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New Jersey Gas Tax Increase to Help Strengthen the State’s Infrastructure, at Least in the Short Term

Why did it take 28 years for the State of New Jersey to finally raise its gas tax, a tax used solely to keep the NJ Transportation Trust Fund solvent? That answer to that question is only known to those who work in Trenton, but the result is good news for New Jersey’s transportation infrastructure.

The Transportation Trust Fund is used to match funds from the US Federal Highway Administration’s Highway Trust Fund and used exclusively to fund things like replacement and repair of bridges, fixing roadways, keeping New Jersey Transit flowing with its rail and bus systems, and much, much more. This is an essential trust fund that impacts the quality of life for everyone that lives in or passes through New Jersey.

While the NJ Senate, Assembly and many Governors have “kicked the can” of gas tax increases down the road, costs and inflation have outpaced significantly what the Transportation Trust Fund could generate. Also, the State’s legislators designed methods to tap into the Transportation Trust Fund and redirect those funds to the General Fund against the will of the voters of New Jersey, further depleting the fund’s capacity to perform transportation enhancements. Thus, the Transportation Trust Fund became insolvent over the past few years.

With the new gas tax in place, the average contribution from gas tax to the fund will increase a little more than two times. This is good for the residents as well as visitors to the State of New Jersey. The increase in the gas tax will keep the Transportation Trust Fund financially secure for the short term. With a solvent Trust Fund, New Jersey bridges can be replaced or repaired, roads can be maintained and repaired, and commerce can flow efficiently through and within the state. Maintaining the flow of commerce is highly important to the livelihood of many businesses and individuals. Should an important roadway be closed due to a bridge outage, businesses near that closed bridge can easily incur millions of dollars per day of lost revenue. When businesses lose millions of dollars in lost sales, the State of NJ loses hundreds of thousands of dollars of sales tax revenue. The domino effect can be catastrophic to local economies and statewide economies.

Such a scenario of a bridge outage is not out of the question. New Jersey is a state where 9% of the bridges are structurally deficient and 26% are functionally obsolete. That means 35% of the bridges in New Jersey have problems that need to be rectified. And this percentage is before we take into account the possibility of bridges being taken out of service due to storms or other events. New Jersey, with its 130 miles of ocean coastline, is vulnerable to Mother Nature, as we learned in 2012 with Hurricane Sandy. Think about that percentage a little longer – more than one-third of the bridges in New Jersey may be a threat to the well-being of drivers.

So we need a focused funding plan that will keep the Transportation Trust Fund solvent for many decades to come. Increasing the gas tax is fine for now, but it will not be adequate in a few years. Cars two decades ago were getting 10 to 20 MPG, but many new cars today are highly efficient and achieve 20 to 60 MPG. And generally, people are driving fewer miles today than in years past. With greater fuel efficiency from cars, the increased popularity of electric and hybrid cars, and less miles being driven, a fuel tax increase is not a long term fix; the tax increase will help for a few years at best.

The Assembly and Senate need to step up and establish a whole new way of collecting funds that would be used for the Transportation Trust Fund. For vehicles registered in New Jersey, a charge built into the registration fee that is based upon miles driven per year (some call this a VMT – vehicle mileage tax) is one way to achieve a more equitable and predictable method of funding the Transportation Trust Fund for the long term that would have all vehicle types participating, whether powered by fossil fuel, electricity, hydrogen or another method. Collecting fees from out-of-state visitors might be an amalgam of gas taxes and some other means of revenue collection such as expansion of tolls. Indexing gas taxes to inflation would provide a method to increase gas taxes more consistently without a need to put such a measure in front of state legislators. Indexing would eliminate both the very long lapses between tax increases and the resulting drought/flood syndrome and provide more stable financing for the Transportation Trust Fund. There are other funding means available, too, such as using alternate methods of debt structure or establishing private-public partnerships.

The increase in the gas tax was much needed and New Jersey’s legislators did the right thing when they approved it. Now, let’s keep the topic of funding the Transportation Trust Fund in front of us and resolve to find long-term solutions that work for the majority of New Jerseyans and visitors to our state.

By Bill Killeen, PE – President and CEO of Acrow Bridge