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New Jersey lawmakers are pushing forward a bill that would increase the state's gas tax and introduce fees for electric vehicles. The proposal aims to extend the state's Transportation Trust Fund, which finances road, bridge, and other transit projects, for another decade.
The bill proposes an estimated 18% increase in gas tax collections over the next five years. This translates to a near ten-cent rise per gallon. In addition, electric vehicles sold in New Jersey would face new registration fees starting at $250 annually, increasing each year until reaching $290 by 2028.
Sponsored by Sen. Paul Sarlo and Assemblyman Clinton Calabrese, both Democrats from Bergen County, the bill is designed to raise the gas tax's revenue target by $366 million over five years. The first hike of $32 million is slated for January 1st.
The proposed changes mark the first significant shift in transportation trust fund revenue since 2016 when lawmakers approved a deal that more than doubled levies on gasoline and diesel in exchange for reducing the state’s sales tax and eliminating its estate tax.
Currently, New Jersey's gas tax stands among the nation's highest at 42.3 cents per gallon for gasoline and 49.3 cents per gallon for diesel. Revenue from these taxes goes into the trust fund which pays debt service on bonds funding transportation capital projects in the state.
The new legislation also seeks to address how electric vehicles will contribute to maintaining New Jersey’s roadways as the state moves toward phasing out new gas-burning cars by 2035. Currently, EV owners do not pay directly into the transportation trust fund through gas taxes.
However, some critics argue that imposing such fees could deter people from switching to EVs and hinder New Jersey’s emission reduction efforts. They suggest a lower fee of around $75 instead.
Despite opposition from Republicans who question whether additional revenue is necessary for continuing the trust fund, the bill is set to see a vote before the Assembly’s transportation committee and the Senate Budget Committee in the coming week.