New Jersey bill would extend current fuel tax rule

A New Jersey legislative panel voted to advance a bill that would continue to support transportation funding in the state via regular fuel tax increases. A new transportation revenue source also would be included.

Each October, the state revises gas and diesel rates to adjust for any revenue shortage or surplus during the prior fiscal year. And last fall, the tax setup resulted in a fuel tax increase of about a penny.

The price increase marked the first time in three years the fuel rate rose. In 2022, truck drivers and motorists in the state received a penny price break. The previous year, the tax rate decreased by 8.3 cents.

Why the tax changes?

An eight-year-old Garden State law requires a steady stream of revenue to support the state’s Transportation Trust Fund. The rule requires the state treasurer to adjust the tax rate each year to ensure it brings in revenue needed to pay the bills for transportation work.

The fund is required to provide $1.6 billion annually to support infrastructure work.

The current tax setup is scheduled to sunset this summer.

Extension with revisions

Action underway at the statehouse would extend the tax setup with changes.

The Assembly Transportation and Independent Authorities Committee voted 7-4 along party lines to advance a bill that would reauthorize the Transportation Trust Fund for another five years.

The fund would be required to spend $2 billion annually on transportation projects – an increase from current law. Additionally, the amount would be raised each year starting in 2027.

The increases would be divided equally between local, county, New Jersey Transit and state Department of Transportation projects.

Sponsored by Assemblyman Clint Calabrese, D-Bergen, A4011 also would raise fuel tax collections and create a new annual registration tax on zero-emission vehicles.

Assembly Republicans do not support the extension.

Assemblyman Christopher DePhillips, R-Bergen, said the current setup has not met expectations.

“We all support transportation infrastructure on this dais. We all support robust funding for transportation projects. But our residents want and deserve to see return on investment,” DePhillips said in prepared remarks.

Taxes and fees

The state’s fuel rate includes two components: a petroleum products gross receipt tax and a motor fuels tax.

Since October 2023, the petroleum products gross receipt tax has been set at 31.8 cents for gas and 35.8 cents for diesel.

Additionally, the motor fuels tax rate on gas is 10.5 cents. The diesel rate is 13.5 cents.

The total tax rates for gas and diesel are 42.3 cents and 49.3 cents, respectively.

Passage of A4011 would result in a 1.9-cents-per-gallon fuel tax increase each year through July 2028. At that time, the gas rate would be 51.8 cents and the diesel rate would be 58.8 cents.

Assemblyman Michael Inganamort, R-Sussex, said that while it is understood that reauthorization is necessary, an increase in the fuel tax does not need to be attached.

“An increase in the gas tax is unnecessary and unwise and thus for me a nonstarter,” Inganamort stated.

The bill includes a provision to add a flat $250 annual fee on electric vehicle registrations. The amount would be increased by $10 each July until 2028. At that time, the annual fee would reach $290.

A4011 has moved to the Assembly Appropriations Committee. The Senate Budget and Appropriations Committee voted 9-4 along party lines on Monday, March 11, to advance an identical version. The Senate bill, S2931, next heads to the chamber floor. LL

While Senate Republicans want to invest in our infrastructure and to fund the Transportation Trust Fund (TTF), there are alternative ways to do so, without raising the gas tax and burdening our residents for Trenton’s poor budget decisions.

— New Jersey Senate Republicans (@NJSenateGOP) March 11, 2024

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