Gov’s Budget Announcement, New Gas Theft Scheme, and more

February 29, 2024

Gov. Murphy Proposes Budget

On Tuesday the Governor proposed his budget for the next fiscal year, which will begin July 1st. After a few years of high revenues and very high spending that allowed for some pretty non-controversial budgets, there is growing concern that the bills on a few different things are starting to come due. The Governor is proposing to spend $55.9 billion. That's a 61% ($21.1 billion) increase over Chris Christie's final budget in 2017. 

There have been rumors of a sales tax increase to help pay for the budget, but apparently legislative leadership is currently opposed to it, though it may come up again in June. There was no mention of a cigarette or other tobacco tax increase, which is welcome. However, there are growing projections that next year's budget, Murphy's final budget, will face much bigger problems and could lead to a series of tax increases. 

He didn't mention this in his speech, but the Governor's budget proposal plans to end the sales tax exemption for electric vehicles starting July 1. This is estimated to cost EV purchasers a collective $70 million next year, though $20 million would be put toward additional subsidies for purchasers with “modest” incomes.  

The State will be officially rolling out a “RetireReadyNJ” program aimed at workers whose employer does not provide any kind of 401k or other retirement savings program to them. This is the result of a law passed several years ago whose implementation has been consistently delayed. Businesses with 25 or more employees will be required to set this up for their employees if they do not provide them with another retirement option. Employers are not required to pay anything for the program, and employees can choose not to contribute to the plans, they just need to be offered the opportunity. Businesses with fewer than 25 employees will be able to choose to offer these accounts, and you might be wise to offer it as an option. We will have more details on this program in the future. 

The most newsworthy announcement was a 'new' Corporate Transit Fee on c-corporations with net income over $10 million per year (not gross income), set at 2.5% on top of the regular corporate business tax of 9%. It apparently affects about 600 entities doing business in the state. It is estimated to collect around $850 million per year, which will be spent on subsidizing NJ Transit. This is being called 'dedicated funding' for NJ Transit, but technically future Legislatures will be able to spend it on whatever they want. It also comes after Gov. Murphy repeatedly gave his word that the 'temporary' corporate business surcharge would be allowed to expire and not renewed. It seems he is counting this as keeping his word since they changed the name of the tax.

One final proposal in this budget that will affect your business is a new tax on deliveries from warehouses. The legal language is not available, but it would apparently place a $1 tax for every truck trip leaving a warehouse. No doubt that would be passed on to the business accepting the delivery, whether from a parts warehouse or just a UPS delivery. It is estimated to generate about $10 million per year, which is quite small in the scope of a $59 billion budget, so it may not survive the budget process. 

Gas Tax Increase Rumors

One thing not mentioned in the Governor's budget address was the motor fuel tax or the Transportation Trust Fund (TTF). We had heard some rumors that it might be included, and it may still be announced separately in the near future. The budget draft plans for flat revenues for the motor fuels taxes next year. The Transportation Trust Fund (TTF) needs to be reauthorized in the next few months, and the various interests who work on repairing and maintaining the state's roads are very influential and are pushing hard for an increase in spending. 

One possibility is small, regular, annual increases for a few years, around 8-10¢ total over the a period of 6-10 years. By comparison, the state's fuel taxes have increased a net 5.2¢ a gallon over seven years, though that was quite a rollercoaster given the impact of the covid shutdown (up 9.3¢ one year and then down 8.3¢ the next). A flatter, more predictable curve has some benefits. One welcome change would be adding a special registration fee for EVs, which are using the roads without paying the tax to maintain them, even though battery electric vehicles are 30% heavier than the gas-powered equivalent. Most states outside the northeast have already implemented this.

Meanwhile, several new Democratic members of the Legislature introduced a bill to cut the gas tax by a third and create a registration fee on EVs. Even though this bill has bipartisan support, don't expect it to move anywhere. It would be enough of a win in this state to avoid a gas tax increase, much less to see a lowering of the fee. Still, it's a political win to see even some Democrats starting to publicly identify EVs as products firstly for the rich, while working and middle class families need cheaper gasoline. 

New Pump Tampering Method Found

A few weeks ago, NJGCA brought you a security update concerning the latest pump tampering and fuel theft trend. In following up on that segment, a national industry trade publication has reported that a sister association in Texas is discovering an altogether new method of stealing fuel from station owners.

Just as in our previous reporting, thieves are gaining access to the inside of your dispenser cabinets to manipulate the metering system. However, unlike the methodology we reported on previously (which mostly affected tampering with the pulsars), this new method focuses on the valve coil wires.  

The thieves use wire taps along the coil wires to attach an external power source to start the 24-volt valve pump directly. Typically, this has been done by attaching a battery (such as two 9-volt batteries, arranged in a series) to the internal wiring.

The use of an outside power source means that they are bypassing the transaction process to initiate the pre-start sequence inside the dispenser, and activate the submersible turbine pump directly. That means the thieves can merely pick up the nozzle and pump fuel freely without starting an actual transaction. Once they are done, they remove the external power supply and drive off.

Frustratingly, if a pre-start is turned off on one side of the pump, thieves can still dispense fuel from the other side of the dispenser or just move onto another pump altogether until the theft is complete. What’s more, using a pulsar shield on the internal pulsars will not stop this method of directly turning on the pumps (as the thieves will just attach the battery further along the path at the valve board).

This type of fuel theft is on the rise and station owners must guard against inadvertently allowing access to the inside of your dispensers.  Don’t allow it to happen to you and take the proper precautions!

To read more on this phenomenon, click HERE.

Have you seen this tampering method in your community?  Do you know of a station owner who has fallen victim to this kind of theft?  Let us know, email or call Nick@njgca.org 

FDA Hands Down Massive Fines for Flavored Vape Sales

On Monday the federal FDA announced they were fining 20 retailers nationwide, 5 of which are in NJ, for the sale of illegal vaping devices, specifically Elf-bar disposable devices. In each case, the FDA issued the retailer a warning letter telling them to stop the sale of these illegal products. Had they done so after the warning from the inspector, they likely would have been okay. But the FDA deliberately sent inspectors back to those shops, and when they found the illegal sales were continuing, they issued the largest fines they legally can