How Will NJ Fund Transportation Projects if Input from Gas Tax Dwindles?

Tom Johnson | November 12, 2019 | Energy & Environment
The tax contributes $2 billion annually to road, bridge, transit improvements. Lawmakers want to figure out how to sustain it after switch to clean-energy vehicles
Credit: NJTV News
A commission is being proposed that would come up with a new system of taxing vehicles including, but not limited to, electric cars and hydrogen fuel-cell vehicles.

If New Jersey achieves its goal of electrifying its transportation system, it poses one new great challenge for policymakers. How do you replace the billions of dollars annually raised by a gas tax to fund road improvements and mass transit projects?

Under a bill (S-4090) up for consideration this week in the Legislature, a new seven-member commission would come up with a new system of taxing motor vehicles including, but not limited to, electric cars and hydrogen fuel-cell vehicles.

For the Alternative Fuel Vehicle Transportation Financing Commission, there may not be much reason to hurry. By most estimates, only 25,000 electric vehicles are on the road in New Jersey today. Even clean-car advocates concede it will be tough to meet a target of upping that number to 330,000 by 2025.

But they hope to push a bill (S-2252) in the lame-duck Legislature that would provide incentives for consumers to buy electric vehicles; it also would establish aggressive targets to build charging stations — a step advocates say is necessary to convince consumers to buy the electric vehicles.

The state’s draft energy master plan and New Jersey’s participation in the Transportation Climate Alliance all recommend the electrification of the transportation sector, the largest source of greenhouse gas emissions. Most climate activists say New Jersey will never achieve its goals without significantly electrifying vehicles, not only light-duty cars, but commercial vehicles and buses, too.

But replacing the gas tax — a conventional way of financing transportation improvements — is proving to be a tough choice for states as consumers switch to vehicles no longer fueled by petroleum. Some, like Oregon, and other western states, have tried pilot programs that tax motorists on vehicles per mile traveled.

A different way to tax drivers

The bill, up before the Senate Transportation Committee on Thursday, does not specify any way to raise the needed funds, but gives the commission 180 days from its formation to provide recommendations to the Legislature.

In New Jersey, a gas tax of 41.4 cents a gallon funds approximately $2 billion of improvements to roads, bridges, and highways, as well as mass transit projects each year. Automatic gas tax hikes are mandated if fuel consumption does not produce enough revenue to keep the state’s Transportation Trust Fund’s $2 billion annual spending plan in balance.

Clean-energy advocates recognized the need to explore new ways to fund transportation improvements but argued it should not be done by hindering the transition to cleaner cars.

“Obviously, we need to come up with future funding solutions for the gas tax,’’ said Doug O’Malley, director of Environment New Jersey. “But we shouldn’t be putting impediments on the transition to electric vehicles.’’

“There has to be some new kind of system,’’ acknowledged Chuck Feinberg, president of the New Jersey Clean Cities Coalition, an organization dedicated to a transition away from petroleum-fueled vehicles.

The vehicle-miles-per-traveled option is the best mechanism for achieving that goal, Feinberg said, noting it is based on how many miles a vehicle is used and placing the burden of financing a new funding system on those who use the roads the most.

But O’Malley argued the more important issue is figuring out how the state is going to get more cleaner-running cars on the road.