New Jersey is increasing gas taxes and electric vehicle fees to fund the state’s transportation fund

Buckle up, New Jersey: Driving in the Garden State is about to get more and more expensive.

Starting in July, New Jersey motorists will see an annual increase in gasoline taxes for the next five years — estimated at about 2 cents per gallon. Electric vehicle owners, meanwhile, will receive an annual road maintenance fee, starting at $250.

It’s all part of an effort to generate revenue for the state’s Transportation Trust Fund (TTF), which finances major infrastructure projects in New Jersey, from state and interstate highways to bridges, transit structures, railroads and runways,” and even those damn potholes, Gov. Phil Murphy said Tuesday before signing legislation reauthorizing the fund for five years.

“America depends on the strength of New Jersey’s transportation system,” Murphy said, noting that the state sits “at the heart” of the Northeast Corridor, where “roads, tunnels and bridges of our entire region. and train tracks.”

“When our infrastructure falls behind, our entire economy falls behind, and worst of all, our families pay the ultimate price in costly delays and lost opportunities,” Murphy said. The reauthorization would, the governor said, “rebuild and maintain our entire transportation system,” create thousands of union jobs and help offset the costs of infrastructure repairs for municipalities.

How will it work?

The TTF renewal adjusts the state’s gas tax formula to increase annual revenue targets from $2 billion to $2.37 billion by July 2028, via an estimated 1.9 cents per gallon annual increase in gas taxes.

The electric vehicle fee — a first in New Jersey — would charge drivers of non-gasoline vehicles $250 in July, and increase that payment by $10 each year to $290 by 2028. More than 30 other states have introduced similar registration fees for electric vehicle owners to finance infrastructure improvements. Murphy previously announced plans to require all new cars and light trucks in New Jersey to be zero-emission by 2035.

Murphy and other proponents of the fund renewal noted that it will provide an estimated $2.3 billion in state aid to counties and municipalities for road improvements — fees they said would typically be borne by local taxpayers through property taxes.

Barrington Mayor Kyle Hanson on Wednesday applauded the renewal of the transportation fund, noting that his South Jersey borough has received more than $1.6 million in grants through the state’s transportation department since 2018 for conservation and road improvements – money he said “would not have been possible” without the fund.

“The TTF is a win for our local municipalities and Camden County as a whole because renewing the TTF means we don’t have to increase our municipal or county taxes to pay for those transportation projects,” Hanson said. “Ideally, we will continue to renew the TTF, which will receive subsidy funds to keep costs for our taxpayers as low as possible.”

The reauthorized fund will also raise money for capital projects for the transportation department and the struggling New Jersey Transit, which has proposed a 15% fare increase as budget shortfalls loom.

Earlier this month, Republican critics of the Democratic legislation introduced an unsuccessful counterproposal that eliminated the gas tax increase while imposing a flat $300 registration fee on electric vehicles and constitutionally assigning sales tax on the vehicles to the fund, with the impact of a gas tax was rejected. increase could have consequences for residents.

What is the New Jersey Transportation Trust Fund?

The New Jersey Transportation Trust Fund was established in 1984, intended to help pay for the construction and repair of the state’s roads, bridges and public transportation through a per-gallon gas tax.

But for decades, instead of paying for projects to be completed, the state relied heavily on borrowing money from the fund, with politicians reluctant to raise taxes as New Jersey had one of the lowest gas tax rates in the nation. country maintained, at 14.5 cents per gallon. .

By 2016, the depleted transportation fund had reached a crisis point, with construction projects suspended and workers left out of work, as the then government said. Chris Christie and state lawmakers couldn’t agree on how to replenish it.

After months of deadlock, Christie reauthorized the TTF for eight years in October 2016, raising the state gas tax by 23 cents per gallon.

After that, state law required the tax rate to be adjusted each October to ensure it raised about $2 billion annually to fund infrastructure improvements. Currently, motorists in the Garden State pay about 42.3 cents per gallon in gas taxes – the seventh highest in the nation, according to the Tax Foundation. (Pennsylvania drivers pay the third-highest gasoline tax in the country, at 62.2 cents per gallon, according to the foundation.)

The new law signed by Murphy on Tuesday will postpone any additional increases to petrol and diesel fuel taxes this year, encouraging a further adjustment to gas tax rates in Jersey from October to January 2025.

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