January 7, 2011

Dear NJGCA Member:

Here's what you'll find in this edition of the NJGCA Road Warrior, and thank you for reading:

EXECUTIVE DIRECTOR'S MESSAGE: GREETINGS & SAL-UTATIONS!
•Floating the idea of a gasoline sales tax & the Marketplace

NEWS AROUND THE STATE
•Governor proposes 5-year, $8 billion transportation improvement plan
•School Funding: Bill permitting school bus advertisements signed into law
•Report: Despite new initiatives, most town budgets increased by 5 percent or more
•Analyst: Demand for gasoline should drop for good after 2006 peak

A REGULATORY ADVISORY FROM ATS
•New air regulations will be enforced on January 10, 2011 -- will you be ready?

NJGCA WANT AD CLASSIFIEDS
•Do you have what this member is looking for?!

TRAINING CLASS SCHEDULE
•See our latest training class schedule below!!

POLITICAL PARTICIPATON: THE NJGCA PAC
•Participate in the NJGCA PAC today and help us keep our Agenda rolling in Trenton!

A SPECIAL MESSAGE FROM BELLOMO FUELS
•Serving New Jersey since 1910 -- 100 years of supplying gasoline retailers like YOU!

THE MEMBER TOOL BOX
•On the NJGCA Homepage
•Know your Territory Manager!


 EXECUTIVE DIRECTOR'S MESSAGE: GREETINGS & SAL-UTATIONS! 

 

FLOATING THE IDEA OF A GASOLINE SALES TAX, THE MARKETPLACE, LOTTERY

In Trenton, bad ideas have a way of fermenting to become even worse ideas.  Unfortunately, it’s just what naturally happens when you take a group of people who make policy (and typically leave their common sense at home) and turn them loose on each other.

Of course, I’m not talking exclusively about Legislators, but also other lobbyists and activists who are forever trying to affect the debate in the halls of the State House.  That’s certainly the case when it comes to raising money for needed transportation projects.  Even though it would hurt motorists, commuters, and your small business, there are Legislators (and special interests) that have been in favor of raising the gas tax for a few years – and they still are. 

However, there’s a new twist on this old song as some folks are now floating the idea of ADDING A SALES TAX TO GASOLINE SALES.  That means that, just like when you purchase any other product in a store, you’d have to include a sales tax on any gasoline sales.  Just to clarify, they’d add a gasoline sales tax ON TOP OF THE EXISTING GAS TAX.  Get your attention yet?

For the average customer, the shock might be significant.  Remember, this is a SALES TAX, which means that as the price of gasoline rises and falls, the total tax collected changes since it is based on a fixed percentage.  Remember also that your credit card fees are folded into this.  For Mr. and Mrs. Customer, this means that as gasoline is currently hovering around the $3.00 a gallon, it works out to be approximately 21¢ EXTRA per gallon sold (7% sales tax on $3.00 a gallon gas ≈ 0.21¢)

What about for you?  How will adding an additional 21¢ to every gallon of gas sold impact your establishment?  While we are obviously opposed to ANY tax increases because it will hurt you and your customers, we’re deeply opposed to any sales tax on gasoline because of the logistical – and mental – toll it would put on you. This tax creates a huge problem for your pumps and creates a huge liability when you are required to collect, manage, and remit these taxes on a timely basis.
 
Just imagine someone who pumps 100,000 gallons a month; if gasoline stays at $3.00 a gallon, that's an additional $21,000 in sales tax remittance every month.  Yes, you say, we already collect sales taxes on other items anyway.  True, but it's hard to manage the sales tax you remit now on repairs and items in your convenience stores – can you imagine the fiasco this would create on top of that?

We are letting people know behind the scenes that this is a bad idea and that we will oppose to the death.  But if this idea really catches hold, we’re going to need to call out the troops to prove what a dumb idea it is.  Be ready for it.
 
There seems to be a bit of confusion in the marketplace right now. As demand is still flat (and has remained flat over the last few weeks), I have been predicting that the price of gasoline will drop when speaking with reporters.  However, while keeping an eye on those steady demand numbers, I am still surprised that prices haven't fallen.  In fact, gasoline prices are continuing to rise with the cost of crude oil, which is now over $90 a barrel.

This is really shocking to me since the lack of demand dictates that these prices have to come down. Yet some experts – most of whom are far smarter than me and have better crystal balls – continue to predict that oil prices may rise again to levels we last saw in 2008. 
 
