After a review of fuel consumption statistics and consultation with the Legislative Budget and Finance Officer, the state Department of the Treasury announced on Aug. 24 that New Jersey’s gas tax rate will decrease by 8.3 cents per gallon beginning Oct. 1 to comport with the 2016 law that requires a steady stream of revenue to support the state’s Transportation Trust Fund (TTF) program.
“Because actual consumption in Fiscal Year 2021 was so closely in line with our projections made last August, coupled with the fact that consumption in the current fiscal year is projected to be above last fiscal year’s levels, our analysis of the formula dictates an 8.3-cent decrease in October,” State Treasurer Elizabeth Maher Muoio was quoted as saying in a press relase.
“We are pleased this dedicated funding stream continues to provide billions of dollars across the state to support our critical transportation infrastructure needs,” Muoio said.
Under the 2016 law signed by then-Gov. Christie Christie, New Jersey’s TTF program is required to provide $16 billion over eight years to support critical infrastructure improvements to the state’s roads and bridges, according to the press release.
In order to ensure the state has the funds necessary to support these projects, the law dictates that the Petroleum Products Gross Receipts tax rate must be adjusted accordingly to generate approximately $2 billion per year.
What is generally called the “gas tax” or the “highway fuels tax” is actually two separate taxes on gasoline and diesel fuel – the Motor Fuels tax and the Petroleum Products Gross Receipts (PPGR) tax, according to the press release.
Under the formula outlined in the 2016 law, the PPGR tax rate will decrease on Oct. 1 from 40.2 cents to 31.9 cents for gasoline and from 44.2 cents to 35.9 cents for diesel fuel.
When combined with the Motor Fuels Tax, which is fixed at 10.5 cents for gasoline and 13.5 cents for diesel fuel, the total tax rates motorists will pay for gasoline and diesel fuel will be 42.4 cents and 49.4 cents, respectively, according to the press release.
According to the press release, highway fuels revenue collections in FY 2021 are projected to exceed the FY 2020 highway fuels revenue target by $58.8 million.
Offsetting this slightly is the fact that the actual shortfall for FY 2020 ended up being $8.1 million higher than the $156 million shortfall that was projected in August 2020.
On the bottom line, the FY 2022 PPGR tax rate will be lower than in FY 2021 because there is no shortfall in prior fiscal year collections, but it will continue to be above the original 22.6-cent tax rate, according to the press release.
Treasury noted that only legislative action can change the statutory formula and any new statutory change would still need to secure reliable annual revenues for the Transportation Trust Fund.
