This week, Governor Christie is expected to sign into law a new deal to fund the New Jersey Transportation Trust Fund (TTF). The TTF, which funds state transportation projects, had reached a point where existing funds could only pay off interest on bonds taken out to pay for previous projects – no money was left to start new projects to build roads, repair bridges, or make needed improvements to help people move around the state. After months of haggling, the NJ State Assembly and Senate passed a deal last week, which will see the state gas tax increase to provide new funds for the TTF. In exchange – and in response to demands form Governor Christie – the state sales tax will be trimmed, along with a blend of other tax cuts, including phasing out the estate tax. We called for a gas tax increase years ago, and although the deal is messy and overdue, it is still necessary.
New Jersey’s transportation network is clearly vital to our economy, especially given our location between New York and Philadelphia. We can’t neglect our infrastructure, or idle transportation projects, as happened this summer. New revenue is needed. But the compensating cuts in sales and estate taxes are controversial. Credit agencies are warning about the possibility of another credit downgrade, because the new tax cuts will make it harder to pay for state programs and outstanding pension obligations. Proponents such as NJ Senate President Steve Sweeney (D-Gloucester) have argued that any shortfall will be outweighed by growth in the state economy and increased tax revenues from wealthy retirees who are encouraged to stay in-state by the tax cuts. If they’re wrong, it will cause severe problems with balancing the state budget in coming years.
Other elected officials have complained that the increase in the gas tax, which is estimated to be about 23 cents per gallon of fuel, is unfair. This opposition comes from both sides of the political spectrum. State Senator Shirley Turner (D-Mercer) said “23 cents is too much for the working households to absorb at one time“. State Senator Jennifer Beck (R-Monmouth) called it “a regressive, onerous tax“. All three of Princeton’s NJ state representatives- Assembly Reps Andrew Wicker (D) and Jack Ciatterelli (R), and State Senator Kip Bateman (R)- voted against the transportation funding deal.
Nobody likes new taxes, but it’s not clear who these elected officials think ought to pay for our essential roads and transportation infrastructure. As a basic principle, it seems fairly obvious that the people using the roads the most ought to pay the most. That is easily achieved by a gas tax, and if more money is needed for roads, then the gas tax ought to rise. The alternative would be to fund transportation spending using money from general taxation. This is a bad idea for several reasons. First, truly low-income people don’t drive as much – they walk, bike or take transit. They also car-share at higher rates. Keeping gas taxes low doesn’t help these people much; instead they end up subsidizing the driving habits of more affluent residents through the other taxes they pay. Cheap gas is therefore in not a triumph of progressive policy-making.
Second, when we subsidize driving, we encourage people to drive more. That is fine if driving is something we want to encourage. But why would we do that? More driving means more sprawling subdivisions, more greenhouse gas emissions, and more people run over by cars. (New Jersey has the second-highest share of pedestrian fatalities in traffic crashes in the nation.) If people choose to drive, they should be free to drive as much as they want, but they should pay for that privilege through a gas tax that sustains the roads they are using. If we want to provide a benefit to low-income people, do it by providing something that benefits everybody (e.g. lower tax rates) instead of by subsidizing some particular behavior (like driving or parking).
Instead of complaining about gas taxes, elected officials might do better to carefully study whether all the gas tax money is being well used. Are we investing in ‘Complete Streets’ that work for everybody, or are our road projects just creating sprawl and dangerous conditions for vulnerable road users? Do state land use policies enable people to easily access places of employment, or are we effectively requiring low-income people to drive long distances to reach their workplace? This is a particular problem in affluent towns like Princeton, which have systematically under-built housing on the assumption that employees in local businesses will commute from other townships that are expected to provide housing and services for them. This is the type of problem that could be addressed at the state level – if legislators want to take an interest.