The New Jersey Treasury Department announced Friday that the gas tax rate in that state will increase by nearly 10 cents per gallon on Oct. 1.
According to the treasury departments, a 2016 law requires that a steady stream of revenue must come into the state’s Transportation Trust Fund (TTF) to support infrastructure improvements. With lower fuel consumption, exacerbated by the COVID-19 pandemic, a Treasury Department review of fuel consumption statistics found that the gas tax will need to increase by 9.3 cents per gallon.
The 2016 law signed by Governor Chris Christie provides $16 billion over eight years to fund improvements to the state’s roadways and bridges. In order to ensure the state has the funds to support the projects, the law requires that the Petroleum Products Gross Receipt (PPGR) tax rate must be adjusted annually to generate the necessary revenue.
“As we’ve noted before, any changes in the gas tax rate are dictated by several factors that are beyond the control of the administration,” said State Treasurer Elizabeth Maher Muoio. “The law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target. When it does not, the gas tax rate has to be adjusted accordingly in order for us to meet our obligation under the law and fully fund the state’s many pressing transportation infrastructure needs. Highway fuels consumption took a significant hit in FY 2020 because of the economic downturn caused by the COVID-19 pandemic.”
Gasoline consumption in the state fell by 38.7 percent between March and May, while diesel fuel consumption fell by 16.5 percent. Treasury officials attributed the decline to people working from home and limiting their extracurricular activities because of the pandemic.
Due to the formula outlined in the law, the PPGR tax rate on gasoline will go from 30.9 cents to 40.2 cents per gallon. For diesel fuel, the tax rate will go from 34.9 cents to 44.2 cents. Additionally, the 10.5 cent Motor Fuels Tax on gasoline and 13.5 cent tax on diesel fuel will make the total tax on gasoline 50.7 cents per gallon, and the total tax on diesel fuel 57.7 cents per gallon.