Get Ready For NJ's Gas Tax To Possibly Go Up – Again

Looks like New Jersey could be headed toward another gas tax hike if revenues don't turn around soon, officials say.

What might trigger the hike is a little-talked-about provision in the recent 23 cent gas-tax increase that could either hike, reduce or keep the gas tax the same.

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 Murphy administration has been meeting to determine whether the gas tax has been producing enough revenue to prevent a hike. Jennifer Sciortino, a spokeswoman for the state Department of Treasury, said her office is reviewing the latest numbers and expects to make a final determination "relatively soon on whether the rate must be changed in accordance with the requirements of the law."

Treasurer Elizabeth Maher Muoio told recently told the Assembly Budget Committee that "we've seen that the revenue numbers on the gas tax have been lower." She said the Murphy administration will "continue to monitor it throughout the summer ... so we're going to watch what happens."

The rate is determined annually, so a gas tax hike could go into effect on Oct. 1 if revenues fall short.

The 2016 gas-tax-bike legislation signed by 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."

In other words, the state Department of Treasury has to determine if the revenue derived from the gas tax met the state's expectations.

The plan was expected to produce around $2 billion in annual revenue that will be constitutionally dedicated to the TTF. If the revenue falls short of that – as Muoio warned – then we can expect a hike.

The state legislature approved a plan two years ago 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.

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 was followed by a decrease to 6.625 percent on Jan. 1, 2018, for a total reduction of 0.375 percent.

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