After Christie signature, gas tax hike takes effect Nov. 1

Gas prices in South Jersey held steady at under $2 per gallon for most of the summer in 2016. A bill signed Friday, Oct. 14 would increase the state's gas tax 23 cents starting Tuesday, Nov. 1.

file photo

TRENTON — New Jersey’s famously low gas prices are about to see a steep hike.

Gov. Chris Christie signed off on a 23-cent-a-gallon increase to New Jersey’s gas tax on Friday, Oct. 14. The governor said in a Friday statement that the legislation will replenish the state’s impoverished Transportation Trust Fund and provide sales tax relief for taxpayers.

On Friday, Oct. 7, the bill passed on a 24-14 Senate vote and a 44-27 vote in Assembly. First District State Sen. Jeff Van Drew and assemblymen Bob Andrzejczak and Bruce Land, all Democrats, voted against the measure.

Christie’s signature comes more than three months after he ordered a massive shutdown of state-funded projects in July, shortly after a deal on the increase between Christie and the Legislature fell apart. According to reports from the time, there was support in the Assembly, but Senate Democrats balked, saying it would hurt the state budget. The governor lifted the project freeze on Oct. 7.

Along with raising the gas tax from the previous 14.5 cents per gallon, one of the lowest in the nation, to 37.5 cents per gallon, the bill implements a 27-cent tax increase on diesel fuel per gallon. It also cuts the sales tax from 7 percent to 6.875 percent by January, and to 6.625 percent by July. The measure also phases out the estate tax by increasing the exclusion threshold from the current from the current $675,000 to $2 million in 2017 and eliminating it in 2018.

It also raises the earned income tax credit from 30 to 35 percent, and it increases the tax exclusion on retirement and pension income over four years to $100,000 for joint filers, $75,000 for individuals and $50,000 for those who are married but file separately.

The state’s new gas tax, set to take effect Nov. 1, will be higher than gas taxes in Delaware and Maryland, but still lower than Pennsylvania and New York, according to the American Petroleum Institute. Nationally, state gas taxes average around 30 cents per gallon.

Gas prices in South Jersey had hovered under $2 per gallon for most of the summer of 2016.

Christie and other advocating lawmakers called the legislation a compromise.

“Through this legislation, we are continuing our commitment to providing tax relief for working New Jerseyans of all income levels, senior citizens, military veterans and property owners, while ensuring solid, reliable, state-of-the-art roads, bridges and mass transit systems,” Christie said. “Over the next eight years, a record $32 billion in state and federal funds will be invested in infrastructure improvements and modernizations in New Jersey. This compromise legislation locks in what I called for from the beginning: tax fairness for all residents, leading to a more affordable state and an improved economy.”

Assembly Speaker Vincent Prieto, who sponsored the bill, said it will lead to a stronger and safer state.

“While it may not have been popular, it was the right thing to do,” Prieto said in a statement. “The future of our state required it. The economic well-being of our state demanded it.”

Van Drew, meanwhile, called the measure harmful for New Jersey residents.

In a statement released after the Senate and Assembly votes on Friday, he said the bill is the wrong way to move forward.

“Residents are taxed, tolled, feed, charged and assessed to death in this state,” he said. “Middle-class and working people are just trying to make enough to pay their mortgage or rent, to put food on the table, and if they’re lucky to take a vacation on occasion. Increasing the gas tax will only make it harder to make ends meet.”

Van Drew said the legislation’s impacts will be especially felt in South Jersey, where he says public transportation is less accessible than in other parts of the state.

“Residents have to commute farther to work, to school, to doctor’s appointments and, in more rural areas, even to get to the drug store,” he said. “We have the lowest per capita income in deep South Jersey, and many people are struggling to get by. People can’t afford to pay more at the pump.”

Van Drew added that increasing the gas tax could harm the state’s fishing, construction, marine and farming industries, who he says would have to pay more to keep their equipment running.

“I voted against this proposal because increasing the gas tax, one of the few taxes where New Jersey is competitive with other states, is the wrong thing to do,” he said.