In a 35-15 vote, the Senate gave final approval and sent to the House on Thursday a bill that would cut the state gas tax in March and force 500 Department of Transportation workers out of their jobs. The plan would raise the gas tax substantially in coming years, according to forecasts.
Wake County Sen. Dan Blue, the Senate Democrats’ leader, criticized the measure.
“This bill is a $1.2 billion tax increase over the next four years that will put the burden of funding our transportation shortfalls on the backs of the middle class families that can least afford it,” Blue said in a statement.
“Rather than discuss all options and keep the best interest of all of our citizens in mind, Senate Republicans are again using smoke and mirrors to sneak through regressive tax hikes that hurt working families at the fuel pump,” Blue said.
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Two Democrats – Floyd McKissick Jr. of Durham and Josh Stein of Raleigh – joined most Republicans in passing the bill. Republican Tamara Barringer of Cary was the only Republican to oppose the measure, and she said it was based on a provision in the bill unrelated to the gas tax issue.
Gov. Pat McCrory said the Senate legislation would “help protect and stabilize transportation revenue” for roads and bridges. But he indicated concern about a requirement in the bill to lay off 500 DOT workers and eliminate at least 50 vacant positions by March 1.
“We need to fully evaluate the impact that workforce decisions will have on the safety and maintenance of our transportation network,” McCrory said in a news release.
Transportation Secretary Tony Tata said that, after cutting more than 2,100 jobs over the past five years, DOT will be careful about any additional layoffs ordered by the legislature.
“We are conducting the due diligence to determine the impact of any personnel decisions on the operations, maintenance and safety of North Carolina’s transportation system,” Tata said by email.
Bobby Lewis, DOT chief of staff, said the March 1 deadline for layoffs might conflict with state personnel law requirements to give employees 30 days’ notice before their jobs are eliminated. Priority for DOT layoffs would fall on administration jobs, maintenance jobs that could be outsourced and positions that allow the agency to reduce management layers.
Current law keeps the gas tax at its present rate, 37.5 cents per gallon, until July 1. After that, it is expected to fall 6 to 8 cents a gallon because of a legislative formula pegging the tax rate to wholesale fuel prices, which have plunged in recent months.
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 lower in the future. The 2.5-cent reduction would trim $33 million from state revenues in the current fiscal year, which ends June 30.
The measure also would change the tax-rate calculation formula – to multiply the average wholesale fuel price by 9.9 percent, instead of the current 7 percent – a change that would amplify the tax increases expected when fuel prices rise in future years.
Economists for the legislature and for the McCrory administration agree that the proposed change in the tax formula is likely to push the tax rate 5 to 7 cents higher over the next four years, generating additional revenues projected to reach $1.2 billion through 2019.