Raleigh, N.C. — House lawmakers began debate Tuesday morning on a Senate proposal to increase the state's gas tax, but they're making major changes to the bill.
As it passed the Senate last month, Senate Bill 20 would have lowered the current gas tax from 37.5 to 35 cents per gallon for three months. But it would have set 35 cents as the state minimum, keeping the gas tax from falling to 30 cents per gallon in July – and even lower next January – as scheduled.
The Senate version also permanently increased the variable portion of the tax and required the Department of Transportation to cut 500 filled positions almost immediately.
The version rolled out in the House Finance Committee on Tuesday morning is a mostly temporary measure. It would lower the current gas tax to 36 cents per gallon instead of 35, stopping the scheduled drop to 30 cents in July as the Senate bill did. But the rate would be allowed to return to its current formula in January. It would cut 40 unfilled positions at DOT to pay for part of the lost revenue.
House sponsor Rep. Bill Brawley, R-Mecklenburg, said that's intended to pressure lawmakers to pass permanent changes to the tax by the end of this year's session.
"This patch is simply to allow this body time to come up with and debate a more comprehensive fix to the problem of transportation funding,” Brawley said.
The bill passed the Finance Committee on a voice vote and also cleared the House Appropriations Committee later in the day. House leaders say it is due to be taken up and voted on the House floor Wednesday and Thursday.
Brawley said another section of the bill cutting 500 positions at NCDOT this fall was also intended to put pressure on lawmakers, but Rep. Skip Stam, R-Wake, successfully argued to have that cut removed, saying those positions are needed for road construction and repair.
"I’m all in favor of putting pressure on ourselves to get something done," Stam said. "There’s no reason to put a couple of thousand employees in the position of wondering for the next six months or so whether they’ll have a job."
As in the Senate, there was a lot of discussion about whether the legislation amounts to a tax cut, a tax hike or something in between.
Rep. Paul Luebke, D-Durham, said it's a tax increase. Come July, he said, "For the middle-class consumer at the pump, those consumers will pay 6 cents more per gallon for gasoline than they would otherwise without this bill."
But Rep. David Lewis, R-Harnett, argued the opposite. "Thirty-six cents is less than [the current rate of] 37.5 cents."
Both progressives on the left and free-market groups on the right have been pressuring lawmakers not to raise the gas tax. But the proposal has the support of both the North Carolina Chamber and the North Carolina League of Municipalities, who say the fix is needed to stave off deep cuts in transportation funding as the gas tax plunges this summer.
"We’re not raising the tax. We’re not allowing it to decrease as much as it would have absent this bill," said Brawley. "I’m not selling this as a tax decrease or anything.
"We have essentially two choices," he added. "We can drop the gas tax by 7.5 cents, or we can fill the potholes and fix the roads. Pick one."
"It is what it is. Everybody can see it for what it is, and I’m not going to go down that rat-hole," agreed Rep. Charles Jeter, R-Mecklenburg.
The gas tax has been an increasingly unstable revenue source for some time. Stam pointed out that is driven by "three good things": falling gas prices, increasing fuel mileage and more cars that don't use gas at all.
Supporters say the House bill will buy lawmakers a few months to find a new, more stable solution.
"The gas tax as it's written will not work. This bill gives us an incentive, for lack of a better term, to do the right thing," Jeter said. "Let’s pass this bill, and let’s fix it before we get out of here."
The measure passed the House Finance Committee on a voice vote that sounded extremely close.