News Column

Fuel-efficient Cars Mean Less Money for Roads and Bridges

March 14, 2013

Derek Harper, The Press of Atlantic City, Pleasantville, N.J.

fuel efficient

New Jersey residents help pay for their roads and bridges with the third-lowest gas tax in the country.

But now that state residents are driving less and using more efficient cars, there is less and less money available for repairs.

That has some state lawmakers are thinking of raising the tax, while others have proposed different ways of funding roads and bridges.

New Jersey's Motor Fuels Tax is a per-gallon assessment on fuel sold in the state. The state gas tax was first enacted in 1927, at 2 cents per gallon. Adjusted for the Consumer Price Index, that would be the equivalent of about 26 cents in 2012.

Instead, the state collects 10.5 cents on every gallon of gasoline and diesel fuel sold to passenger vehicles, while diesel trucks and buses pay an additional 3 cents. Vehicles like Atlantic City's jitney fleet, which run on compressed natural gas, pay 5.25 cents per gallon, while the handful of electric cars in the state do not pay the tax.

By comparison, New York charges 43 cents and Pennsylvania 39 cents per gallon.

New Jersey last raised the tax in 1989. Inflation since undermined the value by almost half.

Meanwhile, cars have been growing more efficient, averaging nearly 26 miles a gallon, with federal standards expected to raise that to 39 miles per gallon for cars and 30 mpg for trucks in the next four years

While cars are getting more efficient, New Jersey residents have begun driving less.

The state residents drove about 10,450 miles on average in 1980, according to state Department of Transportation figures. By 2007, New Jersey drivers were traveling another 2,700 miles every year.

But mileage quickly dropped, as the recession and high gas prices cut into the family budgets.

State motorists in 2010 drove 12,220 miles, more than 900 fewer than they did in 2007.

Between greater efficiency and fewer miles on the road, the state has consequently seen the Motor Fuels Tax raise less and less money each year for roads and bridges.

The Motor Fuels Tax crossed the half-billion dollar mark in 2000, reaching $563.3 million in 2008.

But with less fuel being burned, state Treasury figures show that the tax fell $40 million by 2011.

A slumping gas tax, plus years of borrowing for roads means the state's gas tax cannot completely pay for just the interest payments on past highway loans.

The state has proposed filling a $250 million hold in next year's Transportation Trust Fund by offering premium bonds, which will be repaid at higher rates of interest. As a result, debt service in this year's Transportation Trust Fund budget hit $995.4 million, and is projected to rise to more than $1 billion in the next budget, staying at that level for the next 10 years.

The cancellation of the ARC Tunnel project, a new train tunnel into Manhattan, allowed Christie to pay for $3.2 billion of the $8 billion cost of the Transportation Trust Fund between 2012 and 2016.

Some state lawmakers have repeatedly suggested raising the gas tax. Over the last two legislative sessions Assemblyman Albert Coutinho, D-Essex, proposed to raise it by 8-cent increments over three years, eventually bringing in an additional $24 billion to the Transportation Trust Fund.

However, this and other proposals have gotten little support in the legislature, and Gov. Chris Christie has repeatedly opposed the idea.

Sen. Jim Whelan, D-Atlantic, proposed a miles-based tax. State residents would be exempt from the gas tax, but they would be charged about 0.8 cents per mile when the re-registered their car.

Average drivers would pay about $102.

A number of states, including Washington, Oregon, Idaho, Minnesota, Wisconsin, North Carolina, Maryland, and Rhode Island have also contemplated similar taxes. Both the Netherlands and Denmark are planning to start a VMT fee in the next several years.

Oregon officials test-drove the idea in 2006, using GPS transponders that tracked mileage, but not destination. When drivers pulled up to the pump, the device determined the mileage tax and adjusted the gas bills.

In 2009, a federal infrastructure panel recommended scrapping the federal gas tax entirely, replacing it with a vehicle miles traveled tax by 2020.

Whelan's proposal was immediately attacked. Somers Point's libertarian leaning Liberty and Prosperity group picketed Whelan's office earlier this month. An email circulated by group President Dennis Mahon urged members to tell Whelan "we are tired of their constant schemes to raise more money for the State."

Similarly, Atlantic County Sheriff Frank X. Balles, a Republican candidate for state Senate, said the Transportation Trust Fund did not need additional revenue. Whelan quickly backpedaled, saying on Tuesday he would amend the bill to only cover electric vehicles or other vehicles that do not pay a gas tax.

In a subsequent emailed statement, Balles said "Whelan's continued push for a mileage tax on 'Green' vehicles unfairly targets our struggling middle class, penalizes consumers for making environmentally conscious decisions, and does nothing to reduce America's long term dependence on foreign oil."

It is unclear if the state will pay more for its roads and bridges. For now, transportation advocates say any money for roads needs to be new revenue, free of debt.

Janna Chernetz, the New Jersey advocate for the Tri-State Transportation campaign, said the group applauded Whelan's initiative, saying the state cannot afford to borrow any more.

"We hope this is the beginning of a conversation," she said, "and we need to get the conversation going."

Source: (c)2013 The Press of Atlantic City (Pleasantville, N.J.) Distributed by MCT Information Services

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