North Carolina House votes to authorize temporary fuel tax increase

| 6/15/2009

Struggling to cope with dwindling funds to pay for roadwork, the North Carolina House endorsed a bill to prevent the state’s fuel tax from dropping. The bill now moves to Gov. Beverly Perdue’s desk for her signature. Senate lawmakers have already approved it.

The House voted 64-52 to approve the bill – SB200 – which would ensure that the fuel tax rate won’t go down next month as expected. Once it is signed into law, the current fuel tax limit of 29.9 cents per gallon will become the minimum rate for the next two years.

Without the change, the tax was expected to drop to 28 cents July 1.

The tax is composed of a 17.5-cent flat rate and a 12.4-cent wholesale component. It is adjusted twice annually based on wholesale prices.

Acknowledging that consumers are tired of paying what they consider a lot for fuel, supporters say the revenue is needed to help the North Carolina Department of Transportation close its budget gap. Declining fuel sales and the tax rate are partly to blame for the disparity, they say.

House Transportation Committee Chairman Rep. Becky Carney made her views on the issue known. In the time leading up to the start of the legislative session, as lawmakers were trying to decide whether to adjust the cap or look for money elsewhere, the Charlotte Democrat said tough decisions needed to be made.

Carney acknowledged that while politically it would be better not to mess with the cap, there is no money. Lawmakers were going to have to look for it through either taxes or fees.

The tax is expected to increase one-half cent to 30.4 cents in January. According to a legislative fiscal note, the change will generate $67.5 million for roads and bridges through mid-2011.

The temporary tax increase reverses a decision made by lawmakers three years ago to cap the tax. Although popular at the time, the state received nearly a half-billion dollars less in fuel taxes.

Democrats, who control both chambers of the statehouse, now say passing the 2006 cap was a mistake.

To view other legislative activities of interest for North Carolina in 2009, click here.

– By Keith Goble, state legislative editor

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