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October 14, 2016 5:00 PM, EDT

New Jersey Transportation Funding Deal Becomes Law as Fuel Taxes Hiked

Andrew Harrer/Bloomberg News

New Jersey Gov. Chris Christie concluded his state’s long-running transportation funding crisis on Oct. 14 by signing bills that will raise taxes on diesel fuel by 27 cents per gallon and on gasoline by 23 cents per gallon. The current taxes of 17.5 cents per gallon on diesel and 14.5 cents per gallon on gasoline are the nation’s lowest outside of Alaska. 

New Jersey, which hadn’t raised fuel taxes since 1988, is the only state to do so in 2016.

The diesel increase will be divided, with 14 cents applied on Jan. 1 and the remainder on July 1 in recognition of trucking firms’ usual purchase of fuel on contracts of at least six months.

Christie, Senate President Steve Sweeney and Assembly Speaker Vincent Prieto had agreed on Sept. 30 to the parameters of a deal to replenish New Jersey’s depleted Transportation Trust Fund and to end the road construction shutdown that the governor had ordered July 8.

On Oct. 7, the Senate and Assembly passed the bills that will produce $16 billion over eight years for the transportation fund while also providing wallet relief through reductions in sales taxes and retirees’ taxes, as well as a phase-out of the estate tax and an increase in the Earned Income Tax Credit. Matching federal funds will raise the fund's assets to $32 billion.

“Through this legislation, we are continuing our commitment to providing tax relief for working New Jerseyans of all income levels … while ensuring  solid, reliable, state-of-the-art roads, bridges and mass transit systems,” Christie said in a statement after signing the bills. “Over the next eight years, a record $32 billion in state and federal funds will be invested in infrastructure improvements and modernizations in New Jersey. This compromise legislation locks in what I called for from the beginning: tax fairness for all residents, leading to a more affordable state and an improved economy.”

Sen. Paul Sarlo, one of the sponsors of the legislation, said it “will create 34,000 jobs, generate $4.7 billion in economic activity and help maintain an infrastructure that transports people and products safely, effectively and efficiently.”

Sarlo’s co-sponsor, Sen. Steve Oroho, focused on the benefits to the taxpayers.

“This is a plan that delivers tax fairness with a tax structure that is good for the economy and that provides savings for the working poor, retirees who often live on fixed incomes, veterans and for parents, grandparents and small business owners who want to pass down their assets to their [families],” Oroho said.