Road Worrier Blog

A divided NC House OKs 36-cent gas tax

The House gave tentative approval Wednesday, in a 70-47 vote, to a bill that would drop the state gas tax to 36 cents a gallon starting April 1 and continuing through December.

The new rate would be a 1.5-cent tax cut initially, since the current tax is 37.5 cents.

But critics pointed out in floor debate, and supporters acknowledged, that the bill would prevent motorists from enjoying a much bigger tax cut for the last six months of the year.

“So those citizens will get the benefit of three months of a genuine tax cut, before they get the pain of a tax increase,” said Rep. Charles Jeter, a Charlotte Republican who supported the tax change.

Unless current law is changed, a statutory formula that determines the tax rate would be expected to cut the gas tax to 29.9 or 30 cents on July 1. The formula pegs the tax to changes in wholesale fuel prices, which have plunged in recent months.

The vote split both parties. The gas tax plan, endorsed by several Republican leaders, was opposed by 15 Republicans and supported by 12 Democrats.

The House is expected to give final approval Thursday to the measure, Senate Bill 20, which made substantial changes in a bill first approved by the Senate last month.

The Senate approved a more complicated package that would cut the tax to 35 cents for the rest of 2015, then make changes in the statutory formula to push the tax rate a projected 5 to 7 cents higher in future years than would be expected under current law. That bill would also cut about 500 transportation jobs.

The House measure would revert to current law starting in 2016. Unless the Senate approves the House changes, the two chambers will appoint a conference committee to settle their differences.

Rep. Bill Brawley, a Charlotte Republican pushing the tax change, said it would stabilize revenues for the state Department of Transportation for the rest of the year, giving legislators time to make long-term changes in transportation funding sources.

Other GOP leaders have said they want to increase DOT revenues by $1 billion a year. They have not hinted at what new taxes or fees they would propose.

“There is a consensus among everybody involved with this that it’s going to be controversial, that transportation revenue changes are going to be a heavy lift,” Brawley said. “The situation is: Stop the bleeding and give us a chance to fix the problem this year.”

Each penny of gas tax generates about $52 million per year for DOT, and costs the average driver $7.50 a year, Brawley said.

Legislators received warnings that if they let the gas tax fall by 6 cents a gallon in July, there will be less money to repair bridges and less money to help cities maintain their streets.

“My county said if they don’t get this money, they’re going to have to raise property taxes locally,” said Rep. Donny Lambeth, a Winston-Salem Republican who voted for the gas tax change.

But Rep. Larry Hall, a Durham Democrat, said the Republican majority caused more serious financial hardship for local governments when they took steps last year to restrict city and county tax options.

“We did help create this emergency,” Hall said. “You helped start this fire, as part of the tax policy you passed.”

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