TRENTON – It was announced today that after a thorough review of fuel consumption statistics and consultation with the Legislative Budget and Finance Officer, the Department of the Treasury will necessitate a gas tax increase of 9.3 cents per gallon in order to ensure compliance with the 2016 law that requires a steady stream of revenue to support the state’s Transportation Trust Fund (TTF) program. The 2016 Law Mandates Adjustments to Ensure Funding for Critical Infrastructure Projects.

Under the 2016 law (Chapter 57) signed by Governor Christie, New Jersey’s TTF program is required to provide $16 billion over eight years to support critical infrastructure improvements to the state’s roadways and bridges.  In order to ensure the state has the funds necessary to support these projects, the law dictates that the Petroleum Products Gross Receipt (PPGR) tax rate must be adjusted accordingly to generate roughly $2 billion per year. 

“As we’ve noted before, any changes in the gas tax rate are dictated by several factors that are beyond the control of the administration,” said State Treasurer Elizabeth Maher Muoio.  “The law enacted in 2016 contains a specific formula to ensure that revenue is meeting a certain target. When it does not, the gas tax rate has to be adjusted accordingly in order for us to meet our obligation under the law and fully fund the state’s many pressing transportation infrastructure needs. Highway fuels consumption took a significant hit in FY 2020 because of the economic downturn caused by the COVID-19 pandemic.”

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Treasury noted that consumption of gasoline declined by a total of 38.7 percent from March to May, while diesel fuel consumption declined by 16.5 percent. Consumption of gasoline and diesel fuel continues to be depressed as many people continue to work from home and limit extracurricular activity.

Under P.L. 2016, Chapter 57, a statutory formula determines how much the PPGR Tax rate is to be adjusted annually in order to meet the Highway Fuels Revenue Target.  The Highway Fuels Revenue Target is required to be reviewed annually each August by the Treasurer, in consultation with the Legislative Budget and Finance Officer (LBFO).  This process just concluded, with Treasurer Muoio and LBFO Frank Haines consulting on revenue numbers. The release stated that the target is to be adjusted at the start of each year based on the prior fiscal year’s shortfall or surplus. If last year’s revenue was below target, then the cap must rise to make up the shortfall or be lowered to account for the surplus. The PPGR tax rate is then re-calculated to meet the current year’s updated Highway Fuels Revenue Target. The Highway fuels revenue collections in FY 2020 are projected to fall short of the FY 2020 Highway Fuels Revenue Target by $154.0 million.