NJ Tries to Avoid Fiscal Potholes as Drivers Switch to Alternate-Fuel Cars

Decline in gas-tax revenues would impact already-depleted transportation fund

The state yesterday began addressing how it will pay to maintain its roads and bridges if residents begin to switch at a more rapid pace to alternative-fuel vehicles. But don’t expect any answers anytime soon.

As New Jersey tries to more promote more use of cars fueled by electricity, natural gas or propane, it raises the question of how the state will raise money for its already cash-strapped transportation trust fund if gas taxes begin to decline.

The issue poses difficult choices for policymakers. How should users of alternative-fueled vehicles be taxed to support the transportation infrastructure without imposing costs that discourage consumers from buying those cars, which generally are already more expensive than conventional vehicles?

Perhaps the bigger problem is that the transportation trust fund is essentially broke, with virtually all of the state’s gas tax revenues now being used to pay off New Jersey’s past borrowing. That problem could be exacerbated if more and more drivers switch to vehicles not fueled by gasoline, none of which are subject to motor vehicle taxes.

A bill (S-2531) still not available to the public proposes a system in which owners of alternative-fuel vehicles would pay a fee based on an average of vehicle miles travelled. It is an approach that even its sponsor, Sen. Jim Whelan (D-Atlantic), acknowledges is uncertain.

“We’re in uncharted territory here,’’ Whelan said at a hearing in the Senate Environment and Energy Committee.

Instead of paying a tax at the pump when they fuel up, drivers of alternative-fuel vehicles would pay a fee roughly equivalent to what they would have paid if the fueled the vehicle at a gas station, he said.

“I’m not sure how popular that would be,’’ Whelan added.

The committee took no action on the bill, but heard various options for trying to make up the loss in tax revenue from customers switching from gas-fueled vehicles, including installing meters in garages to monitor how much natural gas owners use to fuel their compressed-natural-gas cars. Others suggested a better way to monitor vehicles travelled would be to check at inspection stations when drivers come in to see if their vehicles are meeting emission standards.

Some urged caution in whatever direction legislators take.

“We know our infrastructure is in desperate need,’’ said Michael Pisauro, an attorney for the New Jersey Environmental Lobby. But Pisauro said the state should not create a disincentive for consumers to buy cleaner-running cars and vehicles.

Jeff Tittel, director of the New Jersey Sierra Club, agreed.

“There’s not always a simplistic solution to a complex problem,’’ he said.

“It’s not an easy issue,’’ conceded committee chairman Sen. Bob Smith (D-Middlesex), who has been trying to shepherd a number of bills to promote alternative-fuel vehicles through the Legislature.

At a recent roundtable sponsored by NJ Spotlight, Smith said the state may be on the cusp of a new era in transportation that will be based on vehicles fueled by compressed natural gas, electricity and propane. Some utilities, including New Jersey Natural Gas, are already building refueling stations where compressed natural gas vehicles can be refueled.