When it comes to transportation, what do our low-tax legislators have in common with our low-fare airlines?
Allegiant Air is making its name at Raleigh-Durham International Airport by selling Florida flights for lots less than its competitors’ cheapest fares. The airline is making its money by collecting fees for just about everything. Paying by credit card can cost you $8, and a carry-on bag might set you back another $50.
Likewise House Republicans. They are steering clear of tax increases that would have raised what legislative leaders agree are much-needed funds to pave more roads and fix more bridges. And, they want you to know, they’re planning another cut in the state gas tax.
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But watch out for the DMV fees. The proposed House budget includes a 50 percent increase in the charges assessed by the state Division of Motor Vehicles for everything from learner’s permits to truck titles.
That’s an extra $16 to renew an eight-year driver’s license, another $14 each year to renew your car registration.
And pretty soon, we’re talking about real money: The higher fees would bring in an additional $280 million a year for the state Department of Transportation. DMV fees would rise by 2017 to more than $900 million a year, making up more than 27 percent of all state funding for transportation, up from 18 percent last year.
The savvy air traveler can avoid paying the airline $5 for a printed boarding pass, but there’s no way to dodge those DMV fees. If you drive a plug-in electric car, your $100 fee will rise to $150. If you need a vehicle title, now $40, you’ll have to pay $60.
If this was a $280 million tax hike, we would be seeing angry TV commercials by now.
Americans for Prosperity, an anti-tax group, rapped the Republicans in March for a new law that cut the gas tax by 1.5 cents a gallon – because the law also prevented the tax from falling even farther in future months. When the group criticized the House budget Monday for extending a $47 million renewable energy tax credit, it overlooked the big increase in DMV fees.
Asked about this, Donald Bryson, state director for Americans for Prosperity, said he likes “user-based fees and consumption-based taxes.” But he noted that the House budget trims gas tax collections by only about $30 million a year, and said he’d like to see a bigger tax cut to match the higher DMV fees.
“We would like them to find a way to sustainably fund transportation, but they’re not offsetting that with any other kind of tax relief,” Bryson said.
The tax on motor fuels worked for decades much like a user fee – the more miles you drove, the more gallons of taxed gas and diesel fuel you paid for – and it accounted for as much as 70 percent of all state transportation funds.
But these days, most every new car we buy uses less fuel per mile than the old car it replaced. State leaders are looking for dependable revenue streams to replace DOT’s shaky reliance on gas taxes.
The House budget would hold North Carolina’s diesel fuel tax steady at 36 cents a gallon, while dropping the gas tax – which historically has been the same as the diesel tax rate – to 33 cents in January.
Some House Republicans said earlier this year that they wanted to raise an additional $1 billion a year for transportation. House Bill 927, filed in April, included the DMV fee increase along with an estimated $600 million in tax increases.
There was a proposed increase in the 3 percent highway use tax on car sales, which is lower than what neighboring states charge, and far lower than the state’s 4.75 percent base sales tax on most other things we buy. But that idea was snuffed out quickly, thanks to the influence of North Carolina’s automobile dealers. In deference to another powerful industry, House leaders also nixed a proposal in the same bill to levy a new tax on auto insurance premiums.
There was no discussion of the DMV fees Monday when the budget proposal cleared the House Finance Committee. The $280 million increase is expected to be included when the full House adopts its budget later this week.
Senate leaders have not said what they want to do about gas and other transportation taxes, and about DMV fees.