Bill would give car owners tax rebates of up to $800 to offset gas prices

Car owners would get tax rebates under a new bill intended to provide relief for motorists struggling with gas prices pushed upward by supply-chain constraints and conflict in Eastern Europe.

The bill, sponsored by Assemblyman Raj Mukherji (D-Hudson), would provide New Jersey residents with a non-commercial vehicle registered in their name with tax rebates of between $400 and $800, depending on how many months they lived in the state during a given tax year.

“Our motorists and commuters are recovering from the pandemic. They’re facing high inflation, and with the price of gas, they just need a break,” Mukherji said in an interview.

Mukherji’s proposal would also create a fare holiday for NJ Transit users that would run from June to August and pull a sizable chunk of revenue from the agency.

The bill sets aside $1.65 billion to pay for the rebates and reimburse NJ Transit for some of the cost of the fare holiday.

Gas prices in New Jersey were on average $4.38 per gallon Friday, slightly higher than the $4.28 national average, according to AAA data. One year ago, the New Jersey average was $2.98.

Mukherji said his proposal is based on a $9 billion plan proposed by California Gov. Gavin Newsom. The California Democrat’s plan would also create a three-month transit fare holiday and offer rebates between $400 and $800, but the awards would be based on the number of cars owned by a given filer, to a cap of two vehicles.

It is also reminiscent of a rebate plan drafted by Sen. Ed Durr (R-Gloucester). Durr’s proposal would provide residents with rebates of $250 for single filers making less than $125,000 annually, with doubled rebates and income limits for joint filers. Those rebates would be paid retroactively to 2021 tax bills.

A spokesperson for the governor declined to comment on Mukherji’s bill, but the governor in March said Durr’s proposal, which the senator said comes with a $1.9 billion price tag, was “worthy of debate.” Mukherji said he has not spoken to the governor’s office about his plan yet but hopes it will receive a positive response.

“I read in the papers the governor was open-minded on another potential solution that, when I read about it, would be costlier and just a different way of going about it,” Mukherji said.

It’s unclear how much NJ Transit would lose in revenue from a three-month fare holiday. The agency expects to receive $766.2 million in revenue from fares in the coming fiscal year, according to budget documents.

Some of the losses for NJ Transit would be offset by a $150 million general fund appropriation included in Mukherji’s bill.

The rebates for car owners would be funded by a $1.5 billion appropriation, though Mukherji said he hopes the bill could be paid for with unused federal aid.

About $3 billion of the roughly $6 billion in federal aid the state received under the American Rescue Plan has not yet been allocated. Lawmakers have until Dec. 31, 2024, to appropriate those funds, and they must spend them by the end of 2026.

Mukherji said he has yet to discuss the proposal with Democratic leaders in either chamber, and while those officials haven’t embraced the rebate plan outright, they haven’t ruled it out either.

“I am carefully reviewing proposals in the Assembly,” Assembly Speaker Craig Coughlin (D-Middlesex) said in a statement. “With a focus on affordability this legislative session and knowing New Jerseyans are facing challenges, we are thoughtfully exploring a host of legislative solutions to control costs across the spectrum.”

Plans to fight gas price hikes

Though their chances of passing appear to be the best, Durr and Mukherji’s bills aren’t the only proposals for gas price relief.

Sen. Shirley Turner (D-Mercer) has introduced a bill that would impose a 60-day gas tax holiday cutting New Jersey’s per-gallon rate from 42.4 cents to 14.5 cents, but that measure appears to have stalled over concerns a holiday would deplete the Transportation Trust Fund, which is funded by gas tax revenues and pays for capital transit projects and roadwork.

A separate proposal, backed by the New Jersey Gasoline and C-Store Association, to allow self-service at New Jersey’s gas stations is also in legislative limbo. Senate President Nicholas Scutari (D-Union) in March said he opposes the bill, citing public support for the state’s full-service mandate and a lack of evidence that allowing self-service would reduce gas prices.