Over the past three decades New Jersey voters have approved several ballot questions that have protected revenue raised from state fuel taxes from being used for anything other than transportation projects. Now, in the wake of the unpopular 23-cent gas-tax increase that went into effect this week, voters are being asked to do so again.
One of two public questions that will appear on Election Day ballots throughout the state next week will ask voters if they want every penny from the newly hiked fuel taxes to be constitutionally dedicated to one purpose — paying for the upkeep and expansion of the state’s roads, bridges, and mass-transit system.
Supporters of the constitutional dedication say it’s the only way to make sure the money isn’t diverted away from the state’s more than 30-year-old Transportation Trust Fund since governors from both political parties have a long history of raiding funds that haven’t been earmarked with such an ironclad protection.
To be clear, the gas-tax increase itself is not on the ballot and can’t be reversed with a “no” vote.
What supporters say
Without the constitutional “lock box,” the gas-tax revenue could be diverted into the state budget’s general fund, where it could be used for other purposes or simply to plug budget holes. That used to happen on a regular basis to New Jersey’s Unemployment Insurance Trust Fund, which was raided so frequently before the Great Recession that the state ended up having to borrow billions of dollars from the federal government to cover unemployment benefits after New Jersey’s jobless rolls swelled.
“We simply can’t risk letting Trenton misuse our hard-earned tax dollars,” said Greg Lalevee, chairman of the Engineers-Labor Cooperative, in a statement calling for passage of Public Question #2.
The way New Jersey assesses fuel taxes right now is rather complicated. There is a 10.5-cent per-gallon tax on the sale of gasoline, and all revenue from that tax is dedicated to funding transportation projects via the TTF, which is a separate spending account walled off from the budget’s general fund. The state also levies a 13.5-cent per-gallon tax on diesel fuel, with 10.5 cents currently dedicated to the TTF. Lastly, the state also charges a tax on the gross receipts of petroleum products at the wholesale level, with at least $200 million required to be set aside for the TTF under a ballot question approved by voters in 2000.
Up until Nov 1, the gross-receipts tax – which is generally passed along to motorists buying gas at the pump – was a 4-cent per-gallon charge. But Christie and lawmakers decided to increase the gross-receipts tax in a deal that was struck last month, effectively taking it from 4 cents up to 27 cents. That change went into effect this week.
Ballot question 2 is supported by Republican Christie and Democratic leaders in the Legislature. Other groups in favor of the new fuel-tax dedications include business groups and construction unions.
What opponents say
But Republican Lt. Governor Kim Guadagno and others say the language in the ballot question is incomplete and it’s what is missing is the reason to vote no on it. They maintain the TTF reauthorization bill that was signed into law by Gov. Christie last month links $12 billion in planned new borrowing for transportation projects to the passage of Public Question #2.
Under that bill, the state would spend $2 billion annually on transportation projects over the next eight years, with about $1.5 billion raised from new borrowing and the remaining $500 million coming from the increased gas tax.
The $2 billion represents an annual increase of $400 million over the $1.6 billion that has been spent by the state on transportation each year for the last decade.
“The only reason the governor and Democratic leadership are pushing the ballot question is to enable borrowing against the new tax increases, which will exhaust all of the new revenue in eight short years and will require future tax increases,” said Assemblyman Erik Peterson (R-Hunterdon).
Many of the opponents are also upset that the new revenue from the gas-tax increase, which they opposed, will be used to expand the mass-transit system, including the long-planned expansion of the Hudson-Bergen Light Rail Line, instead of roads and bridges.
But state fuel-tax revenue has traditionally been used to pay for mass-transit projects since they ease congestion on New Jersey’s roadways.
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