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For the first time, electric vehicle drivers in New Jersey will directly contribute to the annual maintenance of the state’s roads, bridges and other transportation infrastructure, under a measure approved Thursday by a key legislative committee.
But how much this growing number of motorists will pay annually to pay for the upkeep of New Jersey’s transportation system is a key topic of debate leading up to the July 1 deadline for action on transportation spending. It becomes.
A bill introduced this week by majority Democratic members of the state Legislature calls for new registration fees for zero-emission vehicles that would take effect in July and initially be set at $250 per vehicle.
Under the same bill, passed by the Assembly Transportation and Independent Authorities Committee after a lengthy hearing Thursday, the toll would increase by $10 each July until 2028, after which it would be permanently set at $290. That will happen.
According to the bill, the money raised by the fee would apply to both battery electric vehicles and hydrogen fuel cell vehicles and would legally go to the New Jersey Transportation Trust Fund. The Trust Fund (TTF) is a separate account from the state budget dedicated to paying billions of dollars annually for road, bridge, and rail infrastructure improvements across the state.
Gasoline tax is now 42.3 cents
Currently, the primary source of revenue for the trust fund, which must be reauthorized by July 1, comes from New Jersey’s 42.3 cents per gallon tax on gasoline and 49.3 cents per gallon tax on diesel. It is.
But in addition to enacting a new state fee on zero-emission vehicles, the Democrats’ updated bill also lays the groundwork for a series of modest gas tax hikes that will take effect from January 1st to January 1st of each year. . 2029.
“The smaller the price difference, the less likely drivers are to go out of their way to buy at a[New Jersey]station.” — Eric Blomgren, New Jersey Gasoline, C-Store, Automobile Association
It’s unclear exactly how much gasoline taxes will rise each year to support the revenue targets proposed as a five-year trust fund renewal, but a summary of the legislation says the increase will be based on current conditions and consumption. It is likely to be about 2 cents a year. trend.
Meanwhile, the same law would also leave in place the “adjustment” process that allows for additional gas tax rate adjustments that New Jersey currently makes each year. This ensures that the state receives enough revenue each year from the gas tax to maintain the trust fund’s annual spending goals.
In total, the renewal bill authorizes $10.367 billion in capital program spending from fiscal years 2025 to 2029.
growing popularity
The latest vehicle registration numbers tracked by the state show that electric and plug-in hybrid vehicles have grown in popularity since the trust fund was last reauthorized in 2016.
As a result, one of the key questions heading into this year’s debate on trust fund renewal is whether and if electric vehicle owners will be asked to start contributing towards the maintenance of the transportation system. The question was what percentage, if any, should be contributed.
The answer to that question was revealed in a renewal bill introduced in both the Assembly and Senate earlier this week, apparently with the blessing of Gov. Phil Murphy’s administration.
At Thursday’s hearing, lawmakers heard from multiple witnesses that the new rates are too high for a state seeking to promote the use of electric vehicles as part of a broader effort to combat the increasingly negative impacts of electric vehicles. I heard an opinion that it would be set to . Global climate change.
“This fee is significantly out of step with what the average (vehicle) owner pays into the Transportation Trust Fund,” said Anjuli Ramos-Busotto of the New Jersey Sierra Club. “An individual who drives 10,000 miles a year and gets 25 miles per gallon currently pays about $170 a year through gas taxes.”
Additionally, rates should be higher as policymakers seek to level the playing field for drivers of gasoline-powered vehicles, which already cover most of the state’s transportation maintenance costs through a constitutionally-dedicated state gasoline tax. Some suggested that.
“The fee should be rounded up to $300 and set there immediately,” said Eric DeGesero, executive vice president of the New Jersey Fuel Distributors Association.
EV phase-out incentives
The plan to set the new fees would be a 100% exemption from New Jersey’s 6.625%, one of the major incentives used in recent years to encourage the purchase of electric vehicles, which Murphy said in the state’s annual budget. This comes alongside proposing plans to begin phasing out the consumption tax.
According to the governor’s proposed spending plan for fiscal year 2025, which begins July 1, the state would receive about $70 million in general fund funding in the first year of the three-year phase-out.
“This is a very troubling issue for us,” said Jim Appleton of the New Jersey Automobile Retailers Federation.
Predictions called into question
Meanwhile, the gas tax will be lower than administration officials have publicly indicated over the next five years, as part of a reauthorization that gradually increases targets for how much the tax itself should raise to maintain planned annual spending. Some suggest it could be raised further.
Eric Blomgren, director of the New Jersey Gasoline and C-Store Automobile Association, said this could be due to an increase in drivers not refueling in New Jersey, where gas has historically been cheaper than in neighboring states. Ta.
“The smaller the price difference, the less likely drivers are to go out of their way to buy at a[New Jersey]station,” Blomgren said.
Gasoline vehicles are also becoming more fuel efficient overall, and consumption is so high that larger gas tax hikes may be needed to meet the individual revenue targets specified in the bill. He added that there is.
“This bill doesn’t set a tax rate. This bill says we have to collect this amount of revenue,” Blomgren said.
— Graphics: Genesis Obando
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