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.

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David Cullen

David Cullen

[Former] Business/Washington Contributing Editor

David Cullen comments on the positive and negative factors impacting trucking – from the latest government regulations and policy initiatives coming out of Washington DC to the array of business and societal pressures that also determine what truck-fleet managers must do to ensure their operations keep on driving ahead.

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