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New Jersey considering 4-cent gas tax hike

New Jersey considering 4-cent gas tax hike
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New Jersey is considering increasing the amount of money drivers in their state will have to pay at the pump to help pay for transportation projects as federal road funding dries up, The Wall Street Journal reports

State lawmakers in New Jersey are considering a proposal that would increase the state’s tax on wholesale petroleum by four cents, according to the report. 

New Jersey drivers are currently charged 14.5 cents-per-gallon tax on gas purchases in a combination of excise taxes and other state levies. 

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The new New Jersey fuel levy will be collected on top of an 18.4-cents-per-gallon federal gas tax that is charged to all drivers in the nation to fill the federal government’s transportation funding coffers. 

The American Petroleum Institute says the gas tax increase will bring the total amount of money that drivers in New Jersey are charged at the pump to nearly 36 cents per gallon, which is among the lowest rates in the nation. 

New Jersey is the latest to consider increasing its gas tax in recent years as the future of federal transportation funding looks uncertain. Six states implemented such hikes on July 1

Lawmakers in Congress are currently facing a July 31 deadline for the expiration of federal transportation funding, and they are struggling to come up with a way to pay for a long-term extension of the measure after passing a patch in May that last only two months. 

Transportation advocates in Washington have pointed to the willingness of states like New Jersey to raise their own gas tax as evidence that a national hike would be politically palatable this year. 

Conservative groups in Washington have made clear that they would consider an increase in the federal fuel levy a tax hike, however, and Republican lawmakers have explicitly ruled out such a hike.

The national gas tax has been the traditional source of transportation funding since its inception in the 1930s. The tax has not been increased since 1993, however, and improvements in auto fuel efficiency have sapped its purchasing power. 

The federal government typically spends about $50 billion per year on transportation projects, but the gas tax only brings in approximately $34 billion annually at its current rate. 

Lawmakers have turned to other areas of the federal budget in recent years to close the $16 billion per year gap, but transportation advocates have said the resulting temporary funding measures are preventing states from completing large construction projects.

The Department of Transportation has said the Highway Trust Fund will run out of money at the end of the month if Congress does not come to an agreement on an extension in the next couple of weeks.

The House has passed a temporary extension of the highway funding measure that would keep federal dollars flowing until December. The Senate is expected to unveil a longer version of the transportation spending bill this week.