Short­fall Trig­gers Higher Gas Tax in New Jersey

The Bond Buyer - - Front Page - BY AN­DREW COEN

New Jersey’s gas tax will rise by 4.3 cents per gal­lon on Oct. 1 to sup­port the state’s Trans­porta­tion Trust Fund.

State Trea­surer El­iz­a­beth Ma­her Muoio said lower-than-pro­jected fuel con­sump­tion lev­els over the last two years ne­ces­si­tated a gas tax in­crease in or­der to com­ply with a 2016 law that re­quires a steady stream of rev­enue to sup­port the fund.

For­mer New Jersey Gov. Chris Christie and state law­mak­ers in 2016 ap­proved an eight-year, $16 bil­lion, TTF re-au­tho­riza­tion that raised the state’s gas tax by 23 cents per gal­lon.

“The law en­acted in 2016 con­tains a spe­cific for­mula to en­sure

that rev­enue is meet­ing a cer­tain target,” said Muoio in a state­ment. “Un­for­tu­nately, be­cause the Christie ad­min­is­tra­tion over­es­ti­mated gas con­sump­tion rates last year, the tax rate has to be in­creased by nearly two cents more this year in or­der for us to meet our obli­ga­tion un­der the statute and fully fund the state’s many press­ing trans­porta­tion in­fra­struc­ture needs.” Muoio said that gas tax rev­enues fell $125 mil­lion short for the 2018 fis­cal year that ended June 30 and were off by $32.6 mil­lion in 2017.

The gas tax in­crease, which will mark the sec­ond in three years after New Jersey went with­out one after 1988, brings the Gar­den State’s gas tax to 41.4 cents per gal­lon. The Gar­den State’s gas tax will still be lower than the neigh­bor­ing states of New York (45.8 cents per gal­lon) and Penn­syl­va­nia (58.7 cents), ac­cord­ing to the Tax Foun­da­tion.

“The pre­cise change in the gas tax rate is dic­tated by sev­eral fac­tors, all of which are beyond the control of the cur­rent ad­min­is­tra­tion,” said Muoio.

“Only leg­isla­tive ac­tion can change the statu­tory for­mula and any new statu­tory change would still need to se­cure re­li­able an­nual rev­enues for the Trans­porta­tion Trust Fund,” said the news re­lease from the trea­sury de­part­ment.

Christie’s 2016 gas tax in­crease to help fund trans­porta­tion in­fra­struc­ture was part of a deal with law­mak­ers that also in­volved cut­ting the sales tax to 6.625% from 7% and phas­ing out the es­tate tax.

Moody’s In­vestors Ser­vice analyst Baye Larsen cau­tioned in a Novem­ber 2016 re­port that the com­pro­mise tax plan was a credit neg­a­tive for New Jersey be­cause it could cre­ate an es­ti­mated $1.1 bil­lion loss to the state’s gen­eral fund by 2021.

New Jersey was hit with 11 bond rat­ing down­grades un­der Christie and is now the low­est-rated U.S. state other than Illi­nois.

The state has gen­eral obli­ga­tion bond rat­ings of A3 from Moody’s In­vestors Ser­vice, A-mi­nus from S&P Global Rat­ings and A from both Fitch Rat­ings and Kroll Bond Rat­ing Agency. ◽

Bloomberg News

A gas sta­tion at­ten­dant fu­els a ve­hi­cle in Jersey City. New Jersey’s Fuel tax will in­crease by 4.3 cents pers gal­lon on Oct. 1.

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