Christie Administration Makes Decision On Potential Gas Tax Increase

A little-talked-about provision in last year's gas-tax increase could have triggered another hike by Oct. 1. The state, however, has chosen a different path.

The Christie administration has decided not to raise the gas tax again, nearly a year after raising it 23 cents to help fund the Transportation Trust Fund.

The state has decided not to take advantage of a provision that would have allowed a tax hike if revenues that fund the Transportation Trust Fund fell short of expectations. The fund pays for important emergency road projects.

While no announcement was made, the Christie administration's Petroleum Products Gross Receipts Tax shows the tax rate will stay the same after Oct. 1.

The possibility of another gas tax hike was raised last week when the Christie administration said it was reviewing whether to take advantage of a legislative “true-up” provision. The provision was part of the 23 cent gas-tax hike legislation that Christie signed into law nearly a year ago.

That entails the following:

"If the rate is too high and the state overcollects, then in the next year the rate must be adjusted down to account for the overcollection," according to the legislation, "and if the state undercollects then the rate is increased to account for the undercollection."

In other words, the state Department of Treasury had to determine if the revenue derived from the gas tax met the state's expectations. It's not clear how much money the treasurer expected to draw from the gas tax.

A spokesman for the treasurer, Willem Rijksen, said last week that "the matter is currently under review."

"Per the statute, the treasurer and legislative budget and finance officer shall determine the total revenue derived from highway fuels taxes in FY17," he said in a statement. "After considering the result of that determination, any adjustment to the 22.6-cent gallon gas tax will be announced in advance of its effective date of October 1."

The state legislature approved a plan last fall to raise gas taxes by 23 cents, a Christie-backed plan that took effect Nov. 1, 2016. The state Senate voted 24-14 to approve the plan, while the state Assembly voted 44-27 to approve it, with nine not voting, soon afterward.

Read more: N.J. Gas Tax Hike: What You Need To Know

The state’s gas tax increased by 23 cents a gallon to 37.5 cents, an amount that was still less than the neighboring states of New York, Pennsylvania and Connecticut, according to supporters. The plan was expected to produce $1.2 billion in annual revenue that will be constitutionally dedicated to the TTF.

As part of the package, the sales tax will be reduced by one-third of a penny over two years. On Jan. 1, 2017, the sales tax went from 7 percent to 6.875 percent. That will be followed by a decrease to 6.625 percent on Jan. 1, 2018, for a total reduction of 0.375 percent.

Patch file photo