Senate delay means higher prices for local drivers
Starting January 1, Union County drivers will pay three to four cents more per gallon for gas. State Senate members adjourned their session Tuesday, Nov. 29, refusing to take up a House bill that would cap the current gas tax at 35 cents per gallon.
Under current state law, the gas tax in North Carolina is recalculated twice a year, on Jan. 1 and July 1. The tax climbed 2 cents July 1 to an all time high of 35 cents and will climb again Jan. 1, this time to 38.9 cents. State fiscal staff members presented that information to a session of the House Finance Committee Monday, Nov. 28 as they debated House Bill 645. The bill, which called for a cap of the current gas tax, passed the House by a 99 to 23 vote. Now the Senate has to decide if it will take up the bill during the short session.
“Of all the issues people have called me about, this has to be the second most referenced, behind schools,” District 68 Rep. Craig Horn, one of the bill’s sponsors, said. “North Carolina’s gas tax is the highest in the southeast and one of the highest in the nation. That hits people in the wallet. The impact of gas prices on small businesses and consumers is a problem.”
Horn, a former small business owner himself, saw firsthand the impact high gas prices have on companies, he said.
“Fuel costs impacted my profitability to a huge extent,” Horn said. “The more time my sales guys spent in the office, the fewer sales they made.”
Currently, North Carolina charges a state tax of 35 cents and a 18.7 cent federal tax per gallon of gas. That places the state ninth highest in the nation, according to a 2011 study by the American Petroleum Institute.
The bill calls for a cap on the current gas tax until June 30. During that time period, it also calls for a study of the gas tax, to look at other ways of generating revenue for the State Department of Transportation. One such idea involves a switch from taxing on gas to taxing per mile. Modeled after similar programs in Oregon and the Netherlands, the plan would charge people based on the number of miles they drive annually. Satellite technology, similar to GPS, would be installed in cars.
“All our cars are getting better mileage than years ago,” Horn said. “Our whole concept of how we fund transportation needs to be overhauled.”
The idea of a gas tax overhaul, including a switch to taxing per mile, was originally brought up in 2009, when a committee was appointed to study the issue. The Surface Transportation Infrastructure Financing Commission turned in their report in February 2009, calling for the switch to take place, but nothing came of the study.
Tax cap would cost jobs?
Opponents of the current bill argue a cap on the gas tax would cut jobs and create funding problems for road projects, moving forward.
“Any change to our funding structure will decrease the number of projects we can deliver in the future,” State Department of Transportation Communications Director Greer Beaty said. “As it is, we have to plan out 5 to 10 years to fund projects. If there is a change, ultimately, there would be projects delayed.”
Department of Transportation projections estimate that capping the tax until June would delay 400 miles of road resurfacing and 72 bridge repairs. Beaty also pointed out a portion of the bill that called for the department to make reductions. In making the reductions required, the bill reads, the department may eliminate positions.
Also during the Finance Committee hearing, Christie Barbee, a lobbyist for the Carolina Asphalt Paving Association, estimated that up to 2,800 construction jobs could be lost, if the gas tax is capped.
Horn, who serves as a member on the House Appropriations Committee, disagrees, pointing to unspent transportation dollars as a way to cap the tax, while determining alternative solutions.
“Currently there is more than $31 million in unreserved funds sitting there,” Horn said. “That comes from canceled projects and highway projects that came in under budget.”
Horn’s plan would require $95 million in cuts, according to the state fiscal staff. He proposed to address that by taking the $31 million currently unspent from the transportation fund, leaving $64 million needed in cuts. To address that, the state would trim $20.3 million from the interstate budget, $8.2 million from the urban loop fund, $2.1 million from the state’s secondary roads budget and $2.1 from the transportation funding given to municipalities. Addressing the remaining $31.3 million shortfall would be up to Department of Transportation officials. State staff members estimated the shortfall would mean 30 to 40 days delay on some loop and highway projects.
“We were told capping the tax would mean about a month’s delay on some of these projects,” Horn said. “In my experience, prices go up real fast and go down real slow. What we would gain outweighs the benefits the 3 cent tax increase would bring.”
Beaty said that the Department of Transportation would not adjust their list of funded projects, unless the bill passes through the General Assembly next year. The increase to 38.9 cents was included in this year’s budget for the department.
“We’re going to move forward until we’re told otherwise,” Beaty said.
The House and Senate reconvene for the short session February 16.