Gov. Phil Murphy plans to veto a bill that would have instituted a five-cent fee on single-use plastic and paper bags in New Jersey.

State Sen. Bob Smith, D-Middlesex, announced the impending veto Thursday during a joint legislative hearing in Toms River to discuss the options to reduce plastic waste including bags, straws and micro-plastics.

Parts of the room erupted in cheers at the announcement including academics and environmentalists who favor an outright ban on plastic bags rather than a fee. The Sierra Club, among others, support a ban instead of a fee.

As the bill remained pending, several towns rushed to issue plastic bans so their stricter regulations would be grandfathered in if the 5-cent fee statewide bill were signed. Now, they can have more time to establish those stricter bans, said Jeff Tittel, director of the New Jersey Sierra Club.

Nearly 20 towns have bans or are working on banning plastic, Tittel said.

Girl Scouts (from left) Rose Silletto, Eliza Silletto, Kieli Nicholls and Amita Anana testify at a legislative hearing on plastic waste Thursday in Toms River. Nicholls is wearing garments made with plastic bags.

Michael A. Egenton, executive vice president of the New Jersey Chamber of Commerce, said the veto by Murphy provides a clean slate to properly address recycling without harming the economy.

The bill had passed both houses of the legislature amid the flurry of activity during the final days of budget votes. The fee would have raised an estimated $23.4 million annually.

Some environmentalists considered the fee a good initial effort to curb plastic waste.

"We are disappointed by the governor's failure to issue strengthening amendments for what could have been the first step in the right direction to curb bag use statewide," said Kelly Mooij, the vice president of government relations for NJ Audubon. "With reasonable fixes, the bill would have prevented plastic waste from entering our environment and harming wildlife."

Business interest have opposed the potential affect a bag fee or ban would have on consumers.

"To date, the state has not released any kind of analysis studying the impact of plastics as it relates to litter or other environmental concerns," said Chrissy Buteas, chief governmental affairs officer for the New Jersey Business & Industry Association. "We want to be sure that any measure impacting so many jobs will actually have the desired effect."

No other state currently has a statewide fee for single-use bags, though Washington, D.C. does have a district-wide fee that is similar to the New Jersey proposal. California has an outright statewide ban on single-use plastic bags, and Hawaii has a de facto bag ban after each county in the island state passed local bans.

Cassidy Grom may be reached at cgrom@njadvancemedia.com Follow her at @cassidygrom. Find NJ.com on Facebook.Have a tip? Tell us. nj.com/tips