@NCCapitol

GOP eyes resurrecting cap on state gas tax

Posted March 8, 2011 5:28 p.m. EST
Updated March 8, 2011 7:20 p.m. EST

— As fuel prices soar, Republican lawmakers are looking at once again capping the state tax rate on gasoline.

The state eliminated the cap two years ago, flipping it upside-down to set a minimum tax of 29.9 cents per gallon. The tax is now at 32.5 cents per gallon.

The state Department of Revenue recalculates the gas tax, which is tied to the wholesale price of fuel, every six months. Officials said the rate would likely increase by 2 to 2.5 cents in July because of higher gas prices.

The price of gas has been climbing steadily in recent weeks and is at a two-year high, averaging $3.51 a gallon nationwide.

"I worry about that kind of loss of money (people spend on gas) that would normally go for goods and services," said Rep. Bob Rucho, R-Mecklenburg.

North Carolina's gas tax is the highest in the Southeast, and lawmakers said it might be time to rein it in to help both consumers and retailers statewide.

"I think we need to fix the gas tax because people are crossing the border to Virginia and South Carolina (to fill up)," said Sen. Neal Hunt, R-Wake.

The gas tax is the largest revenue source for the state Department of Transportation, and officials said the agency would lose $1 billion over the next decade if the tax is capped.

"It is a lot of money, particularly when you look at all the needs we have in this state, to take care of our aging infrastructure and to take care of the congestion problems we have in the state," said Mark Foster, chief financial officer for the DOT.

Seventy-five percent of the gas tax funds road maintenance projects, and the DOT estimates that 18,335 miles of pavement statewide wouldn't be resurfaced if the gas tax is capped at its current level. That includes 890 miles in Wake County, 341 miles in Cumberland County and 278 miles in Durham County.

Hunt said DOT can simply shift money slated for new projects to maintenance.

"Stop projects that aren't needed. Put the money back in maintenance programs. Preserve what we've got, and cap the gas tax at the same time," he said.

Foster and other DOT officials argue that there is little correlation between the gas tax and the actual cost at the pump. Whether a station in Raleigh charges $3.47 or $3.59 a gallon, the tax is the same, they said.

Some drivers support a cap, saying they need every little bit of help they can get.

"I think every cent counts right now, especially the way the economy is," driver Danielle Davis said.

Driver Michael Chavis said, however, that he doesn't believe a gas tax cap would help ease the pain in his wallet.

"Unless you're getting 100 gallons or 200 gallons of gas, it (won't) make a difference," Chavis said. "If you're getting 15 gallons, what's 2 cents (a gallon)?"