A $1.7 billion extension of PATH train service from Newark Penn Station to Newark Liberty International Airport — which has floundered for decades due to a lack of funding for the costly project — may finally be getting the money it needs.
The state Senate and Assembly are set to vote Thursday to eliminate many of the current aviation fuel exemptions in the state, essentially raising the cost of fuel 4 cents per gallon. Currently, taxes are only collected on fuel used during taxiing and takeoff.
The move is expected to raise $36 million to $40 million per year, all of which would be dedicated to the project.
The Port Authority of New York and New Jersey already assumes the project will also receive $730 million in grants from the Federal Transit Administration.
New Jersey has a reputation for one of the lowest aviation fuel tax rates in the nation. That will need to change for the extension to be built, legislators said earlier this week.
The project has been discussed as a key component of the state’s economy and was of interest to Amazon when it came to tour Newark as a candidate for its HQ2 second headquarters project.
“Newark airport is the cornerstone of a transportation network that is a key component of the state’s economy, creating jobs and sustaining economic growth,” Senate President Steve Sweeney (D-West Deptford), a sponsor of the bill, said in a recent statement.
“Providing a direct link to Lower Manhattan will make Newark Liberty the airport of choice for those doing business in the financial center of the world, and it will help ease roadway congestion by creating a direct PATH connection for passengers and airport employees alike.”
The New Jersey Business & Industry Association has opposed the bill, saying it would hurt United Airlines, which is one of New Jersey’s largest companies, and could open the door for expansion plans to move outside the state.
“Changing the fuel tax formula will result in increased costs, specifically at Newark Liberty International Airport, which is already the highest cost airport in the country,” NJBIA Vice President Andrew Musick said. “When you look at all that United contributes to the state, it’s clear that we want them to continue to grow here.
“When any company with significant infrastructure in the state also has a presence in other states, it’s not a discussion about them leaving but, rather, about them not growing.”
United Airlines and its regional partner carriers operate more than 400 daily flights out of its Newark hub and serve 14.6 million passengers a year, according to NJBIA.
Musick also said New Jersey and New York currently structure their aviation fuel taxes in a similar manner, and changing the formula would put New Jersey at a competitive disadvantage in the region.
Sen. Tom Kean Jr. and Assemblyman Jon Bramnick (both R-Westfield) also oppose the bill.
“If New Jersey makes it more expensive for airlines to refuel here, every plane ticket from our state will become more expensive,” Kean said. “This will raise the cost of family vacations, hurt Atlantic City’s efforts to draw tourists from farther away and raise the price of business travel for employers who already struggle to justify staying in New Jersey.”
Bramnick agreed.
“This tax hike will increase ticket costs for passengers flying out of Newark, which is already the highest-cost airport in the country,” he said. “We cannot afford to make New Jersey less competitive at every turn and not expect to keep losing jobs to other states.”
The sponsors of the bill, including Sen. Teresa Ruiz, a Democrat who represents Newark, said the project is an economic benefit to the area.
“The addition of subway access in those two neighborhoods would provide low- and moderate-income families direct train service to New York City,” she said. “This could generate substantial economic development in the area.
“This bill clearly points to the South Street stop and the South Ward stop, which would bring the rail line into two areas that haven’t had easy access to a rail system.”
