A gallon of regular gas in New Jersey on average cost $4.08 Tuesday, down 28 cents from one month ago, according to AAA data. (Photo by New Jersey Monitor)
While it’s unclear whether legislators will advance any of the measures before them intended to cut gas prices for consumers, tax credits could be the likeliest plan to win enough support to become law.
Lawmakers have also suggested temporarily cutting the state’s gas tax and encouraging the IRS to increase standard mileage reimbursement. Gas station industry groups, meanwhile, claim if New Jersey ends its full-service requirement, the only one of its kind in the nation, motorists would pay less.
As gas prices have nudged upward by inflation and Russia’s invasion of Ukraine, Democratic and Republican officials nationwide have made moves they say will help motorists until gas prices decrease. New York lawmakers on Thursday approved a seven-month gas tax holiday that will reduce the state’s levy on fuel by about 17 cents. Maryland suspended its 37-cent gas tax in March, but those collections are set to resume later this month. California Gov. Gavin Newsom has proposed a $400 rebate for vehicle owners to offset the rising costs of gas.
Here in New Jersey, a bill sponsored by Sen. Ed Durr (R-Gloucester) and other Republican legislators would offer a $500 rebate to joint tax filers making up to $250,000 annually, with a $250 award and $125,000 cap for single filers. The rebates would be paid on 2021 tax bills, with credits retroactively applied for residents who have already filed.
Durr said he hopes the bill can avoid partisan pitfalls.
“The Democrats have always said they’re there for the little guy, they believe in the people. Well, this is money for the little guy. This is literally going to help families who need the money, so why not?” he said.
The senator said the Office of Legislative Services has estimated a price tag of roughly $1.9 billion for the rebates. While the legislative office has certified the bill for a fiscal note, that note has not been released to the public.
Despite emerging from the minority party, Durr’s proposal has won interest from the state’s most powerful Democrat.
Though he stopped short of endorsing the bill, Gov. Phil Murphy last month said it is an idea “worthy of debate.” Durr said he intends to discuss the matter with legislative leadership.
The price tag could complicate the bill’s path to law. While surging tax collections mean the state will likely have the money to pay for the rebates, it could force New Jersey to dip into its surplus or divert funds from spending priorities.
The first-term Republican lawmaker, who won a surprise victory over former Senate President Steve Sweeney in November, is optimistic.
“I never say never because I also was never supposed to be a senator,” said Durr.
A gallon of regular gas in New Jersey on average cost $4.08 Tuesday, down 28 cents from one month ago, according to AAA data. That’s slightly less than the national average of $4.10 but significantly higher than the $2.89 New Jersey customers paid for gas at this point last year.
A temporary tax cut
Sen. Shirley Turner (D-Mercer) has proposed bringing New Jersey’s 42.4-cents-per-gallon gas tax down to 2016 levels for 60 days. In 2016 the state’s 14.5 cent levy was among the country’s lowest.
She said the Office of Legislative Services determined the holiday would cost the state between $180 million and $200 million in gas tax revenues. Like Durr’s bill, Turner’s proposal has been certified for a fiscal note, but that note has not yet been released.
Turner’s push for a tax holiday has so far won a frosty reception. Murphy has regarded it with skepticism, concerned about its impact on the state’s transportation trust fund, which pays for road improvement and maintenance in the state. All revenues from New Jersey’s gas tax are dedicated to the trust fund, as is a portion of New Jersey’s sales tax.
Turner said she had heard similar concerns from colleagues in the Senate. She proposed offsetting the lost trust fund revenues using federal funds disbursed to the state under the bipartisan Infrastructure and Jobs Act, which will send New Jersey roughly $12.3 billion for capital projects over the next five years.
“We have an embarrassment of riches, and it makes no sense that we’re going to just sit on it when there’s so many people suffering financially,” Turner said. “We know that when the gasoline prices increase, it’s a ripple throughout the economy.”
But it appears unlikely lawmakers or the administration would be willing to divert federal dollars to the transportation trust fund. Any move to reduce gas tax collections is likely to draw the ire of organized labor and could strain the fund’s finances, prevent borrowing for future capital projects, or complicate its authority to pay billions of dollars in bond debt.
“What are the bonding agencies going to say when New Jersey has $970 million still in bond debt sitting there and we decide to cut the funding source that pays those bonds back?” said Greg Lavelee, business manager of International Union of Operating Engineers Local 825. “I think I know what my mortgage banker would say.”
Lavelee, who is vice chair of the Transportation Trust Fund Authority’s board, added a reduction of the gas tax levy would also reduce taxes paid by out-of-state residents and would not guarantee prices go down at the pump.
Pump it yourself?
Similar questions over whether gas retailers would pass along reduced costs to consumers played a role in stalling a revived proposal to do away with New Jersey’s full-service mandate on gas stations.
New Jersey is the only state in the nation to require full-service gas stations. Oregon has a similar rule but allows customers to serve themselves in some rural counties.
The New Jersey Gasoline and C-Store Association has pushed a bill that would loosen New Jersey’s rules to allow for voluntary self-service while keeping full service in place at most gas stations.
That bill’s chances at passage slimmed to near nothing after Senate President Nicholas Scutari (D-Union) said he opposed it, citing a lack of public support and skepticism over its purported effect on gas prices, though he left the door open to supporting it in the future.
A March Rutgers-Eagleton poll that queried support for self-service without a full-service component found 73% of New Jersey adults prefer to have their gas pumped for them. A Monmouth University Poll released Monday found 54% of residents back allowing self-service with a full-service option at every gas station.
Six in 10 respondents told Monmouth they opposed self-service alone.
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