North Carolina adopts fuel tax changes

By Keith Goble, Land Line state legislative editor | 4/1/2015

The North Carolina General Assembly has agreed on a plan to halt a sharp drop in the state’s fuel tax rate to buy time for lawmakers to work out details of a long-term transportation funding solution. As a result, truckers and others fueling in the state could see a price break at the pump as soon as Wednesday, April 1.

Gov. Pat McCrory welcomes the funding fix.

“This proposal protects and stabilizes gas tax revenue so we can fund important transportation priorities that connect communities throughout our state,” McCrory said in prepared remarks.

The state’s per-gallon fuel rate was 37.5 cents. The fuel tax was composed of a flat rate and a wholesale component. It was adjusted twice annually based on wholesale prices, which have plunged in recent months.

Without legislative action, Rep. Bill Brawley, R-Mecklenburg, said the state was facing the loss of hundreds of millions of dollars.

State estimates show the tax rate was expected to drop below 30 cents this summer. As a result, the state anticipated a loss of $236 million during the next fiscal year in road and bridge revenue.

In order to prevent the upcoming tax dip, state lawmakers reached agreement this week on a deal to cut the state’s fuel tax rate by 1.5 cents to 36 cents per gallon effective Wednesday, April 1. The change included in S20 is expected to raise $142 million during the upcoming fiscal year.

Additional cuts of a penny each will take place on Jan. 1, 2016, and again on July 1, 2016, when the tax rate reaches 34 cents.

Starting Jan. 1, 2017, a new fuel tax formula will be used to calculate the tax rate. Specifically, the formula will be based on increases in state population and a consumer energy price index.

“This is a thoughtful compromise that helps meet the need for a sustainable revenue stream to fund our state’s roads and bridges,” stated Sen. Floyd McKissick, D-Durham.

In an effort to reduce the state’s dependence on fuel tax revenue for transportation work, Brawley said House and Senate lawmakers will spend the coming months looking for more stable funding sources for future years.

To view other legislative activities of interest for North Carolina, click here.

Copyright © OOIDA