The state Senate on Thursday gave final approval and sent to the House legislation that would cut the state gas tax this year before pushing the tax much higher – enough to raise a projected $1.2 billion for transportation needs by 2019.
Before a preliminary vote the day before, Republican supporters consulted county-by-county listings to highlight the road-and-bridge money at stake in the home districts of Democrats who questioned the measure. But they refused to acknowledge that their legislation would increase the gas tax in future years.
“How low it will go or how high it will go, I cannot tell you,” said the bill’s sponsor, Sen. Bill Rabon of Brunswick County. “Because we don’t have a crystal ball.”
Current law would keep the gas tax at its present rate, 37.5 cents per gallon, until July 1. After that, it would likely fall 6 cents to 8 cents a gallon because a legislative formula pegs the tax rate to wholesale fuel prices, which have plunged in recent months.
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The GOP-sponsored Senate Bill 20 would cut the tax four months early, on March 1, to 35 cents per gallon – and set 35 cents as a floor to prevent the tax from falling further in the future. It would next go to the House.
The 2.5-cent reduction would trim $33 million from state revenues in the fiscal year that ends June 30, forcing the state Department of Transportation to lay off 500 employees. Layoff priority would fall on DOT administration staffers, maintenance jobs that could be outsourced and positions that allow the agency to reduce management layers.
Besides preventing the gas tax from falling below 35 cents, the measure also would change the wholesale rate formula to amplify tax increases expected in future years, when fuel prices rise again. State economists predict that the rate would stay at 35 cents in 2016 and then climb eventually to 41 cents in 2019 under the Senate proposal. Under current law, they say, it would fall to 30.4 cents in 2016 and rise to 34.2 cents in 2019.
“I don’t have any problem telling our folks we need to raise taxes in order to provide for the transportation infrastructure in our state,” said Sen. Ben Clark, a Hoke County Democrat. “This is a tax increase. You don’t generate about $1 billion worth of revenue over four years by doing a tax cut.”
Sen. Terry Van Duyn, a Buncombe County Democrat, said the gas tax increase was “not fair to the working families in North Carolina who are waiting for their share of the Carolina comeback.”
Sen. Tom Apodaca, a Henderson County Republican, said, “If you don’t want your road money in your district, please vote against this bill.”
Business groups and transportation advocates have warned that North Carolina’s roads and bridges will deteriorate unless the state finds dependable alternatives to the gas tax, which has weakened as automobile fuel economy has improved over the past decade.
The N.C. Chamber, the state’s main business lobby, said the Senate proposal “takes an important step to relieve immediate stress on current transportation infrastructure needs.”
But the anti-tax Americans for Prosperity said the legislation “keeps the gas tax artificially inflated over time.” A liberal group, Progress N.C. Action, called the move a “bait-and-switch” that would hurt average residents by costing them more at the pump over the long haul.