A great many people travel to the state of New Jersey because of its famous shore, where blue-green water laps at sandy beaches. Others come to play in the casinos in Atlantic City, and some visit the famed Pinelands of South Jersey. But, perhaps the most popular feature of the state is the price of gasoline.
New Jersey has the lowest gas tax in the nation. NJ service stations actually offer service in the form of attendants who man the pumps and in some cases actually wash your windshield. Yet, the price for fuel is still lower than its neighbors. That might soon end. If not, transportation-related construction might suffer a drastic drop in volume.
The tax on gasoline is 10.5 cents in the Garden State, and nine cents of that goes toward transportation. That nine cents, however, does little to pay the bills. It pays the debt service. A variety of borrowing, bond plans and use of other funds has been the state’s money raising methods in the past. Many fear that New Jersey has bankrupted its future in the process. An increase in the gasoline tax is almost an inevitability, and the construction industry awaits that with baited breath.
The New Jersey Transportation Trust Fund from whence come the monies for highways, bridges and all the other accouterments that make up the state’s transportation infrastructure is in danger of going broke. The State currently is working with a simple patch that expires in June. Between now and then, the legislature and governor must come up with a plan to put a billion dollars into the fund, or watch construction and repairs come to a screeching halt.
Talk to different people, and you get vastly different opinions as to what will happen.
Bill Dressler is the executive director of the New Jersey Gasoline Retailers Association. He is dead-set against any tax increase. He is convinced that the state’s governor, Christine Todd Whitman, will not allow a tax increase during her remaining time in office. There are strong rumors the governor has national aspirations or a foreign ambassadorship after her term. New taxes would make for very poor public relations. That’s what destroyed the career of Whitman’s predecessor, Jim Florio, who was literally drummed out of office for raising taxes. Garden Staters have a short fuse with the words ’tax increase.’
Whitman currently is under intense fire thanks to a new emissions testing system for motor vehicles that is causing humongous waiting times at the state’s Motor Vehicle Inspection Stations. Motorists have been known to wait as long as four hours to have their cars inspected.
“Can you imagine a motorist fuming during that wait, and then realizing he’s paying an added tax on his wasted gasoline?” Dressler asked.
Most legislators are talking about a four- or five- cent tax increase. Dressler said that the most he would support is an added two cents. He fears for the fate of the thousands of gasoline retailers. “To be competitive with the very big guys, they would have to bite the bullet and not raise prices. Few would be able to survive and then there would be mass closings of stations,” he said.
Republican legislator Rich Bagger, chairman of the Assembly Appropriations Committee, has been telling New Jersey residents to stop worrying. Bagger represents several counties in central New Jersey.
“It is certain that the Transportation Fund will be renewed by June 30th, the date the current legislation expires,” Bagger has reassured voters.
Bagger said New Jersey must have a five-cent increase in its gasoline tax. “Right now all we are doing is paying the debt service on the money that was borrowed to pay for the fund in the past. It would have been better if this legislation had been passed back in 1998 when gasoline was under a dollar. Now it is going to be a bitter pill to be swallowed, but it must be done.”
“We must return to ’pay as you go’ and not destroy the future,” Bagger said. “There are monies in the state’s General Fund which can also be used. Not only will we pass the necessary legislation, but the funding for the Transportation Fund will be at a greater level than it is now.”
That statement should warm the cockles of those involved in construction.
The ’end of March’ is the even more optimistic date set for passing legislation according to Alex DeCroce, chairman of the NJ Assembly Transportation Committee and also the deputy speaker of the House. “First of all, we are a corridor state, our two major highways are toll roads [the NJ Turnpike and the Garden State Parkway], with continuing income, so, we are not exactly falling apart.
“I like the Senate President’s plan,” DeCroce said, speaking of Senate President, Donald T DeFrancesco. That plan would take $400 million out of the state’s General Fund and another $200 million from sales taxes on automobiles, trucks and the like. “Trust me, before the end of this legislative session, we will have a bill in the hopper. Then the people can vote on a Constitutional Amendment to increase the gas tax,” he said.
New Jersey’s General Fund is used to pay for a variety of projects. The state currently has a surplus of almost a billion dollars. Democrats in the state attribute that to Governor Whitman’s slashing of services, while her fellow Republicans call it responsible government. Whatever the truth, the General Fund almost certainly will be a source of some revenue for the Transportation Fund.
“I’d love to see a tax increase. I wouldn’t care if it was twenty cents a gallon,” said Robert Briant Jr., associate director of New Jersey’s Utility and Transportation Contractors Association. Briant said, however, that he will settle for an increase of five to seven cents a gallon, a number that far exceeds anything political figures would discuss.
Briant pointed to a variety of transportation-related taxes that could be used for the Transportation Fund. “They could use money from the tax on refining petroleum products, or they could use part of the sales tax on new cars,” he said. The associate director also pointed to the $400 million New Jersey will receive from a settlement with the tobacco industry.
“The money is absolutely needed. We are drowning in a sea of red ink used to just pay the interest on money the state borrowed in years gone by. Currently 90 percent of the Motor Fuel Tax goes to just paying off the debt service. That’s killing us.” Briant claimed the problem was compounded when the original bonds were extended from 10 to 20 years, further increasing the amount the state would have to repay.
So, all agree something has to be done in the nation’s most densely populated state. The 10 million residents all seem to have cars, and as with California, motor vehicle use is a necessary way of life. New Jersey has few major cities and development homes — as opposed to neighborhood housing — are the rule. That means getting in the car to do just about everything. New Jersey parents have become acclimated to being little more than taxi drivers for their children’s needs whether it is to take them to ballet or soccer practice or just to a friend’s house. New Jersey housewives know that shopping is not available on the corner. The nearest supermarket is a 10- to 15-minute drive away. That, in turn, means a need for more and more roads, more and more repairs and of course, more and more money.
June 30 is the deadline for new legislation to put money in the Transportation Fund, and the clock is ticking. The construction industry is watching with crossed fingers.
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