable donations and give retired people a bigger break on income taxes.

The state would wind up with a $2 billion annual state Transportation Trust Fund program that doubles the amount of aid to towns.That trust fund is poised to run out of cash this summer. And while lawmakers have been considering possible fixes for more than a year, they've yet to make a deal.

Here's a recap of what's happening with trust fund and how it could affect your taxes:

1. How did we get here?

When it was enacted by former Gov. Tom Kean, the Transportation Trust Fund was designed to be self-sustaining, with half coming from the revenue gained largely through the gas tax, and half coming from borrowing that would be limited so it could be replenished as the bonds are paid off.

But over time, governors raised the borrowing limit without providing more revenue through a higher gas tax. What happened was the lion's share of the money dedicated to the fund from the gas tax has been used to pay off old debt rather than pay for new road and rail repairs.

Christie in 2012 had envisioned a plan with $4.4 billion in new borrowing over five years and a bigger reliance on pay-as-you-go funding. Some of that was money that the Port Authority had allocated to the Access to the Region's Core Hudson River tunnel project that Christie cancelled in October 2010.

But, according to Moody's Investor's Service, budget woes meant the state chipped in less and "the final borrowing plan increased to $5.4 billion."

Raise gas tax in exchange for 3 tax breaks?

Raise gas tax in exchange for 3 tax breaks?

A senate senator wants to swap three tax breaks for a hike in N.J.'s gas tax to fund the Transportation Trust Fund.

The current, five-year Transportation Trust Fund program expires June 30, which is roughly when officials expect the fund to run out of money for major new projects.

The trust fund was expected to go broke last summer, but Christie's budget cobbled together money to get through another year.

His proposed budget for the fiscal year that begins July 1 does not identify a source of revenue for highway and transit projects. Christie says it's up to lawmakers to bring him a solution.

Where will the state come up with the money?

Democrats have set their sights on the gasoline taxes.

In the last couple years, Democratic lawmakers have offered a couple options, one that would mean motorists would pay another 25 cents per gallon at the pump, and another that would phase a 15 cent per gallon increase over three years.

Sen. Samuel Thompson (R-Middlesex) last week suggested the state raise the gas tax 2 cents per gallon each year.

Sen. Jennifer Beck (R-Monmouth) unveiled her own plan in December to replenish the trust fund without tax increases, saying natural revenue growth can pay for it. Her $1.6 billion annual plan assumes total state tax collections grow 3.34 percent a year.

She would also generate or free up $263 million a year through increased fines for some motor vehicle violations, savings from consolidating the state's various transportation agencies and reforming employee health benefits.

Where does the governor stand on this?

Christie has said he won't consider raising the gas tax unless Democrats agree to tax reductions elsewhere. He's called this compromise "tax fairness."

At a campaign stop in New Hampshire, the governor responded to a question on New Jersey's high cost of living, saying "I'll tell you what I'm not going to do, I'm not going to increase the gas tax while you're sitting here and complaining to me about every other tax being too high, but you want me to spend money on roads."

"Well, I've spent money on roads and we have the second lowest gas tax in America," he continued.

So what taxes will they cut?

The plan by Sarlo (D-Bergen) is a response to Christie's call for "tax fairness." The gradual elimination of the estate tax is the most significant part of his proposal.

New Jersey's estate tax is paid by heirs who inherit more than $675,000. That is the nation's lowest threshold. The federal estate tax exemption for 2016 is $5.45 million.

Proponents say it makes New Jersey less competitive and drives out wealth.

Progressive groups call cutting the estate tax a gift to the wealthy at the expense of revenue for safety net programs. Only 5 percent of estates are subject to the estate tax, according to the nonpartisan Office of Legislative Services.

In 2014, 120 estates valued at more than $5 million paid 38.4 percent of all estate taxes collected here. As a comparison, the 1,405 estates worth between $675,000 and $1 million represented 9.3 percent, according to OLS.

It brings in about $400 million a year, and OLS estimates once Sarlo's proposed phase-out is complete in 2022, the state will lose about $550 million in revenue each year.

Christie, meanwhile, has called for its immediate and total elimination, saying the phase out isn't enough.

What other taxes may go down?

There's the retirement income tax.

Right now, the state income tax for a retired married couple filing jointly kicks in after their income exceeds $20,000. Under bipartisan legislation (S998) that has passed the Senate's budget panel, retired couples wouldn't be hit with state income taxes until they receive $100,000 in income (after a three-year phase in).

Retired individuals would not have any state income taxes until their income exceeds $75,000 rather than the current $15,000 level. These changes could cost the state $80 million to $125 million a year once fully implemented, OLS said.

The last leg of his proposal incorporates a Republican bill (S1932) to create an income tax deduction for charitable contributions to New Jersey-based organizations. New Jersey has relatively few deductions to the gross income tax.

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