State lawmakers voted Monday night to approve a deal to cut the state’s sales tax on gasoline in three phases over the next 15 months and to change the formula for calculating the tax in the future.
The House voted 69-49 and the Senate 40-9 to schedule gas tax cuts through the end of 2016. The tax would fall from 37.5 cents to 36 cents per gallon on Wednesday, to 35 cents a gallon in January, and then to 34 cents per gallon in July 2016. The deal is part of a compromise plan that lawmakers said is intended to stabilize tax revenue, and which includes scrapping the formula that ties the tax to fluctuating wholesale fuel prices.
A new formula based 75 percent on state population and 25 percent on the national consumer price index for energy costs would take effect in January 2017.
Legislators are looking for ways to pay for transportation needs as gas prices drop and vehicles become more fuel efficient. Legislators emphasize the per-gallon drop, though the proposal would keep taxes higher than they would have been and would produce more money than the state Department of Transportation had expected.
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The House and Senate gave preliminary approval to the deal. After final votes set for Tuesday, the bill goes to Gov. Pat McCrory for his signature.
The changes set for 2016 and 2017 may never happen, legislative leaders said last week. They could be canceled if the state comes up with another means of transportation funding.
The Senate approved the bill without debate, but some House Democrats argued it was a bad deal.
House Minority Leader Larry Hall, a Durham Democrat, called the bill “a bad tax increase.”
Democrats pounced on a provision unrelated to the gas tax that would count as taxable income a portion of mortgage debt that a former property owner is forgiven as part of a debt relief program.
The federal government is not taxing the forgiven debt as income, but the state would.
The provision is tantamount to saying, “We’re going to stomp folk while they’re down, and we’re going to dance on them,’” said Rep. Kelly Alexander, a Charlotte Democrat. “It’s unconscionable.”
The Senate proposed the provision, but the House took it out of the version it approved. It reappeared in the compromise bill.
Rep. Darren Jackson, a Wake County Republican, said he wouldn’t vote for the bill because it included the section on mortgages. He said the state shouldn’t put additional burdens on people who have lost their homes.
The compromise does not include any DOT layoffs, but 40 unfilled jobs would be eliminated.