New Jersey’s gas tax could soon rise, and EV owners may have to pay a fee

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The New Jersey legislature wants to increase the state gas tax by 1.9 cents per gallon annually for the next five years.

Lawmakers approved the measure Monday. The money raised, approximately $10 billion, will go to fund the state Transportation Trust Fund, which pays for all transportation projects in the Garden State.

The same bill also calls for EV owners to pay a $250 fee starting July 1. That fee will increase by $10 a year until at least fiscal year 2029, but individuals who buy a new EV will have to pay for the entire 5-year fee — slightly more than $1,000 upfront.

State Sen. Bob Smith, chair of the Senate Environment and Energy Committee, voted in favor of the measure but said he doesn’t like EV owners are levied a tax. “It sends a terrible message. It makes another hurdle to people buying EVs,” he said. “We don’t need hurdles; we need to make it as easy as possible. Global climate change is killing us. We need to be setting the example for the United States on promoting EVs for the sake of the human species’ survival.”

GOP state Sen. Tony Bucco, who voted against the legislation, said the Republican proposal didn’t have a gas tax hike but had provisions in place that would have funded the Transportation Trust Fund for longer and created more jobs. But it was never posted for a vote.

The bill he co-authored called for a registration fee for EV owners. It also wanted to use money from the state’s debt defeasance and the surplus fund to cover funding for the TTF.

“It would have been way more beneficial to our taxpayers,” he said.

Bucco said electric vehicle owners are utilizing New Jersey roadways.

“And just like the folks that have gas powered vehicles, they need to pay their fair share of maintaining our roads and bridges,” he said.

Smith of the Senate Environment and Energy Committee said New Jersey is trying to convert transportation from fossil fuels to clean, renewable energy, and this EV fee goes contrary to that. Therefore, he will seek a remedy during budget negotiations over the next few months.

“I think there’s a legitimate discussion [to be had] about why this particular number [$250] is the right number for a registration fee,” he said. “In other states, $80, $100 a year are, I believe, closer to the mark.”

Smith said he’s heard that new EV owners are being asked to pay several years of fees upfront because the Motor Vehicle Commission has an older computer system that can’t charge the fee on an annual basis.

“Let’s just get the right computer,” he said. “It’s not like you’re talking about millions and millions of EV registrations. It’s on the order of 200,000 or 300,000 at the moment.”

Smith said nobody wants to increase the gas tax, but it’s necessary.

“If we want to have safe driving, safe transportation and make sure our infrastructure is up-to-date and ready to handle the traffic volume that we have in New Jersey, we have to do this,” he said.

The legislature also passed a measure on Monday to expand affordable housing.