On November 8, New Jersey voters will be given an opportunity to protect the Transportation Trust Fund and make sure that gas taxes are put in a lockbox dedicated to transportation infrastructure. Here are some Frequently Asked Questions about Public Question 2 (also known as ACR1):
What You'll See in the Voting Booth*
Do you approve amending the Constitution to dedicate all revenue from the State motor fuels tax and petroleum products gross receipts tax to the Transportation Trust Fund?
This amendment would provide that an additional three cents of the current motor fuels tax on diesel fuel, which is not dedicated for transportation purposes, be dedicated to the Transportation Trust Fund. In doing so, the entire State tax on diesel fuel would be used for transportation purposes. The entire State tax on gasoline is currently dedicated to the Transportation Trust Fund and used for transportation purposes.
The amendment would also provide that all of the revenue from the current State tax on petroleum products gross receipts be dedicated to the Transportation Trust Fund. In doing so, the entire State tax on petroleum products gross receipts would be used for transportation purposes.
This amendment does not change the current tax on motor fuels or petroleum products gross receipts.
This amendment would dedicate all of the revenue from the State tax on motor fuels to the Transportation Trust Fund. The current dedication is 10.5 cents per gallon on gasoline and diesel fuel. The amendment would include an additional three cents of the tax on diesel fuel that is not currently dedicated. The total revenue from the tax on motor fuels this fiscal year is estimated to be $541 million.
The amendment also dedicates all of the revenue from the tax on gross receipts of the sale of petroleum products to the Transportation Trust Fund. The current minimum dedication is $200 million per year. This fiscal year, the revenue from the tax on gross receipts of the sale of petroleum products is estimated to be $215 million.
The amendment does not change the current tax on motor fuels or petroleum products gross receipts. The dedication to the Transportation Trust Fund ensures that the revenue is only used for transportation purposes.
[Click on a question to see the answer.]
Gas taxes are supposed to go to infrastructure (and over the years most of it has), but Public Question 2 (ACR1 in Trentonspeak) closes a loophole that has existed for diesel fuel and explicitly places language in the state constitution dedicating motor fuel taxes to infrastructure. In other words, it puts the gas tax revenue in a lock box that is constitutionally dedicated to infrastructure and protected from Trenton budget chicanery.
In a word, no. The gas tax was raised under separate legislation. Public Question 2 ensures that all gas taxes and motor fuel revenues are dedicated to infrastructure.
Public Question 2 DOES NOT raise the tax on diesel fuel. There is currently a loophole in NJ law regarding diesel fuel. Right now the tax on diesel fuel is 13.5 cents per gallon but only 10.5 cents of it is dedicated to infrastructure. Public Question 2 closes that loophole and ensures that all diesel gas tax revenue is dedicated to infrastructure.
Tolls from the Garden State Parkway, New Jersey Turnpike, George Washington Bridge, and other tunnels and bridges, and roads in the area are used to maintain those specific roads, bridges, and tunnels. New Jersey’s location makes it a “pass-through state” for many travelling along the Northeast Corridor from Boston to Washington DC, and tolls and the gas tax are the most effective way to get out-of-state users to pay their share of maintenance and upgrades when traveling through our state.
This is a common misconception based on the false assumption that all economic groups use cars and gasoline at equal rates. Thus, the argument goes, a gas tax is a bigger share of a poorer family’s taxes than a wealthier family’s taxes. But the fact is that lower income groups use mass transit more and cars less than higher economic groups.
In a paper from 1991, MIT economist Jim Porteba wrote, “Claims of the regressivity of gasoline taxes typically rely on annual surveys of consumer income and expenditures which show that gasoline expenditures are a larger fraction of income for very low income households than for middle or high-income households. This paper argues that annual expenditure provides a more reliable indicator of household well-being than annual income. It uses data from the Consumer Expenditure Survey to reassess the claim that gasoline taxes are regressive by computing the share of total expenditures which high-spending and low-spending households devote to retail gasoline purchases. This alternative approach shows that low-expenditure households devote a smaller share of their budget to gasoline than do their counterparts in the middle of the expenditure distribution. Although households in the top five percent of the total spending distribution spend less on gasoline than those who are less well off, the share of expenditure devoted to gasoline is much more stable across the population than the ratio of gasoline outlays to current income. The gasoline tax thus appears far less regressive than conventional analyses suggest.” [SOURCE: http://www.nber.org/chapters/c11271.pdf]
Porterba was more recently cited by Harvard economics professor Greg Mankiew, who wrote in 2006, “When I have advocated higher gasoline taxes previously on this blog, some commenters have argued against my position with the claim that the tax is regressive. That argument is nonstarter, for two reasons…First, even if gasoline taxes were regressive, one could alter other taxes at the same time one increased the gasoline tax to leave the overall progressivity of the tax system the same. This is one example of the principle that we should, to the extent possible, separate the issues of efficiency and equality. We should set the gasoline tax at the efficient level to deal with externalities and then use more general taxes and transfers to achieve whatever distribution goals we have.” [SOURCE: http://gregmankiw.blogspot.com/2006/06/is-gas-tax-regressive.html]
This is exactly what the recent gas tax legislation does, provide tax relief for the working poor, veterans, and fixed income retirees.
And in 2002, Mary E. Forsberg of New Jersey Policy Perspective noted, “In fact, car ownership correlates to income to the extent that, according to studies, between one quarter and one third of households with income below $15,000 do not own a car. A 1997 study by Elaine Murakami and Jennifer Young inquired into travel patterns of low-income people in order to help them move from welfare into the labor force. They used data from the US Department of Transportation’s 1995 Nationwide Personal Transportation Survey (NPTS) and estimated that about a quarter (26 percent) of low income households do not have a car compared to only 4 percent of other households.
Their study also showed that:
– When low-income households do own a car, the car is quite old. The average car is 11 years old in low-income households compared to 8 years for other households.
– People from low-income households are more likely to walk to work and are more likely to use public transit – buses as opposed to trains – to get to work.
– People in low-income households are nearly twice as likely to walk for other than work activities as well. Because so many trips are made by walking, the space in which people in low-income households travel is more constricted than for others. For low-income single parent households, about 66 percent of trips are three miles or less.
– Despite having fewer vehicles, people in low-income households still make most of their motorized trips in private vehicles. But these trips are more likely to be made in a vehicle owned by someone else, like a friend or relative.”
If you vote no, then you increase the chances of Transportation Trust Fund funds and gas tax revenues being used for non-infrastructure projects, i.e., Trenton taking money from the Transportation Trust Fund to fill a budget shortfall elsewhere in the state budget.
If Public Question 2 passes, then the Transportation Trust Fund and revenue from the gas tax is in a Lock Box and dedicated to infrastructure.
If Public Question 2 does not pass, then the Transportation Trust Fund and gas tax revenue is at risk of being used by Trenton to fill shortfalls elsewhere in the state budget, which would result in less money for roads, bridges, tunnels, and transit and which means bumpier rides, more traffic, and less safe transportation.
As a pass-through state in the Northeast Corridor, NJ sees more than its share of out-of-state travelers, from big trucks on their way to NY, PA, DE, and points beyond, to out-of-staters heading to the Shore in the summertime. If NJ’s roads were maintained though the general fund, then the wear and tear on the state’s infrastructure by out-of-state drivers would be disproportionately paid for by NJ taxpayers.
Additionally, big infrastructure projects are typically multi-year endeavors, and a stable and predictable source of funding helps those projects stay on track.