The New Jersey Legislature has passed a bill that will incrementally increase the state’s per-gallon gas tax over the next five years, sending the legislation to Governor Phil Murphy’s desk for final approval.
This move comes as part of efforts to replenish the Transportation Trust Fund (TTF), which was set to expire June 30, and has faced challenges financing transportation projects through bonds.
New Jersey’s gas tax is 42.3 cents per gallon, and the tax on diesel is 49.3 cents per gallon. This is one of the highest gas taxes in the country.
The tax increased by 0.9 cents on October 1, 2023, following fuel consumption falling below projections during the 2023 fiscal year, in order to maintain revenue of roughly $2 billion each year.
The change in the state’s gas tax formula beginning July 1, would be expected to raise $2.4 billion in new revenue annually over the next five years. The new bill would reauthorize the TTF until fiscal year 2029.
“Without such renewal, ongoing projects will languish and costs will skyrocket — reminiscent of the hardships endured during previous shutdowns that some of you may have been here to face,” said bill sponsor Assemblyman Clinton Calabrese.
The new electric car fee, which would also begin July 1, would be in addition to existing registration fees. The fee would increase by $10 a year until it reaches $290 in 2028.
Lawmakers in New Jersey have financed approximately $20 billion worth of transportation projects by issuing bonds, resulting in a total cost of $32 billion due to interest payments.
This practice has been criticized for its long-term financial implications, with critics arguing that it prioritizes debt servicing over investments in public transportation and other transportation needs.
The Transportation Trust Fund Authority (TTFA) borrows cash to fund capital projects authorized by the Legislature, using revenue sources constitutionally dedicated to transportation purposes.
The substantial debt service obligations of $32.1 billion significantly exceed the amount spent directly on construction and repair projects, raising concerns about the fund’s financial sustainability.
The bill approved by the Legislature includes provisions to divert significant resources to NJ Transit, addressing criticisms about the TTF’s focus on road projects over public transportation investments. Additionally, the legislation lays the groundwork for a series of modest increases in the state’s gasoline tax, with the aim of renewing the TTF for another five years beginning July 1.
Critics of the bill argue that it will impose additional financial burdens on motorists at a time when inflation and cost-of-living pressures are already high.
Assemblyman Christian Barranco, a former Pompton Lakes councilman and electrician with the politically influential IBEW Local 102, voiced concerns about the impact on working-class residents, saying, “We’re all paying $4 for a gallon of milk, and we’re about to tell everybody now they need to pay more for gas on top of that.”
The bill also introduces a new registration fee for zero-emission vehicles, including battery electric and hydrogen fuel-cell vehicles. This fee, starting at $250 per vehicle and increasing annually, aims to generate revenue for the trust fund and support transportation projects across the state.
Sen. Bob Smith criticized the new registration fee, calling it a “policy mistake” to penalize people for buying electric cars, but ultimately voted for the bill.
Murphy, who will make the final decision on the bill, faces pressure to keep money flowing despite concerns about the financial burden on taxpayers at a time when the state is already implementing toll hikes and fare increases for New Jersey Transit services.
As his wife’s campaign to replace corrupt US Senator Bob Menendez would benefit from funding transportation projects and infrastructure investments, Murphy’s decision on the gas tax increase and the broader renewal of the Transportation Trust Fund is largely a fait accompli.
Discover more from NJTODAY.NET
Subscribe to get the latest posts sent to your email.