Planetizen - Urban Planning News, Jobs, and Education

Road Projects Shut Down in New Jersey As Funds Run Out

A bill to replenish the state transportation trust fund by increasing the gas tax 23 cents per gallon stalled in the Senate because it would also cut $2 billion annually to the state's general fund.
July 5, 2016, 12pm PDT | Irvin Dawid
Share Tweet LinkedIn Email Comments

"Gov. Chris Christie (R)  late Thursday [June 30] declared a state of emergency and ordered state officials to plan a shutdown of all ongoing work paid for by the nearly broke Transportation Trust Fund," reports Samantha Marcusstate budget reporter for The Star-Ledger.

The state's 14.5-cent gas tax is second only to Alaska in being the nation's lowest. It hasn't been increased since 1988.

A Christie-supported bill, A12 [PDF], which among other tax cuts, reduced the state sales tax by one cent, passed the Assembly by 53-23 at 12:45 a.m. on Tuesday morning, June 28, according to an email from Susan K. Livio, statehouse reporter for NJ Advance Media for NJ.com.

Christie has made clear that a gas tax increase must be part of a "tax shift." His earlier press release refers to the Assembly bill as a "broad-based tax cut and transportation funding package," omitting the 23-cents gas tax increase.

"It makes no sense. It blows a $2 billion hole in the budget,"  Sen. Raymond Lesniak (D-Union) told The Star-Ledger  of the Assembly version. "It's going to hurt a lot of people. ... He's going to leave this state and leave us holding the bag, and leaving the residents of this state holding the bag."

Senate tax shift package doesn't satisfy Christie

While the Senate's tax shift package increases the gas tax by the same amount, 23 cents per gallon, it "is estimated to cost the state $870 million a year once fully implemented," reports Marcus.

But that didn't satisfy Christie. He wanted more of a tax reduction, which prompted a stinging rebuke from Star-Ledger editorial board writer Tom Moran. Referring to the Assembly bill, he wrote:

[T]his one goes into the record books. New Jersey has the nation's second lowest bond rating. But watch out, Illinois, we are going for the gold!

What about other states that increase gas taxes?

Dozens of other governors in recent years have signed gas tax legislation that increase gas taxes to fund transportation projects without jeopardizing their states' general funds. Gov. Jay Inslee (D-Wash.) did not demand that tax cuts accompany the 11.9 cent tax increase he signed into law last July. The second part of the tax increase just occurred Friday.

This isn't a partisan issue. Washington was one of ten states, noted at the bottom of this post, that either increased gas taxes last year or passed legislation to prevent them from falling further due to declining gas prices. Only two had Democratic governors. (Seven were Republican, one was Independent.) None of the tax increases (or changes) were accompanied by tax cuts that impacted the general fund.

Insistence upon tax shifts correlates with tax intransigence

Christie is not alone, though, in insisting that a gas tax increase must be at the expense of other revenues to the general fund.  

Mississippi Governor Phil Bryant (R) and South Carolina Governor Nikki Haley (R) also insist that a gas tax increase be part of a tax shift package, according to Kyle Park Points of GAS2.

Interestingly, like New Jersey, both have among the lowest gas taxes in the nation (see API table). And while New Jersey has gone 26 years without an increase to its gas tax, according to the Institute on Taxation and Economic Policy chart, Mississippi and South Carolin do even worse, having each gone 27.5 years without an increase.

Full Story:
Published on Sunday, July 3, 2016 in Planetizen
Share Tweet LinkedIn Email