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Legislative Update
Gas tax hike, fee on zero emission vehicles in the works to renew NJ Transportation Trust Fund
he Assembly Transportation committee passed A-4011 yesterday, a bill that revises "New Jersey Transportation Trust Fund Authority Act," revises calculation of gas tax rate, and establishes annual fee for zero emission vehicles. Copy of the legislation can be found here https://pub.njleg.state.nj.us/Bills/2024/A4500/4011_I1.PDF
The legislation is being fast tracked as the Senate Budget and Appropriations committee is considering the Senate (S2931) version on Monday, March 11th. New Jersey’s gasoline tax would go up by nearly two cents in each of the next five years under a deal being crafted by Gov. Phil Murphy’s administration and Democratic lawmakers.
A bill to increase the tax and shore up the state’s Transportation Trust Fund — which supports $2 billion a year in road and transit. The new money helps the state keep roads, bridges and rail infrastructure in good repair while keeping pace with inflation and funding major new projects. State transportation officials and the construction industry, including labor unions, have been waiting for such a bill to boost infrastructure spending.
Murphy administration officials said the plan includes:
— Increases to the gas tax of 1.9 cents per gallon in each of the next five years, starting July 1. That is a total of 9.5 cents over five years, which the administration considers a relatively modest increase. The current state gas tax is 31.8 cents per gallon.
— A $250 fee on electric vehicles, which will go up by $10 in each of the last four years of the deal. Since electric vehicles don’t use gas, EV drivers have been spared contributing to the trust fund, which is largely funded by the gas tax. The fee, which would be paid along with other vehicle registration fees, is set to roughly match the amount of money the driver of a gas-powered car pays each year in state gas taxes.
The annual trust fund program is expected to remain a $2 billion spending program in the first two years of the five-year plan. The way the money is split will stay the same during those years. Right now, the state Department of Transportation gets $810 million, New Jersey Transit gets $760 million and county and local governments share $430 million.
In the final three years, spending will increase by 3 percent each year. That new money — $60 million or more each year — will be split evenly among DOT, NJ Transit and county and local governments.
The deal follows months of discussions between Democratic lawmakers and the governor’s chief of staff, Diane Gutierrez-Scaccetti, who is also the former head of the state Department of Transportation. The current law governing the fund was last updated during Gov. Chris Christie’s administration and is set to expire this year, meaning officials would soon not be able to borrow money using trust fund revenues without lawmakers' blessing.
The gas tax is recalculated each year using a formula to meet revenue targets for the trust fund. Last fall, the tax went up by .9 cents per gallon. In 2022, it went down by 1 cent. In 2021, it went down by 8.3 cents. In 2020, it went up by 9.3 cents. Such recalculation — known as a "true up" — would continue, except it would also have the 2-cent increase and higher revenue targets built in if approved, meaning it will cost more for drivers than in the past.
While there have been months of on-again, off-again rumors about a deal and nothing materialized during last year's lame duck session, when it may have been more politically convenient to vote for a tax increase, there is so far little sign of the Trenton tumult like the last time the trust fund law was redone in 2016.
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