Most NJ Residents Oppose Hiking Gas-Tax, But Options May Be Even Less Appealing

Debt-laden state can’t really afford more borrowing, critics say, and doing nothing would lead to spike in local property taxes

New Jersey residents, in poll after poll, have made it clear they do not want the state’s gas tax to go up to pay for transportation projects. Maybe it’s time to ask them to consider the alternatives.

As Gov. Chris Christie and Democratic legislative leaders remain at odds over how to pay for infrastructure improvements, the $3 billion state Transportation Trust Fund is moving closer to running out of cash. And although Christie drafted the state’s last five-year funding plan for transportation projects, this time he’s said it’s up to lawmakers to take the lead.

Hiking the gas tax is one option, although New Jersey residents remain opposed to the idea, according to the latest Rutgers-Eagleton poll.

The state could also borrow money to keep transportation projects funded, but New Jersey is already one of the nation’s most indebted states.

Doing nothing is another option, although local officials say that would mean higher property tax bills, since the trust fund helps pay for local and county road and bridge projects, in addition to state highway and mass transit repairs.

Either way, a decision has to be made by June 30, which is the expiration date for the Transportation Trust Fund’s current, five-year finance plan.

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Right now, New Jersey’s gas tax totals 14.5 cents on every gallon of gasoline purchased at the pump. That tax includes a 10.5-cent per-gallon levy on unleaded gasoline, and another 4-cent per-gallon tax levied on the gross receipts of petroleum products. With no increase in nearly three decades, New Jersey’s gas tax is currently the second-lowest in the country behind only Alaska.

Roughly $700 million in annual revenue comes in from the state’s fuel taxes to pay for transportation improvements. To reach more than $3 billion in annual spending, the five-year plan Christie put forward in 2011 has relied on borrowing, revenue from the New Jersey Turnpike Authority and the Port Authority of New York and New Jersey, and federal matching funds.

The latest survey on the gas tax was released earlier this week by the Rutgers-Eagleton poll. The results showed 56 percent of the state’s residents oppose an increase, with only 42 percent saying they support a hike. And opposition was higher among millennials and those in the state’s lowest income brackets.

The poll results were largely unchanged from this time last year, though the same poll found nearly 72 percent of the state’s residents opposed a gas-tax increase five years ago.

“While there is less opposition than decades ago, residents nevertheless do not want to pay more at the pump,” said Ashley Koning, assistant director of Rutgers’ Eagleton Center for Public Interest Polling.

Back in 2004, leaders in Trenton opted for a short-term stopgap measure that relied primarily on nearly $1 billion in new borrowing. But that was done at a time when total state debt was far less than the record $43.23 billion currently on the books.

Assembly Speaker Vince Prieto (D-Hudson), who has been calling for a combination of a gas-tax hike and some new borrowing, said only taking on new debt would be a mistake.

“We have done too much already,” Prieto said. “You need a sustainable revenue source to be able to do this.”

The issue is more complicated than simply asking residents of New Jersey — where the cost of living is already among the highest in the country — whether they want to see another tax go up, Prieto said. They need to know that their other options include things like taking on much more debt or seeing property taxes soar.

“It’s all in the details,” Prieto said. “It’s how you phrase the question.”

Jon Whiten, co-chair of the New Jersey for Transit coalition, believes the gas-tax should be increased, despite what the polls say.

“There’s just no way to get the revenue necessary without a fuel-tax increase,” said Whiten, who is also deputy director of New Jersey Policy Perspective, a liberal think tank based in Trenton.
“Funding transportation with fuel taxes makes the most sense by a long shot — which is why that’s how it’s done all over the country and the world,” he said. “There is no other path forward if we want to get this right and help retain New Jersey’s competitive advantage for business.”

But others oppose a gas-tax hike, including Erica Jedynak, state director of Americans for Prosperity Foundation-New Jersey. Her group would like to see the state’s current spending on transportation more closely scrutinized and engineering assessments done to see which projects are truly priorities.

“At $2 million a mile, New Jersey spends too much and has squandered far too many transportation dollars,” Jedynak said.

For his part, Christie has yet to take a firm position on what he thinks should be done to extend the trust fund. That’s led to the current stalemate with Democratic legislative leaders who want to negotiate a bipartisan deal with the governor on a plan that would involve some new borrowing and some new revenue from a gas-tax increase.

Christie has said he is giving serious consideration to a plan that was floated last year by Sen. Jennifer Beck (R-Monmouth). Beck has proposed extending the trust fund for another seven years without relying on a gas-tax hike.

Her plan would generate up to $5.4 billion through new borrowing, while also raising new revenue from increased fines for motor-vehicle offenses like drunken driving and texting while driving. Her plan also relies on projections of more than 3 percent annual growth in state revenues.

“I think it’s something that really merits discussion and negotiation,” Christie said earlier this month when asked during a news conference whether the trust fund could be renewed without a gas tax hike.

Prieto, the Assembly leader, said earmarking all of the growth in state tax collections for transportation makes little sense for a state that already has a wide budget gap that includes underfunding most K-12 school districts.

A review of the state’s credit issued yesterday by Fitch Ratings raised a similar concern, saying New Jersey’s current budget is “not structurally balanced” since only a fraction of the state’s required contribution into the public-employee pension system is being made this year.

“You need that money for all of the other things that we’re not funding,” Prieto said.

Christie, meanwhile, didn’t directly respond to a reporter who asked him earlier this month if he is contemplating a short-term stopgap measure that would rely heavily on new borrowing.

“I will react to whatever plan the Legislature puts forward, if it includes revenue, if that’s what they want to do,” Christie said.

Asked about the transportation-funding issue yesterday, Christie’s office declined comment. A spokesman for Senate President Stephen Sweeney (D-Gloucester) also declined comment when reached yesterday.

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