No gas tax hike this year? NJ treasurer ‘cautiously optimistic’
TRENTON — The state treasurer is now “cautiously optimistic” a hike in the gas tax will not be required this fall.
This comes after a few solid months of tax collections that eased concerns that another increase might be triggered to reach revenue targets written into state law.
State Treasurer Elizabeth Maher Muoio said the Murphy administration has increased its forecast for collections of the motor fuels and petroleum products gross receipts tax by a combined $48.4 million in the current budget.
“Fuel consumption data has improved somewhat since we last met in April, and revenue collections are slightly better,” Muoio told the Senate Budget and Appropriations Committee on Tuesday.
Growth in next year’s budget, which begins in July, is projected at 4.1%. That would yield an additional $72.5 million in gas-tax revenues on top of the small increase already anticipated.
“While consumption is likely to decline somewhat further, having the 4.3 cent rate increase in effect for an entire 12-month cycle is expected to generate some net growth,” Muoio said.
The gas-tax increase approved in 2016 includes a provision that requires it to be adjusted to ensure it produces the money needed for the state’s road and bridge construction program. That’s the avenue through which an additional 4.3 cents a gallon was added last year to the initial 22.6 cent increase.
“As required by law, we will revisit this data in August to determine if the rate must be recalculated either upward or downward,” Muoio said. “However as of now, we are still cautiously optimistic that this rate will remain unchanged, and we have not budgeted for an increase in FY20.”
At a hearing six weeks ago, the nonpartisan Office of Legislative Services appeared more convinced an increase in the gas tax would be needed this year, perhaps to fill a shortfall projected at $100 million. It is less worried now though notes nothing is yet finalized.
“Fuel taxes have performed quite well in the past several months, which might reduce the likelihood or the magnitude of a possible gas-tax increase in the fall,” said David Drescher, chief of the OLS finance section.