The state treasurer said she’s “cautiously optimistic” that the state can avoid an increase to the gas tax this fall, a long-time concern for motorists and residents in the state given the amount they spend on gasoline.
Budget analysts have warned that as gas tax collections fall behind, another increase could be triggered. Under state law, if gasoline consumption, revenue, and thereby tax payments go up, the tax rate decreases — while if the gas consumption goes down, the tax must increase.
“We will revisit this data in August to determine if the rate must be recalculated either upward or downward,” State Treasurer Elizabeth Maher Muoio testified. “However, as of now, we are still cautiously optimistic that this rate will remain unchanged and we have not budgeted for an increase in FY20.”
Onlookers have worried that with electric cars now on the road, or hybrid ones, consumers are collectively relying less on gas and consumption will consistently trend down resulting in the rate continuing to increase.
Lawmakers have floated a so-called “road user” tax that could be levied against motorists using electric cars so that they would not avoid the gas tax.
Murphy acknowledged that the gas tax could become increasingly unreliable as a result.
“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 an East Orange press conference in April.
The current gas tax rate is 41.4 cents per gallon of gasoline. It finances the $2 billion a year Transportation Trust Fund – $16 billion over eight years – which in turn funds state and local infrastructure projects.
Former Gov. Chris Christie approved nearly doubling the rate by 23 cents in 2016. It increased again by 4 cents last October.