New Jersey Gas Tax Hike: Delayed Maintenance Means a Tougher Decision

There were two hidden lessons in the very good news that New Jersey had decided to increase its gas tax by 23¢ per gallon.

When you put off badly-needed investments for years or decades, the pain you create exceeds the dollars you save.

And when you finally take steps to get the investment right, the backlogged work might take such a big bite out of your tax base that you end up distorting other revenue streams to compensate.

None of this is to be backhanded about the announcement late last month by New Jersey Gov. Chris Christie, State Senate President Stephen Sweeney, and State Assembly Speaker Vincent Prieto: They’ve made a tough call that will save their state’s Transportation Trust Fund (TTF) just shy of insolvency.

But if the U.S. is going to assemble the trillion-plus dollars that will be needed to clear a daunting highway infrastructure deficit, it’s important to learn from experience and find ways to make it easier to free up the funding required to keep moving America forward.

Things Were Getting Urgent

When they announced the gas tax increase September 30, the political leaders each found their own way acknowledge the time it had taken to strike a deal.

“I’m not authorizing any other tax increase during my time as governor,” said Christie, who has been in office for seven years. But “I’m authorizing this one because of the importance of the Transportation Trust Fund…and because we need to responsibly finance this type of activity.”

“Sorry it took so long,” added Sweeney. “But we all have strong personalities, and sometimes it just takes time to get together.”

Prieto said the agreement “couldn’t come soon enough,” adding that replenishing the TTF had become a “public safety issue.”

The state’s infrastructure funding campaign, the Forward NJ Coalition, had the back story.

“The TTF is bankrupt, and work shutdowns are now costing New Jersey 4,200 jobs, $41 million in work stoppage costs, and $9 million in weekly lost sales and wages,” the coalition states on its website. It warns that New Jersey has the sixth-highest level of congestion in the country, the 15^th-highest percentage of deficient bridges, and the fifth-highest percentage of urban and rural roads in need of repair.

Delays Cost Money

The leaders’ remarks shed light on one of the brutal realities of infrastructure maintenance and refurbishment: when essential investments are delayed, then delayed again, the accumulated deterioration costs a lot more to repair when it finally gets too serious to ignore.

In this case, the state gas tax hadn’t increased since 1988 and was one of the lowest in the country, second only to Alaska.

A Road Less Travelled

Last July in Boston, during IBTTA’s 2016 Summit on All-Electronic Tolling, Managed Lanes and Interoperability, participants heard from Peter Garino, Chief Operating Officer at the Rhode Island Department of Transportation, who traced the state’s transition from bad news to good on infrastructure upgrades. He showed a video that chronicled groundbreakings and financial awards for bridge improvement projects, new job numbers, higher weight limits on the Great Island Bridge after 20 years of restrictions, and support from business and elected leaders for Governor Gina Raimondo’s RhodeWorks truck tolling program.

Garino said the state’s bridge renewal program would save a cool $1 billion compared to the previous trajectory for repairs and reconstruction: “It costs less if you catch a bridge before it goes over the cliff and costs that much more for reconstruction,” he said.

No wonder Garino set his video to the hard-driving strains of Born to be Wild.

In the end, both states will get the roadway repairs they’ve desperately needed. But at the moment, at least, the difference in tone and trajectory is hard to ignore. Getting ahead of the infrastructure funding deficit, with tolling as a key tool in the funding toolbox, may be a road less travelled for some states. But when you look at how long and hard New Jersey had to struggle for a more conventional solution, it makes sense to look at a wider mix of options.

Click here for presentations from IBTTA’s Summit on All-Electronic Tolling, Managed Lanes and Interoperability, July 24-26, 2016 in Boston.