Expect Another NJ Gas Tax Hike – And A Price Spike, Officials Say

Expect to pay more at the pump – and expect to do it sooner than later.

New Jersey’s gas tax could rise again this year – unless revenues dramtically turn around, according to a report released this past week by the state Office of Legislative Services.

This report came as higher crude oil prices and steadily decreasing gasoline stocks already have cost local drivers a lot more money at the pump this month. Gas prices in New Jersey have risen at least 20 cents, according to AAA.

And it came as analysts say drivers should expect more increases in the coming weeks. AAA anticipates gas price averages will continue to trend upward well into spring, just ahead of the summer driving season (see your local averages below).

In other words, you could be paying close to $3 a gallon by summer. If not then, you could be paying that much on Oct 1, when another gas tax hike is expected to come.

The gas tax hike issue was raised in an OLS report this past week saying that tax revenue “will fall short of the highway fuels revenue target, and this difference is to be made up in the following fiscal year."

The OLS and state Treasurer Elizabeth Maher Muoio told the Assembly Budget Committee last week that officials will meet in August to decide what to do.

The gas tax is a rate that is determined annually. What triggers a hike is a little-talked-about provision in the 2016 23 cent gas-tax increase that could either hike, reduce or keep the gas tax the same.

Last year, lower fuel consumption over the last two years necessitated a gas tax increase of 4.3 cents to an overall rate of 41.4 cents, according to the state Department of Treasury.

The change depends on how much of the tax has been collected over the past year to fund the Transportation Trust Fund. The fund pays for important and emergency road projects.

The 2016 gas-tax-bike legislation signed by former Gov. Chris Christie has what it calls a "true-up" provision. 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."

And if prices keep rising, people may be more inclined to stay off the roads. Prices have been trending upward for a while, AAA says.

Demand for crude is also being watched closely as trade talks between the U.S. and China continue. Increased demand could send prices higher, according to AAA.

Political factors in Libya may also come into play in the next few days because its oil production has been turbulent in the last few years, and its southern oil fields have frequently gone offline amid fighting among its patchwork of militias and tribal and ethnic groups, according to AAA.

“Hopes for a spring ‘break’ at the pump are coming up empty for local motorists,” says Tracy E. Noble, manager of public and government affairs for AAA Mid-Atlantic. “Gasoline stocks have been steadily decreasing since early February and oil prices have been increasing, causing spikes at the pump that are likely to continue for the coming weeks.”