Bet on Jersey's Politicians to Waste the Gas-Tax Windfall

In the wake of the tragic NJ Transit train crash last Thursday, New Jersey Gov. Chris Christie and state Democratic legislative leaders cobbled together a quick deal to raise the state’s gasoline tax by 23 cents a gallon to replenish Jersey’s transportation trust fund. In exchange, the bill cuts other taxes in the Garden State but provides about $16 billion over eight years for spending on roads, bridges and mass transit.

What the crisis-induced legislation doesn’t do, however, is address the culture of inefficient overspending that helped empty Jersey’s transportation fund in the first place. Voters hoping the deal doesn’t just produce more revenues for the state to squander ought to be demanding further reforms.

The common explanation for Jersey’s transportation financing woes is that the state has the lowest gas tax in the nation, one that hasn’t been raised in years, and this robs Trenton of crucial revenue that can be spent on roadwork. But that’s misleading. Jersey residents actually pay a lot for the privilege of driving.

The Federal Highway Administration gathers data on all revenue sources that fund state roadway spending.

Jersey’s gas-tax receipts are below average, but it collects more in tolls, for instance, than any other state except much-larger New York. As a result, New Jersey actually ranks 7th among all states in revenues it amasses to use on transportation.

The only states that rake in more for transportation spending are much larger places — like California, Texas, Florida and New York. Adjusting for the size of the state’s population, Jersey actually spends far more per resident than each of those places except fast-expanding Texas.

And though the agreement Christie made reduces other taxes, including the sales tax, to offset some of the gas levy’s increase, the net effect over time will be to raise the state’s total tax take by about half a billion dollars a year.

That may make Jersey — with its struggling economy and residents already burdened with among the highest state and local tax bills in the nation — even more economically uncompetitive.

Where, then, has the money gone? It’s not quite clear. According to the Reason Foundation’s annual report on state highways, Jersey spends a whopping $2.2 million per mile of roadway every year, more than 10 times the US average. That includes $232,000 per mile for maintenance, vs. a national average of $26,000, and nearly $45,000 per mile on administration of the highways, against a national average of $10,000.

A Rutgers University study says the state pays less than that — but still pegs the cost of building and maintaining a mile of road at $213,000.

Some Jersey legislators wanted any effort to raise the gas tax to be accompanied by recommendations on how to drive down infrastructure spending costs, but so far a study on how to save money has been delayed by a lack of money to pay for it. “The cost of road construction is too high and that should be a priority to get done, especially when we’re talking about raising the gas tax,” state Sen. Raymond Lesniak said earlier this year.

The problem now is that any recommendations to cut costs are likely to be controversial and opposed by special interests, like construction unions that welcome the often-inflated and uncompetitive wages the state demands contractors pay, and by politicians who use Jersey’s transportation authorities as job patronage mills.

That’s why the best effort to achieve those reforms would have been to use them as leverage in exchange for any tax increase.

Now, instead, with new tax revenues in hand, Jersey’s politicians can do what they often do: Ignore calls to spend the taxpayers’ money better.

It’s up to voters to demand that doesn’t happen again.

This piece originally appeared in the New York Post

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Steven Malanga is the George M. Yeager Fellow at the Manhattan Institute and a senior editor at City Journal.

This piece originally appeared in New York Post