United, which controls the majority of the departure and landing slots at Newark Liberty, carried nearly two-thirds of all paying passengers traveling through airport last year — more than 28 million people. | AP Photo New Jersey bill would hike taxes on United Airlines to help fund PATH extension

New Jersey’s top state lawmaker wants to raise taxes on United Airlines to help pay for a controversial $1.7 billion extension of the Port Authority’s PATH train service to Newark Liberty International Airport.

The legislation from Senate President Steve Sweeney (D-Gloucester) would also force the bi-state agency to add an additional train stop in Newark’s East Ward neighborhood, a component of the project that had previously been scrapped because of logistical and cost concerns.


The measure would significantly expand the state’s taxes on aviation fuel, requiring United and its regional contractors to pay 4 cents per gallon on all fuel purchased in New Jersey. Under existing law, the state only collects taxes on fuel used during taxiing and takeoff, and not during actual flight time.

“Removing the exemption that effectively limits surcharges on fuel used for takeoffs and landings will bring New Jersey in line with the practices of most other states,” Sweeney said in a statement to POLITICO. “This is a legitimate and effective means of funding upgrades and improvements to a system that provides direct services to the airport.”

The expanded tax would not apply to any of the other airlines that fly out of Newark or other smaller airports in New Jersey. A legislative source reasoned that United will be by far the largest beneficiary of the PATH extension.

United, which controls the majority of the departure and landing slots at Newark Liberty, carried nearly two-thirds of all paying passengers traveling through airport last year — more than 28 million people.

The airline has shown a keen interest in the PATH project and lobbied the Port Authority aggressively to ensure it would get funding. That effort turned ugly in 2011 when David Samson, then the Port Authority chairman, shook the airline down for a bribe in exchange for supporting the project and several other issues.

Samson, who was former Gov. Chris Christie’s political mentor, pleaded guilty last year, admitting in federal court he sold his influence in exchange for United restarting a money-losing flight to an airport near his South Carolina vacation home.

A spokesman for United declined to comment, referring questions about the legislation to Airlines For America, a trade organization that represents the major carriers.

Alison McAfee, spokeswoman for the group, said in a statement that instead of unnecessarily raising flight costs for passengers, New Jersey should follow other states that have lowered or eliminated jet fuel taxes in recent years, including Florida, North Carolina, Arizona and Georgia.

“This move promotes travel by encouraging new and diverse flight options, and motivates the airline industry to continue to invest in the state’s future,” McAfee said of cutting the tax.

Federal regulations require tax revenue from jet fuel to be used solely for airport infrastructure improvements or operating costs. Some states have struggled to come into compliance with the regulations.

A spokesman for the Federal Aviation Administration said the permissibility of using airport revenue to pay for a ground access facility that serves non-airport passengers “is reviewed on a case-by-case basis,” and that the agency would need to look closely at the PATH extension project and the “benefits it would provide to the air transportation of passengers and property.“

In 2016, New Jersey lawmakers considered raising and expanding the jet fuel tax as part of a deal to replenish the state’s Transportation Trust Fund, a move that would have directed the money to pay for roads and bridges. The tax ultimately didn’t make it into the final proposal after an aggressive campaign by the airline industry.

Sweeney’s bill, S2892, which isn’t available online but was provided to POLITICO in draft form, would require all revenue from New Jersey’s aviation fuel taxes to go toward the cost of the PATH extension.

New Jersey, which has one of the lowest aviation fuel tax rates in the nation, is said to collect about $8 million per year from its existing tax. The money is used to pay for airport-related expenses.

It’s unclear how much additional revenue would come from expanding the tax; the non-partisan Office of Legislative Services is still working on an estimate.

The PATH project is included in the Port Authority of New York and New Jersey’s $32 billion, 10-year capital plan, but still lacks an explicit funding source. The plan assumes the project will receive $730 million in grants from the Federal Transit Administration.

The project would extend the existing train service from its current termination point at Newark Penn Station several miles south to the Northeast Corridor Rail Link Station in Newark‘s South Ward. The station is serviced by NJ Transit and Amtrak trains, both of which provide service to midtown Manhattan. Riders on the new PATH train would still need to take the AirTrain to reach the airport terminals.

Sweeney’s bill would also require the Port Authority to include an additional PATH stop at Newark’s South Street, in the city’s East Ward. The location would serve part of the Ironbound neighborhood and other surrounding areas that are just out of walking distance to Penn Station.

A South Street station had previously been under consideration, but the Port Authority ultimately concluded it would have been too costly and logistically complicated to build, creating traffic problems along McCarter Highway — a major route through Newark — and requiring the acquisition of large properties in the area.

A spokesman for the Port Authority declined to comment on the new legislation, as did a spokesman for New Jersey Gov. Phil Murphy, a Democrat who would need to sign the proposal for it to become law.

Sweeney said the project is “critically important,” given how big a role the airport plays in New Jersey. The dedicated funding would ensure the work happens, he said.

“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,” Sweeney said. “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.”

Some critics have dismissed the PATH project as a waste of money, saying it would be used by few riders and likely run at a significant operating loss. Former Port Authority Commissioner Ken Lipper, who had served as New York City deputy mayor under Ed Koch, once said the proposal was among “the most ill-conceived projects that I’ve experienced in government.”

But proponents say any effort to expand cross-Hudson rail service is useful, especially with the future of the Gateway rail tunnel in question. It also comes with the added benefit of revitalizing parts of Newark.

Adding subway access in the East Ward and South Ward — one of the poorest and most violence-prone neighborhoods in Newark — could open up new opportunities for residents and spur the sort of urban revitalization seen in nearby Harrison, which has an existing PATH stop.

State Sen. Teresa Ruiz (D-Essex), who represents Newark, said the addition of subway access in those two neighborhoods would provide low- and moderate-income families direct subway access to New York City.

“This bill clearly points to the South Street stop and the South Ward stop, which then of course brings the rail line into two areas that haven’t had easy access to a rail system,” Ruiz said, noting it could also generate “great economic development in the area.”