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New Jersey to Hike Diesel Fuel Tax by 27 Cents

October 11, 2016, by David Cullen

Gov. Christie speaking at announcement of fuel-tax deal with Assembly Speaker Vincent Prieto (left) and State Senate President Steve Sweeney (right) looking on. Photo: New Jersey Governor’s Office/Tim Larsen
Gov. Christie speaking at announcement of fuel-tax deal with Assembly Speaker Vincent Prieto (left) and State Senate President Steve Sweeney (right) looking on. Photo: New Jersey Governor’s Office/Tim Larsen

New Jersey lawmakers have approved a bipartisan deal that not only raises fuel taxes in the Garden State for the first time in three decades, it substantially hikes them— by 23 cents per gallon for gasoline and by 27 cents for diesel.

The New Jersey Senate and Assembly both passed the bill on Oct. 7 and Gov. Chris Christie (R) is expected to sign it within the month, resulting in the first fuel-tax increase for the state since 1988.

The compromise measure was crafted by Christie and the leaders of the Democratic-controlled legislature, Senate President Stephen Sweeney (D-Gloucester) and Assembly Speaker Vincent Prieto (D-Hudson) to replenish the state’s Transportation Trust Fund. The TTF was drained as of early this summer, leading the governor to halt all non-emergency roadwork on July 8.

The New Jersey Motor Truck Association said on Oct. 11 that the gasoline tax increase should go into effect on Nov. 1 while the diesel hike will be implemented in two stages starting next year: The first increase will come on January 1 and the second on July 1.

NJMTA said in a statement that its lobbying effort “was able to get a delayed implementation on diesel as many of our members operate with contracts. Unfortunately, the delay in passage reduced the deal from six months to two-and-a-half months’ notification.”

The exact amount for each stage has not been determined yet, NJMTA noted. “Per the bill, the first increase on January 1, 2017 would be 70%, or approximately 18.9 cents, and on July 1 [it would be] approximately 8.1 cents. The initial rate will be determined by a survey of the statewide price on July 1, 2016 and adjusted quarterly thereafter.” The association added that is seeking confirmation of those exact amounts.

It has been estimated that the higher fuel taxes will account for about $1.2 billion of the $2 billion earmarked annually for the TTF by Christie. Under the governor’s plan, the state will borrow the rest. The bipartisan deal includes measures to offset the resulting higher fuel costs with other tax cuts.

In a press release, Christie said the agreement reflected the need for “a reliable, dedicated source of revenue” for the TTF “and a compromise that includes the first broad-based tax relief for New Jersey residents since 1994.”

Thus, the bill also slices the state’s sales tax from 7% to 6.6%; increases its Earned Income Tax Credit from 30% to 35%; raises income tax exemptions for retirees; and provides other tax relief such as eliminating the estate tax.

While fuel taxes are now expected to fund $16 billion of highway and rail projects over the next eight years, those tax cuts sought by Christie did not sit well with Moody’s Investor Services, per a Bloomberg report.

The rating agency gave the scheme a “credit negative” outlook, contending the tax offsets will result in  a $1 billion drop in the state’s general fund by 2021.

"The net effect of the revenue package is credit negative because it will strain the state’s operating budget amid rapidly rising pension contributions and below-average revenue growth," stated Moody’s in a release.

Comments

  1. 1. vee [ October 12, 2016 @ 04:54AM ]

    WTF???? Everyone has to pay to do business in the state of New Jersey, it's called the franchise tax. 75% of the roads and bridges are toll roads and now this???? This is purely highway robbery and I don't understand why it is allowed to continue. Oh, that's right, no one in New Jersey speaks English!!!!!

  2. 2. Greg [ October 12, 2016 @ 06:43AM ]

    Great idea - to drive all diesel purchases to out of state. Have they looked at the map? No truck should ever have to stop in New Jersey to buy diesel. It's a tiny state.

  3. 3. Timo [ October 12, 2016 @ 07:15AM ]

    Trucks are only taxed for fuel based on the miles they run in each state thru IFTA, except for states that add a sales tax on fuel. The people of NJ will get hit with increased prices because of higher costs to deliver goods there. This tax increase adds about a nickle a mile to the cost of running a semi. My trucks run about 60,000 miles in NJ, so I am looking at an increase of $3000 per year. We will raise our rates to NJ, and stop buying fuel there. That decreases the chance that our drivers will spend money on food and other things resulting in a net loss for other tax revenue and loss of sales for businesses. Way to think that one out bi-partisans.

  4. 4. JOe [ October 12, 2016 @ 07:40AM ]

    Vee you are soooo right, i pay $20K per month in tolls, $13K per year federal road tax, the all the state and federal fuel taxex. only 20 trucks in the fleet

  5. 5. George Wilson [ October 14, 2016 @ 07:37AM ]

    Hmmm, how about No diesel trucks deliver freight there? Send it in by jet, yes, I believe jet fuel is diesel, passengers, airfares also? Then, the deliveries can all be made in gasoline powered, or, perhaps hybrid vehicles, by bicycle, on foot? Let them pound sand, we don't need them, they need us!

  6. 6. MC [ October 14, 2016 @ 12:22PM ]

    They really didn't think this through...typical for politicians. Had they introduced it gradually over 4-5 years, then I think their plan would be more workable. However, such a huge jump so quickly will only greatly reduce the amount of fuel sold in NJ, but also raise the rates of intrastate freight as well as interstate freight coming into NJ. Also, NJ is a small state so planning freight routes to stop in another state for fuel is not that tough a logistical challenge for many companies.

    Another thing they didn't really think about is NJ has the cheapest gasoline in the region due to the lower tax and many people living close to the border travel to NJ to fill up. The new tax rate will make NJ fuel 10-20 cents per gallon more expensive than neighboring Pennsylvania. Now Pennsylvanians will fill up at home and New Jersians will begin crossing into PA to fill up. Some people will say 'so what', but consider that 2 of the top 3 most populous metro area in Pennsylvania are on the PA-NJ border- Philly and the Lehigh Valley (Allentown, Bethlehem, Easton). Also many Pennsylvanians living in the border region work in NJ or NYC and commute daily on I-80 and I-78 usually filling up in NJ because of cheaper fuel. The more expensive gas will chase those customers away quickly.

  7. 7. Michael Galorath [ October 15, 2016 @ 09:04AM ]

    Well not a lot of thought went into this increase of the law. Pretty much all new sails of diesel vehicles are in the class 8 type.. Delivery companies have figured that After treatment systems are to costly. It will be interesting to see a follow up to this story in a years and compare the total gallons sold versa before the tax. Good luck NJ

  8. 8. Don Joe [ October 15, 2016 @ 11:37PM ]

    Lo que debemos es hacer una parada y no operar por un mes ningún semi en NJ y así doblarle el pulso a estos políticos incompetentes.
    Que se reduzcan sus salarios.

 

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