A recent Brookings Institution report on gas taxes in the United States points out that the per-gallon value of New Jersey’s long standing 10.5-cents/gallon state gas tax has been significantly eroded by inflation.

This effect was largely masked in recent decades by increasing vehicle-miles of travel (and thus fuel consumption), and further by the proliferation of gas-guzzling suburban utility vehicles. The U.S. Energy Information Administration estimates that gasoline consumption in New Jersey increased by over 30% from 1980 to 2000, and by nearly 21% from 1990 to 2000 (the Campaign has yet to compare these figures to historical NJ fuel sales and gas tax revenues).

Nonetheless, the Brookings report calculates that in 1992, the NJ gas tax had a value in 2002 dollars of 13.42 cents per gallon. Thus, by 2002, inflation had reduced the value of the nominal 10.5 cents/gallon rate by 27.8%. Even with our gluttonous gorging on gas, the state gas tax – which is among the lowest in the United States – isn’t what it used to be.

To create the public purchasing power needed to address New Jersey’s infrastructure needs, including the many reasonable demands for more mass transit service around the state, NJ leaders are likely to need to look beyond a few-cent gas tax hike when they reauthorize the state’s transportation trust fund next year.

Indeed, NJ Assemblyman John Wisniewski, chair of the Assembly transportation committee, said at last month’s Transaction conference that a small gas tax increase would provide only very short term relief for New Jersey’s transportation funding woes.

The Brookings Institution also warned that a period of flattening VMT and gains in overall motor vehicle fuel economy would further impact gas taxes’ value as a transportation investment resource.

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