Both houses of the state Legislature on Monday approved bills that would increase New Jersey’s gas tax 1.9 cents per gallon for five years and charge owners of electric vehicles a $250 fee as part of an eight-year Transportation Trust Fund reauthorization bill that now goes to the governor for his approval.
The state Senate and Assembly voted along party lines, with Republicans opposing the Democrat-sponsored legislation, citing affordability issues for drivers from the gas tax hike and EV fee.
The Assembly voted 48 -26 for the reauthorize the Transportation Trust Fund and the state Senate voted 24-14 after a brief debate at the Statehouse in Trenton.
The legislation proposes changing the state’s gas tax formula in fiscal year 2025, which starts on July 1, to raise revenues for the trust fund that finances major highway and transit projects. That revenue goal would increase to $2.115 billion in fiscal year 2026, $2.119 billion in FY 2027, $2.366 billion in FY 2028 and $2.366 billion in FY 2029.
The bill also proposes a new electric vehicle fee that would start begin at $250 on July 1, 2024, and increase annually by $10 until reaching $290 on July 1, 2028. The fee would be paid at the same time the vehicle registration is renewed.
It now goes to Gov. Phil Murphy for a final decision. Murphy, a Democrat, negotiated the plan with top Democratic lawmakers.
“I’m disappointed the reaction is to raise the gas tax to fix this problem, to allow New Jersey Transit to syphon off money that should be for roads and bridges ... it’s a mistake,” said Senate Minority Leader Anthony Bucco, R-Morris, a co-sponsor of a Republican counter-proposal.
Bucco made an unsuccessful move to have the Assembly and Senate bills sent back to committee for amendments, instead the Senate voted to table his motion.
The GOP proposal would have “utilized some of the (state’s) debt defeasance money that would have given taxpayers a break a break,” he said. “It would have used some of the state surplus the state carries and for a good purpose.”
Sen. Paul Sarlo, D-Bergen, a top sponsor of the Democratic bill, refuted Republican arguments that the legislation added to residents tax burdens. He echoed Murphy administration rebuttals that the Transportation Trust Fund reauthorization sends more money to municipal and counties to pay for road projects by slightly reducing the amount sent to NJ Transit and the Department of Transportation.
“At end of of five years, this body make largest investment in property tax relief,” Sarlo said. “From 2027 to 2029, it will be the largest amount sent back from the Transportation Trust Fund.”
Murphy administration officials defended the plan as being more affordable by taking a 1.9 cent per gallon annual increase for five years instead of a double digit hike immediately, and needed to counteract the effects of inflation. Officials also said the plan doesn’t use up the state’s surplus and sends more funding to cities, towns and counties to fund work on local roads and bridges.
“The plan that is on the table is modest, is responsible, it is the least costly plan to get the value (and) the amount of infrastructure investment this state needs,” Diane Gutierrez-Scaccetti, Murphy’s chief of staff and former state transportation commissioner, told NJ Advance Media. “It is affordable by many if not all, and it is meant to be something that is not taxing to a family’s budget.”
Gutierrez-Scaccetti pushed back on Republican comments that the Transportation Trust Fund bill is a bail out of NJ Transit’s operating budget, a move the state constitution prohibits. The trust fund only pays for major NJ Transit infrastructure projects..
“To put out a plan that would wholly drain the vast majority of our surplus with a one shot, to talk about idea that this is a transit bailout, is blue smoke and mirrors,” she said. “It will not pass muster with the (bond) rating agencies. Their plan isn’t a stable funding of transportation. It is one gimmick after the other. And that will cost us more money right out of the box.”
The Assembly bill and and its Senate companion were introduced on March 4, and quickly cleared the assembly transportation committee on March 9, moved through committees.
Sen. Jon Bramnick, R-Union, a Republican candidate for governor, took a swipe at Democratic legislators spending on “Christmas Tree” projects that added $2 billion to the current state budget, including transportation projects that he said benefited a limited number of people.
“Do we raise the gas tax or change the way we fund projects?” Bramnick asked. “Let’s put priorities on projects for the entire state and not on those for a few districts. I’m voting no.”
Sen. Bob Smith, D-Middlesex, said while he supports the bill, he criticized the electric vehicle fee, which means buyers would have to pay four years of the fee at the time of purchase. He referred to the billions of dollars insurance companies paid out in claims due to Hurricanes Irene, Sandy and Tropical Storm Ida.
“That’s terrible policy. The TTF is great policy but with the registration fee they’re paying more than their fair share,” Smith said. “Every time a citizen buys an EV, they are helping to prevent those disasters from happening. They’re helping to reduce that climate change footprint.”
Smith said he hoped a compromise on collecting the fee could be worked out with the “front office” during the legislature’s review of Murphys $56 billion state budget proposal this spring.
Murphy administration officials said the fee was based on $267 annual cost calculated by the Eastern Transportation Coalition that the owner of a gas powered vehicle pays annually in federal and state fuel taxes.
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Larry Higgs may be reached at lhiggs@njadvancemedia.com. Follow him on X @CommutingLarry
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