As the possibility of a third gas tax hike (it was doubled in 2016) looms heavily on motorists’ minds, Gov. Phil Murphy on Friday said the gas tax could be an increasingly unreliable way to finance statewide infrastructure projects as residents continue to gravitate toward public transit and fuel-efficient hybrid or electric vehicles.
Fuel consumption and budgetary numbers presented Monday by the State Treasury and nonpartisan Office of Legislative Services suggest that the state has not been hitting the gas tax revenue targets necessary to avoid an increase.
“Down the road, we may need to think of a different mousetrap to capture the movement around this state, and there are some states that are looking at that in terms of mileage fees as opposed to gas consumption fees,” Murphy said at a press conference in East Orange.
The gas tax —41.4 cents per gallon of gasoline and 48.4 cents on each gallon of diesel — finances the $2 billion Transportation Trust Fund, which in turn funds state and local infrastructure projects.
Current budget projections call for $1.466 billion from the gas tax by the end of the current fiscal year, and $1.498 billion by the end of 2020. The remaining half a billion dollars is generally made up by the state issuing bonds.
Under state law, if gasoline revenue goes up, the tax rate decreases — while if the gas consumption goes down, the tax must increase. The most recent increase was an addition of 4.3 cents in October.
“The statutory formula directs us to annually assess this revenue stream to determine if a recalculation of the [Petroleum Products Gross Receipts Tax] is warranted based on fuel consumption data and revenue collections compared to the 2016 base year,” State Treasurer Elizabeth Maher Muoio said Monday at an Assembly Budget Committee hearing.
Treasury officials will scrutinize the numbers in August to see whether a hike is warranted.
Several top budget lawmakers in March floated the possibility of a “user fee” for electric cars so that they would not avoid the gas tax.
“We’ve heard from a lot of folks with electric vehicles, plus we have the hybrids who are reducing how many gallons people buy. We are definitely going to be addressing how they use the roads. And isn’t a gas tax a user fee?” Assembly Transportation Committee Vice-Chair Patricia Egan Jones, D-5th District, said at the Commerce and Industry Association of New Jersey’s 2019 Transportation Summit in Woodbridge in March.
“We’re going to absolutely be developing a way to tackle that issue to make them contribute as well to the roads that they’re driving. It is not exclusive to just people who are using gasoline vehicles,” she added.