State gas tax falls effective March 1
RALEIGH – Was Wednesday’s tax cut cleverly disguised as a tax hike?
North Carolina State Senator Erica Smith-Ingram of Northampton County believes that to be the case.
By a vote of 35-15, the State Senate approved SB 20, a measure that lowers the state gas tax from 37.5 cents per gallon to 35 cents per gallon effective March 1.
However, what appears to be a net savings at the pump for fuel consumers is a clouded scenario. Fuel prices have plummeted statewide since the fall of last year. Based on the current formula used in setting the state’s gas tax, it would have fallen to somewhere around 30 cents per gallon by this summer.
Smith-Ingram said by freezing the minimum tax at 35 cents, consumers will not realize that additional cost-saving. That, she said, coupled with a Republican-led effort to raise the gas tax formula from its current levy of seven percent of the average wholesale gas price to 9.9 percent, would result in a $1.2 billion gas tax increase.
“This places the burden of funding North Carolina’s transportation shortfalls on the backs of families that can least afford it,” Smith-Ingram said on Thursday. “There are some pros and cons with every bill, but I think that we, who represent those who are not here to speak on the floor, have to look at the impact it will have on them.”
She added that other language in the bill eliminates 500 Department of Transportation by March 1.
“We are putting the citizens of NC at a disadvantage with the other 49 states in these United States, causing our citizens of NC to not benefit by our decoupling,” she said.
Smith-Ingram admonished the GOP to “just say what it is. Our State Motto…is ‘to be, rather than to seem.’ If this is a tax increase, then say it for what it is.”
Smith-Ingram was one of 15 Senate Democrats to vote against the measure. Two other Democrats voted with the GOP majority – Floyd B. McKissick Jr. of District 20 (Durham and Granville counties) and Josh Stein of District 16 (WakeCounty).
The bill now heads to the NC House of Representatives for their consideration. The Roanoke-Chowan area’s voice in the House – Representative Howard Hunter III of Hertford County – said he will vote against bill as it’s currently written.
“We’re now seeing some relief at the gas pump with prices dropping since late last year,” Hunter noted. “What the Senate is sending us looks good for the short term, thanks to another 2.5-cent drop per gallon, but it doesn’t look good in the long run. People need to see that, need to understand that.
“I totally understand the need to find a way to fund the transportation needs within our state, but this isn’t the way to go about that and I can’t support this bill,” Hunter added.
Americans for Prosperity (AFP), an advocate for economic freedom, also expressed their disappointment in the passage of the bill.
“The gas tax ‘cut’ in Senate Bill 20 is a transparent Trojan Horse,” stated AFP-North Carolina State Director Donald Bryson. “Its misrepresentation defies the responsibility of elected representatives to communicate honestly with the taxpayers they work for. The bill implements a permanent gas tax increase in July and the people of this state – all of us – deserve an acknowledgement of that fact from Senate leaders.
“This bill does nothing to fundamentally reform how transportation is funded or how the gas tax is calculated,” Bryson added. “In fact, it may actually make the gas tax formula more volatile in the future. Moving forward, we expect the House to be responsible with the bill by having more debate and, at the very least, provide taxpayers some protection with a gas tax ceiling. This would help North Carolinians understand the true impact of Senate Bill 20.”
While a drop in gas prices is enticing for motorists, AAA of the Carolinas said the decrease could result in nearly $400 million lost in funding for North Carolina’s roads and bridges every year.
“Without funding, our roads and bridges suffer,” said David E. Parsons, president and CEO of AAA Carolinas. “Road and bridge safety can sometimes get lost in politics. This proposal ensures a nice balance, with a tax break for all North Carolina drivers while still protecting the safety of our bridges and roadways.”
Currently North Carolina’s gas tax makes up about 70 percent of funds to maintain roads and bridges, and approximately 60 percent of the state Department of Transportation’s budget.
State Senate Leader Phil Berger (R-Rockingham) issued the following statement after Wednesday’s vote: “Today’s bipartisan vote reinforces that there is broad support for this balanced plan to provide a real cut to the gas tax, ensure we can continue to build and maintain safe roads, bridges and economic corridors, and offer North Carolina teachers a much-needed tax deduction.”