New Jersey governor inks fuel tax increase

New Jersey’s gas and diesel tax rates soon will be on the rise.

Touted to safeguard the future of the state’s transportation infrastructure, Gov. Phil Murphy this week signed into law a bill to continue to support transportation funding in the state via regular fuel tax increases.

Since 2016, the Garden State has revised gas and diesel rates each October to adjust for any revenue shortage or surplus during the prior fiscal year. Last fall, the tax setup resulted in a fuel tax increase of about a penny.

Transportation Trust Fund

The eight-year-old 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 was scheduled to sunset this summer.

Extension, with revisions, celebrated

The New Jersey Legislature voted along party lines to send to the governor a bill that would reauthorize the Transportation Trust Fund for another five years.

Murphy acted on Tuesday, March 26 to renew the fund with a requirement to spend $2 billion annually on transportation projects. Additionally, the amount will be raised each year starting in 2027.

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

“New Jersey sits at the heart of one of the busiest stretches of commerce in the entire world,” Murphy said in prepared remarks. “Whether it’s trying to get home to their families after a long day or shipping critical goods to keep our economy humming, our residents and our businesses depend on the strength of our transportation system to get where they need to go.”

Today I signed legislation investing billions into our transportation infrastructure for the next five years.

This critical funding will help upgrade our roads and bridges, create thousands of good-paying union jobs, and help commuters across NJ get to where they need to go. pic.twitter.com/yQZZrAXssU

— Governor Phil Murphy (@GovMurphy) March 26, 2024

Taxes and fees

Previously A4011/S2931, the new law will raise fuel tax collections and create a new annual registration tax on zero-tailpipe-emission vehicles.

The state 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.

Starting July 1, an annual 1.9-cent-per-gallon fuel tax increase will be imposed through July 2028. At that time, the gas rate will be 51.8 cents, and the diesel rate will be 58.8 cents.

Also included in the new law is a flat $250 annual fee on electric vehicle registrations. The amount will increase by $10 each July until 2028. At that time, the annual fee will reach $290.

The new electric vehicle fee also will take effect July 1.

Statehouse Republicans oppose changes

Assemblyman Christopher DePhillips, R-Bergen, is among GOP lawmakers who did not support all provisions in the extension. He said the current setup has not met expectations.

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

Former Republican state Sen. Steve Oroho was the sponsor of the 2016 Transportation Trust Fund Reauthorization. He said the status of the fund does not warrant a fuel tax increase.

“No one disputes the need to reauthorize the Transportation Trust Fund, which is critical to our state. However, very much unlike the situation we faced in 2016 when the fund was completely insolvent, the TTF in 2024 is healthy and supported by revenue,” Oroho stated.

Senate Republican Leader Anthony Bucco said Democrats were not interested in his alternative funding plan that did not include a fuel tax increase. Instead, he wanted to conduct an audit of New Jersey Transit “to hold NJT accountable.”

Additionally, Bucco wanted to establish a constitutional dedication of any new money generated by the proposal to the TTF. LL

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