NJ's Gas Tax Is Going Up, Murphy Administration Says
New Jersey's gas tax is going up, the Murphy administration announced on Thursday.
Lower fuel consumption over the last two years necessitated a gas tax increase of 4.3 cents, according to the state Department of Treasury.
The rate is determined annually, so the new gas tax hike will go into effect on Oct. 1 since revenues – which help determine the rate – fell short this year.
What triggered the hike is a little-talked-about provision in the recent 23 cent gas-tax increase that could either hike, reduce or keep the gas tax the same.
The change depends on how much of the tax has been collected over the past year to fund the Transportation Trust Fund. The fund pays for important and emergency road projects.
The Murphy administration blamed former Gov. Chris Christie and his team for the hike.
“The precise change in the gas tax rate is dictated by several factors, all of which are beyond the control of the current administration,” said State Treasurer Elizabeth Maher Muoio. “The law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target.
"Unfortunately, because the Christie administration overestimated gas consumption rates last year, the tax rate has to be increased by nearly two cents more this year in order for us to meet our obligation under the statute and fully fund the state’s many pressing transportation infrastructure needs.”
The 2016 gas-tax-bike legislation signed by Christie has what it calls a “true-up” provision. That entails the following:
"If the rate is too high and the state overcollects, then in the next year the rate must be adjusted down to account for the overcollection," according to the legislation, "and if the state undercollects then the rate is increased to account for the undercollection."
In other words, the state Department of Treasury has to determine if the revenue derived from the gas tax meets the state's expectations. This year, it did not.
The plan was expected to produce around $2 billion in annual revenue that will be constitutionally dedicated to the TTF.
The state legislature approved a plan two years ago to raise gas taxes by 23 cents, a Christie-backed plan that took effect Nov. 1, 2016. The state Senate voted 24-14 to approve the plan, while the state Assembly voted 44-27 to approve it, with nine not voting, soon afterward.
Read more: N.J. Gas Tax Hike: What You Need To Know
That year, the state’s gas tax increased by 23 cents a gallon to 37.5 cents, an amount that was still less than the neighboring states of New York, Pennsylvania and Connecticut, according to supporters.
As part of the package, the sales tax will be reduced by one-third of a penny over two years. On Jan. 1, 2017, the sales tax went from 7 percent to 6.875 percent. That was followed by a decrease to 6.625 percent on Jan. 1, 2018, for a total reduction of 0.375 percent.
Patch photo
