NJ Gas Tax Update 10 August 2016 ?>

NJ Gas Tax Update 10 August 2016

The New Jersey Assembly voted in June for a 23 cent per gallon gas tax increase.  The Senate disagreed with this addition to the existing 13.5 cent tax.  That would have given NJ the seventh highest gas tax in the country, but still lower than New York and Pennsylvania.

Currently, New Jersey has the second lowest gas tax in the country after Alaska.  And we don’t pump our own fuel. , Unfortunately, our Transportation Trust Fund is broke.

New Jersey drivers dodged a bullet in June.  Lawmakers were considering a tax based on the sales price of the fuel, which would have risen as the price of gas does.  And it will, inevitably.  The low gas prices of 2016 have been just a blip, the result of a global economic slowdown.  The 23 cents per gallon proposal at least caps the tax.

The state consumes 10.8 million gallons of gasoline each day.  Spread over New Jersey’s 8.9 million residents, the tax increase amounts to an average of $102 per person.  It’s not spread evenly, though.  Those who use mass transit won’t be hit hard by the tax, but should benefit by a renewed source of funding to their buses and trains.  More than fifty percent of NJ Transit’s operating budget is covered by subsidy.  A ticket, in other words, covers less than half the cost of running the train or bus.

Lawmakers are pressed to find a solution for the failing state Transportation Trust Fund, which ran out of money for projects in July.  This fund is used for the state portion of state-federal projects, like the Gateway Tunnel.  In the overall scheme, an additional billion for the Transportation Trust Fund isn’t much, but it will attract more federal dollars.

NJ Voters will get their say in November.  Here is the ballot measure:

Do you approve amending the Constitution to dedicate all revenue from the State motor fuels tax and petroleum products gross receipts tax to the Transportation Trust Fund?

This amendment would provide that an additional three cents of the current motor fuels tax on diesel fuel, which is not dedicated for transportation purposes, be dedicated to the Transportation Trust Fund.  In doing so, the entire State tax on diesel fuel would be used for transportation purposes.  The entire State tax on gasoline is currently dedicated to the Transportation Trust Fund and used for transportation purposes.  The amendment would also provide that all of the revenue from the current State tax on petroleum products gross receipts be dedicated to the Transportation Trust Fund.  In doing so, the entire State tax on petroleum products gross receipts would be used for transportation purposes.  This amendment does not change the current tax on motor fuels or petroleum products gross receipts.

The ballot measure has nothing to do with money.  It reroutes $118 million per year from the general fund to the Transportation Trust Fund.  That’s small.  It’s a matter of shifting money from one pocket to another.  Yesterday, the New Jersey Sports and Exposition Authority voted to give up $390 million in sales taxes to pay off bonds for the American Dream Mall at the Meadowlands.  That is an expense to the NJ taxpayer.

The NJ Transportation Trust Fund Authority is about broke right now.  That’s OK, because all nonessential projects are halted.  Eventually, those projects will need to be restarted and the TTF will have to make principal and interest payments on $16 billion bonds it has outstanding.  In the short run, the TTF needs to find more cash.  Raising the gas tax is the most likely solution.  People won’t like it, but the cost of gas is low right now.

In the long run, The New Jersey Turnpike Authority needs to cough up a bigger contribution to the TTF.  It turns over only $12 million per year to the TTF.  It does turn over $350 million to the NJ general fund.

The state needs to contain the cost of maintaining its roads.  A journeyman bridge painter makes $82 per hour, almost double what a teacher makes.

At the end of the day, the TTF bill will be paid. The question is who will pay it.  A gas tax will hit all drivers.  Tapping the NJTP revenue flow will hit all NJ taxpayers.  Reigning in maintenance cost will hurt construction workers.  We can only hope that our legislature will allocate the pain equitably.

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