NJ Must Consider the Feasibility of a Variable-Rate Gas Tax to Replenish TTF

SteveFulop-LibertyHouseFundraiser-June29,2015

New Jersey is comprised of nearly 40,000 miles of roadways that connect our state’s diverse and unique assets. It is estimated that over one third of New Jersey’s major roads are in poor condition, an issue that contributes to severe traffic and vehicle damage. Furthermore, over one third of our state’s bridges require repair, serious improvement or a complete replacement.

As we watch these crucial pieces of infrastructure deteriorate, we are once again faced with an enormous transportation funding issue.

I know personally, as the Mayor of Jersey City, that our growth as a city and a region relies on thoughtful infrastructure investment to keep our city and region competitive. While drivers throughout New Jersey know that much of the infrastructure that supports our cars, trucks and buses is crumbling fast, Trenton has failed to act.

In July of 1984, former Republican Governor Thomas Kean signed into law a solution for similar transportation funding issues that faced the state. The newly created Transportation Trust Fund (TTF) was designed to provide a stable source of funding to repair the state’s roads, bridges and highways. This trust fund was the first of its kind in the nation, as it was automatically replenished each year with $365 million dollars, collected from tolls, taxes and fees. At the time, this was an incredible victory for the state, boldly proving the government’s commitment to preserving and improving New Jersey’s massive roadway system.

During the past 30 years, however, the TTF has fallen apart, accumulating 16 billion dollars in debt, and leaving behind a crumbling transportation network that threatens the state’s economic health. Throughout its lifetime, lawmakers have recklessly expanded the capacity of this fund to keep up with the demand. These momentary solutions placed a burden on the TTF that continued to pile up, and eventually expired. Now, nearly every dollar that flows into the TTF is being used to pay off current debt.

New Jersey has needed a long-term solution to this issue for decades, but now Trenton’s inaction threatens our infrastructure, economy, safety and growth.

We have seen finger pointing between the Legislative and Executive Branches in Trenton, debates on the political timing of a TTF funding plan, and most recently, discussions of a “tax fairness” compromise, which would allow for a decrease in taxes to the wealthy in exchange for an increase in the gas tax. However, ‘tax fairness’ shouldn’t be about trading one tax for another, but rather should ensure that everyone pays their fair share. The gas tax solution is essentially a user fee for motorists who use our roads and bridges the most. It is a means by which drivers from neighboring states pay their fair share for using our highways. This solution encompasses the true definition of fairness, rather than creating shortfalls in other areas of the State’s budget to solve our crisis of funding the TTF.

The strategy our state takes in raising the gas tax is important, and we should work to raise revenue for our infrastructure while also protecting consumers, businesses, taxpayers and our economy. A number of states throughout the nation have recognized the feasibility of a variable-rate gas tax structure as opposed to a flat tax increase, and I believe New Jersey should be among those states. A variable-rate structure means that when gas prices increase, the per gallon tax that motorists pay at the pump will decrease, so that the amount that consumers pay will remain relatively stable. This both protects consumers and our state’s economy from the tax burden that is caused by fluctuating gas prices. Additionally, it is important that our state’s gas tax solution is tied to the inflation rate to allow the tax rates to adjust accordingly without legislative action, ensuring the long-term financial and political sustainability of this revenue source.

As proposals have been discussed, I feel it is important to lend direction to this conversation because this decision in Trenton will have a huge impact on Jersey City’s continued growth. It is generally agreed upon that any solution must generate 1.2 billion dollars in revenue in order to prevent future budget gaps. It is my contention that the best method for arriving at this goal is a combination of a tax increase of 15-20 cents per gallon at the pump, and a 3-3.5% increase in tax on gross petroleum receipts. A blended approach is important because it will minimize the impact on consumers and include the large corporate entities directly in paying for the TTF solution.

A delay to fixing the TTF will harm our state’s drivers, the larger economy and of course local economies like Jersey City. It is time that we do what was done in 1984 by Governor Tom Kean and show true bi-partisan support to make the tough decision to raise the revenue to put this problem behind us.

Steven Fulop is the Mayor of Jersey City