Bond Buyer: Rise in New Jersey gas tax could deter out-of-state consumption, analysts say - Garden State Initiative

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Bond Buyer: Rise in New Jersey gas tax could deter out-of-state consumption, analysts say

September 2, 2020

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By Andrew Coen

A trend toward lower fuel consumption, driven in part by the COVID-19 pandemic, prompted New Jersey to raise its gas tax for a third time in five years to among the highest levels in the nation, putting the state at risk a for future volume dips, according to analysts.

“There is a substantial portion of the gas tax that is transitory,” Regina Egea, president of the conservative-leaning Garden State Initiative, said of how much of New Jersey’s gas revenues over the years has been derived from New Yorkers who went over the border for cheaper prices or from truckers that decided to stop there on long routes. “I wonder if they can now ever can return to volumes they once had.”

New Jersey gas tax revenues, which support the state’s annual $2 billion Transportation Trust Fund, will jump to 50.7 cents a gallon from 41.1 cents starting Oct. 1, according to Treasurer Elizabeth Maher Muoio, who cited a 2016 law signed by former Gov. Chris Christie, which requires a steady stream of revenue to support the state’s TTF. The nearly 10-cent rise will lift New Jersey’s tariff to among the highest in the nation. New York State levies a 45.8 cents a gallon gas tax by comparison.

New Jersey went 28 years without a gas tax increase until 2016, when Christie and the state legislature agreed to a 23-cent hike as part of an eight-year, $16 billion, TTF re-authorization. The gas tax jumped again in 2018 by 4.3 cents after fuel revenues fell short of expectations.

The volume of New Yorkers crossing the New Jersey border to fill up their tanks dropped a bit in recent years as the gas tax rose, Egea said, and the latest hike will give out-of-staters even less reason to visit the Garden State. New toll hikes, taking effect on Sept. 13, of 36% on the New Jersey Turnpike and 27% on the Garden State Parkway will compound the gas tax increase, she said.

“It’s a double hit,” Egea said. “These are deterrents to people coming into the state.”

Read the full report here.