House, Senate reach gas tax deal

Posted March 26, 2015
Updated March 30, 2015

— State House and Senate leaders have reached an agreement to revamp North Carolina's gas tax that will cut what drivers pay at the pump starting April 1 while averting a much steeper decline that would have taken place this summer.

The current gas tax is 37.5 cents per gallon, a price derived based on a formula that includes the wholesale price of gasoline. That wholesale price has plummeted over the past year, meaning the gas tax was set to follow suit this summer. An expected dip to roughly 30 cents per gallon on July 1 would have cost the state fund used to build and repair roads roughly $400 million.

The agreement announced Thursday afternoon lowers the gas tax rate more gradually before putting in place a new formula that legislative leaders hope will be less volatile.

"It gives stabilization, it gives us certainty, and it also gives us immediate tax relief," House Speaker Tim Moore said.

Lawmakers and the governor had been quarreling over Senate Bill 20 for much of the still-young legislative session. Thursday's agreement, Moore said, shows the House and the Senate are working closely together despite having initially different visions for fixing the gas tax.

For his part, Gov. Pat McCrory applauded the compromise.

"This proposal protects and stabilizes gas tax revenue so we can fund important transportation priorities that connect communities throughout our state," McCrory said via a prepared statement. "I appreciate the spirit of cooperation by House and Senate leaders in working to reach this bipartisan compromise."

Under the conference report for Senate Bill 20, North Carolina's gas tax would dip to 36 cents per gallon on April 1. On Jan. 1, 2016, that would dip again to 35 cents per gallon, and then on July 1, 2016, it would go down to 34 cents per gallon.

Legislative leaders say they hope to reach a grand bargain on transportation funding by the end of 2016. More fuel-efficient cars, fluctuating prices and changing driving habits have played havoc with the gas tax, and legislative leaders say they need to find a new way to fund road construction.

However, if a grand bargain fails, the newly unveiled gas tax law will gradually begin to change based on a formula. Three-quarters of the change will be based on North Carolina's population growth. The remainder of the change will be based on the consumer price index, a measure of how much consumers pay for certain goods.

"What we've come to realize is that a lot of the demands on our roads are simply because we're blessed to live in a growing state," Rep. David Lewis, R-Harnett, said.

Earlier in the legislative session, Democrats slammed Republican-led attempts to adjust the gas tax. As with this House-Senate compromise bill, those plans lowered the gas tax slightly but not as much as it would have dropped this summer if left unchanged. Democrats labeled that a tax increase.

Standing with Republican legislative leaders Thursday, a handful of Democrats who embraced the deal expressed optimism it would garner the support of their colleagues.

"I'm certainly not in a position to speak for the Senate Democratic caucus, but I do believe this will be a bipartisan effort. There will be Democrats who vote for this conference report," said Sen. Floyd McKissick, D-Durham.

The state, McKissick said, simply could not afford to let the gas tax drop to 30 cents per gallon.

Rep. Ed Hanes, D-Forsyth, said he was most concerned about ensuring the changes to the tax rates would not lead to job losses in the Department of Transportation. The original Senate bill would have eliminated 500 positions.

"We're very pleased about that, so I anticipate very strong support from the (House) Democratic caucus," Hanes said.

The House and the Senate are expected to take votes approving the measure on Monday and Tuesday.


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  • Jeff Gameo Mar 30, 2015
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    Meanwhile, snowbirds etc going up/down I-95 pay 0 NC tax because they fill up in cheaper VA/SC. If our taxes were at least competitive with border states, we wouldn't loose that business.

  • Dan Kimrey Mar 30, 2015
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    Don't pee(WRAL edit, not mine) on me and tell me it's raining. The middle class gets screwed with another tax increase. Thanks GA!!

  • Arch Maker Mar 28, 2015
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    View quoted thread

    I thought SC gas at 1.99 a gallon this week was good until I thought I would have to buy new shocks with all their pot holes. You get what you don't pay for!

  • Carl Keehn Mar 27, 2015
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    View quoted thread

    People who are complaining, either don't know; or ignore the amount of roads that North Carolina supports on a Statewide level. NC is second only to Texas in the number of road miles supported.

    The reason is that in most other states, you have a combination of state and county roads. North Carolina elected to maintain all major and secondary roads back in the days of the "good roads" movement, and have continued to do so, ever since.

  • Ronnie Smith Mar 27, 2015
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    I don't know where any of the folks who are posting are located, but if all you can do is complain about this tax, then your part of the state is receiving too much of the currently insufficient revenue for maintenance/improvement.

  • Matt Price Mar 27, 2015
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    Goes with the old saying that when Raleigh gets their vein of cash, they have a hard time letting it go.

    I knew when it got to $.35 that they could not let that money go. They got fat and happy and spent just as fast as it came in - now that their own formula is shooting themselves in the foot, they have to keep the syringe in with the tax dope.

  • David Tew Mar 27, 2015
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    So these tax rate would have dropped by 7.5 cents. Instead it will only drop by 3.5 cents. Not a big difference but the fact is that our law makers will use what ever cource they need to maximize tax income. The old method was just fine when it bought in mor tax dollars but when it is in our favor they decide its time to change the laws so we the people pay more. No wonder gas in South Carolina is approx. 20 cent a gallon less. There state tax per gallon is currently about 20 cent less than here in NC.

  • Roy Hinkley Mar 27, 2015
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    View quoted thread

    And in exchange you get a plethora of services and benefits.

  • Al Smith Mar 27, 2015
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    Let's lay it out.

    Fed Income tax
    State income tax
    Medicare deduction
    Social Security
    Property tax on house (city and county)
    Property tax on cars (city and county)
    Sales Tax Tax on interest earned on savings Gas Tax Death Tax Tax on investment income

    And there's probably more but I can't type anymore because it disgusts me. It's not that we have to pay tax, just look at everywhere we get hit for it.

  • Phil Larson Mar 27, 2015
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    The consumer loses, again. Imagine that.