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October 7, 2016 4:10 PM, EDT

N.J. Legislature Votes to Raise Fuel Taxes to Replenish Transportation Trust Fund

Emile Wamsteker/Bloomberg News

The long-running battle over New Jersey’s Transportation Trust Fund could be on the verge of ending. New Jersey’s Senate and Assembly voted on Oct. 7 to provide $2 billion annually to the transportation fund for the next eight years, thanks to tax increases of  27 cents per gallon on diesel and 23 cents per gallon on gasoline. Those taxes now are 17.5 cents per gallon and 14.5 cents per gallon, the nation’s lowest, other than those in Alaska.

Mark Magyar, policy director for New Jersey Senate President Steven Sweeney, told Transport Topics that the diesel tax increase will be phased in with the first 14 cents added on Jan. 1 and the remainder on July 1 in recognition of trucking companies’ normal purchase of fuel on contracts of at least six months.

The bill to replenish the transportation fund passed the Senate, 23-14, and the Assembly, 46-27. A bill to use some of the revenue from the fuel tax increases for a sales tax reduction of a third of a cent, increases in the Earned Income Tax Credit and aid to veterans as well as a phase-out of the estate tax and a cut in retirees’ taxes, passed the Senate, 24-14, and the Assembly, 44-27.

 

The bills were sent to Christie, who is expected to sign them by the end of the month because he and legislative leaders agreed on the general parameters of the package on Sept. 30. According to Senate Democrats, matching federal funds will increase the $16 billion package to more than $28 billion.

“This is one of the most significant investments in New Jersey’s infrastructure and economy in recent history,” said  Sen. Paul Sarlo, chairman of the Senate Budget and Appropriations Committee and one of the bill’s co-sponsors. “This is an investment plan that addresses the transportation needs that are so important to New Jersey at the same time it invests in jobs and the growth. It will provide an immediate impact in jobs and economic activity and will help sustain long-term economic growth.”

The transportation fund ran out of money this summer, causing Christie to order a shutdown of all nonemergency road and bridge construction on July 8.

“The state’s roads, bridges, tunnels and railways are in desperate need of repair and upgrades,” Sarlo said. ”The state’s transportation infrastructure … supports jobs, fuels commerce and is relied upon for the daily activities of the state’s residents.”

This transportation bill about doubles state aid to counties and municipalities to $400 million for highway and bridge repairs and includes a Transportation Infrastructure Bank to lower borrowing costs for local government.

“These bills are the products of the compromises needed to gain the support of legislators from both parties and the governor,” said Senator Sarlo. “No one got everything they wanted, and everyone had to accept provisions they wouldn’t choose on their own, in order to put an effective plan in place.”