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"So, bottom line, you are saying he should have raised the gas tax to continue to pay for a bad rail project? Doing what he did sound very pragmatic to me.  NJ may pay the third lowest gas tax, but the property tax make New Jersey one of the highest taxed states in the nation.  You wanted the gas tax raised in the midst of the deepest recession since 1893?" It is not just property taxes.  It is the whole ball of wax. As of January 2012 New Jersey’s gasoline tax was 14.5 cents per gallon.  It is 48th amongst the 51 fuel taxing districts (includes District of Columbia) in the United States according to Tax Foundation data.   Although New Jersey is 48th in motor fuel tax rates, it is second in toll revenue collections. For example, in 2005, which is the latest data that I could find, New Jersey collected $125.77 per capita in toll revenues vs. $60.42 in fuel taxes.  Only Delaware beat it on toll revenues.  At the other end of the spectrum, as an example, Connecticut collected five cents in toll revenues per capita vs. $136.42 in fuel tax revenues. If one only compares fuel tax rates, it appears that Connecticut collects a substantially higher amount of money from motorists than New Jersey, but when the toll revenues are added to the equation, the picture changes significantly.   Fuel tax revenues are a function of the fuel tax rate times vehicle miles traveled divided by average or median miles per gallon. Accordingly, although the tax rate may not have changed since 1988, which is the date of the last increase according to the NJ Transportation Trust Fund Authority, fuel tax revenues have increased dramatically. Undoubtedly, most of the increase is attributable to an increase in vehicle miles traveled in the Garden State, since there has not been until recently a dramatic improvement in vehicle miles per gallon. In 2011 New Jersey realized $483 million in fuel tax revenues compared to $88 million in 1988.  Moreover, it allocates $200 million of the Petroleum Products Gross Receipts Tax and $200 million from general sales taxes to the trust fund.  Comparing state fuel tax rates is incomplete. In addition to other sources of revenues for transport funding, one should determine if the monies collected from motorists or dedicated to motoring go to other activities. For example, Texas has higher motor fuels taxes than New Jersey, but 25 per cent of the fuel taxes collected in Texas are dedicated to education.   The key question is whether New Jersey collects enough fuel tax revenue to meets its transportation needs. Whether motorists should fund partially public transportation, which they do, at least at the federal level and in Texas, is another key question that is beyond the scope of this reply.   <div>In FY 2009, which is the latest verified data available, according to the Tax Foundation, New Jersey had the second highest state and local per capita tax burden ($6,751) in the United States.  It was only outdone by Connecticut with a per capita burden of $7,256.</div>   When the state and local tax burden is calculated as a percentage of state income, again for FY09, New Jersey was number one at 12.2 per cent. New York was in second place at 12.1 per cent, and Connecticut was in third place at 12.0 per cent. The marginal tax rate for New Jersey’s state income tax scheme is 8.97 per cent of taxable income, compared to 8.82 per cent for New York; 6.7 per cent for Connecticut, and 10.3 per cent for California, which has the highest marginal state tax rate.  The actual state income tax burden differs depending on the interim rates, which vary significantly from state to state, and kick in at different taxable income thresholds. These rates are for single filers. Joint filers usually have a higher deductible and/or bandwidth. One would have to go through the tax law of each state to get a clear picture of the relative tax burden.  New Jersey’s combined state and local sales tax rates place it 22nd in the U.S.  New York is 7th and Connecticut is 31st, indicating that these states rely less heavily on sales taxes as opposed to other taxes. The rate range amongst the states is relatively narrow except for a couple of outliers.   New Jersey gets 45.7 per cent of its revenues from property taxes; 16.1 per cent from general sales taxes; 20.9 per cent from individual income taxes; 4.7 per cent from corporate income taxes; and the remainder from other taxes.  New Jersey had the highest property taxes in FY10 on owner occupied housing as a percentage of the median home value.  The rate was 2.01 per cent, compared to Illinois, which as number two, at 1.93 per cent and number three New Hampshire at 1.92 per cent. New Jersey ranked fifth in the nation on state debt per capita, at $6,944, compared to $11,310 for number one Massachusetts; $9,032 for number two Alaska; and 9,018 for number three Rhode Island.   New Jersey residents had the third highest average per capita income of the nation’s states.  It was $51,167 in FY10.  Connecticut was number one at $54,877, followed by Massachusetts at $51,302.  High-income states are able to shoulder higher nominal tax burdens than less well off states. It is important to pay attention to the debt burden as a percentage of income, as well as other wealth indicators, to determine whether a state is getting in over its head financially.  As the next paragraph shows, the rating agencies believe that New Jersey has some serious financial issues.   As a result of ratings downgrades in the second half of 2011, New Jersey has one of the lowest bond ratings (AA-) of any state, which means it must pay a higher interest rate to attract capital for its projects and perhaps operations. The relatively low ratings have been issued by all of the major rating agencies, i.e. Fitch, Moody's and S&P. As of 2011 only California and Illinois had lower ratings.  The inability or unwillingness to fund the state’s pension obligations appears to be a major factor in the low ratings.  The high debt burden is also a contributing factor.  New Jersey’s debt is still investment grade, although less so than before the 2011 down grades, but uniform down grades of a state's credit standing should never be taken lightly. All up it appears that Governor’s Christie’s concern about taking on additional state debt, whether for capital projects or to fund ongoing operations, is warranted.
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