New Jersey gas tax staying flat year after hike

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New Jersey produced enough fuel revenue last year to avoid a third gas tax increase in four years, according to State Treasurer Elizabeth Maher Muoio.

Muoio announced Wednesday that the current 41.4 cents per gallon tax rate would stay in effect for the coming year following a review of fuel consumption required under a 2016 that requires a steady stream of revenue to support New Jersey’s Transportation Trust Fund. Last year’s gas tax jumped 4.3 cents per gallon because of lower-than-projected fuel consumption levels following a 23-cent hike in 2016 as part of an eight-year, $16 billion, TTF re-authorization.

“We’re pleased that fuel consumption levels, coupled with our realistic projections last year, have allowed us to avoid an increase in the gas tax rate for this year,” Muoio said in a statement. “This dedicated revenue stream has enabled us to disburse billions in funding across the state to bolster our transportation infrastructure and keep New Jersey moving forward.”

Muoio noted that while New Jersey’s gasoline consumption has continued a multi-year decline, the 4.3-cent increase that went into effect last year helped boost revenues for the 2019 fiscal year that ended June 30. New Jersey missed the $2.083 billion 2019 Highway Fuels Revenue target by $33.4 million, marking an improvement from a $125.2 million gap the state faced in 2018.

Last year’s gas tax increase marked the second in three years for New Jersey after the Garden State had gone since 1988 without one. Since the 23-cents per-gallon hike in 2016, the state has disbursed a total of $4.34 billion for local, county, and state transportation projects including New Jersey Transit, Muoio said.

Gov. Phil Murphy said in April he was open to exploring other avenues for funding infrastructure because of changing driver habits coupled with increased use of hybrid and electric vehicles. The I-95 Corridor Coalition is planning to work with state officials to see whether a a mileage-user fee could be a workable alternative.

The 2016 gas tax increase for infrastructure upgrades as part of a deal then Gov. Chris Christie struck with lawmakers to also cut the sales tax to 6.625% from 7% and phasing out the estate tax. Moody's Investors Service analyst Baye Larsen called the compromise tax plan a credit negative in a November 2016 report that since it was expected to create an estimated $1.1 billion loss to the state’s general fund by 2021.

Structurally imbalanced budgets and a heavy pension burden drove 11 bond rating downgrades under Christie from 2011 to 2017 making New Jersey the lowest-rated state with the exception of Illinois. The Garden State’s debt now has ratings of A3 from Moody’s Investors Service, A-minus from S&P Global Ratings and A from both Fitch Ratings and Kroll Bond Rating Agency.

Regina Egea, president of the conservative-leaning Garden State Initiative, said that while the new TTF raised transportation spending by 25% compared to before 2016, the state’s infrastructure remain in poor condition. She noted that New Jersey’s infrastructure is rated D-plus by the American Society of Civil Engineers even though the state has among the most expensive road and bridge networks in the nation.

“When will New Jersey see the incremental benefit of increasing the transportation investment 25% and have it show up as actual improved Department of Transportation/transit performance,” Egea questioned. “For example, did 25% more road miles get re-paved 2018 vs 2016 or 25% more bridges move out of structurally deficient from 2017 into 2018 versus from 2015 into 2016?”

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