New Jersey’s lawmakers are crafting elaborate proposals to replenish a fund for transportation projects that’s about to go broke. Bond investors are counting on the simplest solution as the most likely: raise the gas tax.

Unless legislators act, the most densely populated U.S. state can’t borrow for new road and rail projects as of July 1. Motor fuels collections that flow into the fund are already committed to the $15 billion in outstanding debt issued by the New Jersey Transportation Trust Fund Authority.

New Jersey hasn’t increased the gas levy since 1988. Democrats and Republicans are bickering over how to do so while reducing other taxes, as Republican Governor Chris Christie says he wants to see “tax fairness.” Yields on the agency’s debt suggest investors are betting the logjam will be broken.

“You’re likely to see some kind of gas tax increase,” said Paul Brennan, a senior vice president in Chicago at Nuveen Asset Management, which oversees about $100 billion of municipal bonds, including the authority’s. “The state has infrastructure needs that have to be dealt with.”

Trust fund bonds due in June 2026 yielded 1.9 percentage points above benchmark securities on Thursday, down from as high as 2.1 percentage points in March, data compiled by Bloomberg show. At the same time, the average yield of 3.3 percent is above that of similarly-rated revenue securities at 1.9 percent.

The New Jersey Transportation Trust Fund Authority has had expenses exceed revenue by an average of $1 billion in each of the last three years. For years, even as the gas-tax collections lagged, the state borrowed more and employed practices such as extending debt maturities to keep the account solvent, said Jack Lettiere, a former transportation commissioner under three Democratic governors in the 2000s.

In 2011, Christie pledged to use more cash and less debt for highway and bridge repairs. Instead, faced with a budget shortfall the next year, he put no money into the transportation fund for three years and borrowed $1 billion more than promised.

A proposal by Senate President Steve Sweeney and other leading Senate Democrats that’s supported by several Republican would more than double the gasoline tax to 23 cents per gallon. New Jersey’s levy is 10.5 cents, and an additional levy of 4 cents on petroleum products gross receipts gets passed to the consumer. The 37.5-cent per gallon tax would still be lower than rates in neighboring New York and Pennsylvania, the proponents say. The bill would fund $20 billion in improvements over a decade, and could be considered by the senate this week.

In exchange for raising the cost of gas, the legislation would repeal an estate tax in 2019 and make reductions in other levies. Christie, who unsuccessfully campaigned in the Republican presidential primary on a record of rejecting tax increases, said the offsets don’t go far enough in a state ranked third highest nationally by the Tax Foundation for residents’ state and local tax burden.

In turn, some Democrats say the trade-off for the gas tax increase is too pricey. Elimination of the estate tax would be “tax injustice,” Sen. Raymond Lesniak, D, told reporters in Trenton Wednesday.

In criticizing the proposal, they joined Republicans who said in a separate news conference they were against raising the fuels levy for a different reason: cheap gas that produces long lines at highway rest stops near the borders is one of the few areas where New Jersey has a tax advantage.

Christie, whose term ends in 2018, isn’t proposing a solution to the nearly bankrupt transportation fund. He is instead putting the task on legislators, who also have been loath to increase fuel taxes on their constituents who are legally barred from pumping gas themselves. Only Alaska pays less in gas taxes among U.S. states.

Other states have acted to boost their transportation needs. Eight have passed bills to increase their gas taxes last year and two states altered the taxes to limit decreasing collections, according to the National Conference of State Legislatures.

Absent a fix, New Jersey’s transportation projects would have to be financed through the state’s budget, which is already facing a shortfall. That would “crowd out” other priorities such as aid to municipalities and education, said Dan Belcher, a senior municipal analyst at Columbia Threadneedle Investment Advisers, which owns trust fund securities among its $26 billion in municipals.

“The gas tax is the most likely source of revenue,” he said.

While investors have “placed their bets” that New Jersey would support the transportation trust fund, it’s unlikely lawmakers would move quickly, said Tamara Lowin, director of research at Rye Brook, New York-based Belle Haven Investments, which oversees $4.8 billion of municipal debt.

“Finally, both sides of the aisle are acknowledging that the gas tax is the most effective and prudent way to support the Transportation Trust Fund,” she said. But a deal would “take a lot of fast maneuvering, and that is something New Jersey is not known for.”

(c) 2016, Bloomberg · Romy Varghese