The Gas Tax in New Jersey Is About Half What It Was in 1927

Political refusal to raise the tax has left 10 states with historical lows, according to a new analysis.

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A BP filling station in Lakewood, N.J. (AP)

Times are tough for New Jersey drivers. Their morning commute is a nightmare that will only worsen with the recent two-year closure of the Pulaski Skyway. They pay $11 every time they cross into Manhattan on the George Washington Bridge. They have a legitimate fear that their local roads might be artificially jammed at any point to settle a political vendetta. They aren't even allowed to pump their own gas.

But there is one bright spot: they don't pay much in the way of gas taxes. About half as much as they did in 1927, actually.

New Jersey is one of ten states where the gas tax has reached an all-time historical low, according to an analysis by the Institute on Taxation and Economic Policy. In nine of these states, the tax that helps pay for road maintenance and expansion is less than it was in the 1920s when adjusted for inflation (in the tenth, Alaska, it's below the initial 1945 rate). The current tax trails historical averages by at least 17 cents in all ten states, lagging behind by much more in others.

Let's take the case of New Jersey. The state first levied a gas tax in 1927. It was 2 pennies per gallon at the time, which in today's money is about 27.3 cents, according to ITEP. Flash-forward to 2014, with the rate at 14.5 cents, and the Jersey gas tax has nearly half its initial purchasing power. The tax hasn't been raised since 1990 — and even then it was inadequate by historical standards, worth only 26.3 cents when adjusted for inflation.

What's pretty amazing, looking at the ITEP data, is how much Americans were once willing to pay for gas taxes. In four states, the adjusted 1927 rates topped 50 cents per gallon: Alabama (54.6 cents), Idaho (54.6), South Carolina (68.2), and Virginia (61.4). Today the highest of the group barely tops a quarter (Nebraska, 26.4).

The point of the ITEP analysis is to underscore the need for state officials to get over their fears of raising the gas tax and, at the very least, bring it in line with historical rates. But even that modest task will be a major challenge in some states. In South Carolina, for instance, the tax would remain below its 93-year average of about 49 cents even if it tripled from its current rate of 16 cents a gallon.

Which leads to the far bigger problem: every year of delay not only makes it harder to keep state roads and bridges up to standard, it makes it harder to raise the tax at all. Most voters aren't going to care about historical analyses. They're going to see that their taxes have been raised and — at least in the fears of elected officials — respond accordingly at the polls. The delay is especially damaging for cities, as the artificially low cost of gas makes driving more attractive than other forms of mobility.

Ultimately, states must find creative ways to convince residents to get road costs in line. (We can see the ads now: The Fitzgeralds lift finger bowls in speakeasies while Irving Berlin tickles the ivories against the tagline — The Jazz Age is calling, it wants its roads back.) Some have started on the path to innovation by entertaining a full shift to a pay-per-mile system (including, most recently, Michigan). But even the best funding system is only as effective as the prices it charges. We can't expect people to travel like it's 2014 if they pay for travel like it's 1927.

 

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