All analysts agree, as do I, that because of changes in consumer habits (motorists driving less and driving more fuel efficient vehicles) there is an overall “market-efficiency” issue that is now part of the equation.  These analysts also believe that gasoline demand will continue to decline and it could take another 20 years before it ever reaches the same levels that we saw in 2006.
 
So what’s going on?  The bean counters that dictate price moves by oil companies and refiners have determined that they need larger margins to off set the lower volume demand.  Just as you fight for a smaller piece of the pie, so must they.  However, the law of diminishing returns dictates that if you don't have enough margins on the product you're selling (and volume continues to decline) you will never pay your bills and certainly never make a profit. 

In the oil business or in your business, you must take a serious evaluation of how you will derive profit from your enterprise – and that’s profits in terms of dollars, not volume. 

Sometimes we use gasoline sales as a way to attracting customers into our service bays and convenience stores.  Lottery sales are also a way we do this by getting folks into our convenience stores to buy higher margin products like coffee and sandwiches.  This week we met with Assemblywoman Quijano – AGAIN and for the third time – as we continue to hold off movement on her proposal to allow the state to sell lottery tickets over the internet.  I want to thank those of you who completed the logs that demonstrated the sales of other products in your stores, as it relates to the volume of lottery sales.

I have to express the fact that too many of you DID NOT HELP and I know you are simply expecting that someone else will do it, so why should I?  That’s the wrong attitude to have, but the logs that I did have with me when I was in Assemblywoman Quijano's office on Tuesday made a big impact. 
 
Since the Assemblywoman seems so committed to making this happen because the state is looking for additional revenues, I am not confident or comfortable that we have yet convinced her that the harm she will cause to our businesses will not be worth the additional revenues she will rake in for the state.  Since the budget cycle will start in February, I expect this will become a big issue; we haven’t heard the last of it yet.

To the rest of you who did not help in getting a log of ticket sales to me, there is still time to help if you want.  Simply CLICK HERE to see the log sheet.  Print it out, keep it by your register, and accurately write down if someone picks up other high-margin items when they come to your store to buy lottery tickets.

Thanks for listening - See you next week!

Regards,

Sal Risalvato
Executive Director

NEWS AROUND THE STATE

1/6/2010:
Governor proposes 5-year, $8 billion transportation improvement plan
On Thursday, Governor Christie presented a new $8 billion plan to fund mass transit and highway projects for the next five years.  The plan would see funding allocated from the state, NJ Turnpike Authority, and the Port Authority of New York and New Jersey.  Additional funds will be raised through borrowing, but must face voter approval.

1/6/2011:
School Funding: Bill permitting school bus advertisements signed into law
A proposal which would allow school districts to sell advertising space on the outside of buses to boost revenue was signed into law by Governor Christie.  The measure would permit Boards of Education to decide on what advertisements would adorn buses, but prohibit any ads for tobacco, alcohol, and political advocacy.  The new law is seen as a victory for local school boards which are still coping with funding problems.

1/2/2011:
Report: Despite new initiatives, most town budgets increased by 5 percent or more
A study conducted by the Star-Ledger finds that most towns are not prepared for the state’s new 2% cap on property taxes, as 50% of municipal budgets increased by 5% or more to meet local demands.  According to the report, 70% of municipalities also exceeded the cap by 3% or more, while 100 towns saw double-digit increases in local taxes. The report underlines the need for the Legislature to pass all of the “tool kit” reform bills to give local municipalities the needed instruments to keep property taxes in check.

12/20/2010:
Analyst: Demand for gasoline should drop for good after 2006 peak
After the demand for gasoline has continued to rise steadily over the last 70 years, experts believe that gasoline consumption in the United States may begin a long-term decline.  According to sources, compared to today’s levels of demand, Americans may consume 20% less gasoline by 2030.  Government mandates, smaller vehicles, more fuel-efficient engine technologies, the growing use of hybrids, rise of bio-fuels, and a shift from commuting to working from home are all contributing factors.

CLICK HERE TO READ MORE ARTICLES IN OUR “NEWS AROUND THE STATE” ARCHIVE

                                                                                                                                                                                    

 

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NJGCA WANT AD CLASSIFIEDS

NJGCA Member Jerry Sweet needs to relocate his shop.

He is looking for a new location in the Mine Hill, NJ area and is asking fellow NJGCA Members for assistance.

If you have at least 2 bays available, please contact Jerry at 973-252-5151 or email him at Sweetmotors@optonline.net