Gas tax speeds toward Thursday vote, Monday approval, with hike on July 1
The wheels of government often spin slowly, but lawmakers tend to find a higher gear and the fast lane toward the end of June.
Among the items now flying toward approval is a hike in the gas tax estimated at 23 cents a gallon. That hike – along with a handful of accompanying tax cuts – is scheduled for consideration by the Senate and Assembly budget committees Thursday, with their final approval likely for Monday.
The hike in the gas tax would take effect next Friday, July 1.
“The intent is to move it quickly,” said Sen. Jennifer Beck, R-Monmouth, one of the plan’s most vocal critics. “Not many major public policies are introduced on a summer Friday at 3 in the afternoon unless they’re looking to disguise it and move it fast.”
A crucial change to the bill was announced Wednesday night: The amount of the tax increase will be capped at 23 cents a gallon for 10 years. The bill introduced Monday included a 12.5 percent tax, capped at a $3 wholesale price — which could have meant a tax hike as large as 37.5 cents a gallon if prices rise.
On top of the existing 14.5 cent per gallon tax, the 23-cent increase would bring New Jersey's gas tax to 37.5 cents per gallon, which would be the seventh highest in the nation.
The Transportation Trust Fund plan isn’t the only crucial bill moving quickly this week. The budget committees are taking up five bills that aren’t yet introduced – including the 2017 state budget that expends more than $34 billion and isn’t yet publicly available.
The TTF legislation introduced Monday includes a 12.5 percent wholesale tax on petroleum products, plus a 4-cent per gallon surcharge on diesel fuel. This was a variation on the original draft, announced Friday, June 10, which envisioned a 7 percent tax paired with a 10-cent a gallon tax increase.
The legislation is dense, totaling 109 pages, but here are some other notable new details:
- The tax can never fall below the level it would start at next week. If gas prices fall in the future – the wholesale price has dipped as low as $1.06 per gallon four months ago and below $1 at the end of 2008 – the tax could not drop accordingly.
- A review council would be set up that would monitor whether the Legislature interferes with the implementation of the tax cuts, such as delayed the elimination of the estate tax. If that happens, the increased wholesale tax on gasoline would be reversed.
- The estate tax is phased out over four years. This isn’t actually a change, but news releases from lawmakers tend to describe it as three-year phase-out. The tax is currently applied on estates worth at least $675,000. For 2017, it would change to a $1 million exclusion. That would rise to $2 million for 2018 and $3 million for 2019. The tax would then be eliminated beginning Jan. 1, 2020.
- The estate tax would begin to be applied on the New Jersey property owned by people who die while living in other states. Currently, it’s only applied to New Jersey residents. This change would apply in 2017, 2018 and 2019, then cease with the expiration of the estate tax in 2020.
- If the amount of revenues generated by the wholesale tax is ever greater than what’s received in fiscal 2018, the additional revenue must be used to expand mass transit.
- The legislation would dedicate all revenues from the wholesale and retail gas taxes – meaning the current 14.5 cents a gallon, plus the pending increase – to the Transportation Trust Fund. Voters are being asked in a November ballot question to guarantee that by locking it into the constitution.
- The TTF would have to create a website disclosing all construction projects and potential delays or cost overruns.
- An existing board that reviews the TTF’s finances would get expanded responsibilities. Among them: Analyze the cost-effectiveness of spending on transportation projects; recommend a new system of taxation for vehicles such as electric cars that don’t run on gasoline; study cost-cutting options and improved coordination between the state and utility companies when utilities must be relocated.
A companion proposal authorizes the 10-year transportation construction plan itself, giving the Transportation Trust Fund permission to borrow $15 billion over 20 years and spend $20 billion in total. On average, one-fourth of the $2 billion a year would come from ‘pay-as-you-go’ revenues.
The bills – S2411/A11 for the tax changes, S2412/A10 for the TTF reauthorization – are on the Senate Budget & Appropriations Committee and Assembly Budget Committee agendas for their 10 a.m. Thursday meetings.