Thursday, December 29, 2005

More On the NC Gas Tax

The News Reporter
Gas tax increase decried


North Carolina’s gasoline tax will have increased 5.3 cents in the past 12 months come New Year’s Day, due to an indexing formula that makes motorists pay more for gasoline when the wholesale price of gasoline increases. State Rep. Dewey Hill and other lawmakers want to put a stop to the increase before it kicks in and are asking for a special session of the House.

The General Assembly considered the issue of capping the gas tax two years ago and rejected the idea. The tax goes into the state’s road-building funds.

The latest 2.8 cents a gallon increase taking place Sunday, Jan. 1, means North Carolina now has the sixth-highest gasoline tax in the nation at 29.9 cents a gallon and that North Carolina motorists will pay more in gasoline taxes than ever before in their history.

Combined with the federal gasoline tax of 18.4 cents a gallon, motorists in the Tar Heel state will now pay 48.3 cents a gallon in taxes.

Rep. Hill, in a memo to Speaker Jim Black, asked Black to call a special session of the House consider capping the gas tax. Gov. Mike Easley opposes a cap, Hill said, but aides to Easley told him the governor might change his mind if a large majority of legislators support it.

Hill said Black told him he would call a special session if enough lawmakers wanted one. Hill said lawmakers have organized an e-mail campaign urging Black to call the session.

“We have been pushing the speaker to see if we can’t do something about the tax increase,” Hill said. “When the indexing formula was put in place, we didn’t think gas would reach $3 per gallon. We’ve asked all members to contact the speaker.”

AAA Carolinas, an affiliate of the American Automobile Association (AAA) opposes indexing.

“Gasoline taxes indexed to wholesale prices create additional hardship for motorists when the price of gasoline spikes upward,” said David E. Parsons, president and CEO of AAA Carolinas, in a prepared statement.

Seventy-five percent of the gas tax goes to the Highway Fund, designated for repair of existing roads; the other 25 percent goes to the Highway Trust Fund, which is dedicated to building new roads. Each penny in gasoline tax yields about $53 million a year in revenue.

Currently, despite its high gasoline taxes, North Carolina’s Department of Transportation suffers an annual $313 million shortfall in road and bridge maintenance.

Problems compounding the state’s shortfall include:

•Siphoning money from gasoline tax receipts to the general fund for non-highway use.

• Allowing a dozen special-interest exemptions for heavy trucks that cause extra damage more quickly, necessitating accelerated repairs.

• An inadequate response by the state Legislature to the state DOT’s annual funding requests for road maintenance and repair to bring the state’s road infrastructure up to the national average. (Approximately one out of every five miles of paved road in the state is considered substandard.)

“North Carolina, once the good roads state, now has a sub-par highway and road infrastructure due to excessive road damage by special interest heavy trucks, gasoline tax money going to the general fund and under funding of highway needs by the state legislature,” said Parsons.

Motorists in North Carolina will incur additional costs if a plan is approved to place a $5 toll on I-95 at the North Carolina/Virginia border, to be shared by both states. “That means motorists may pay to travel on an interstate built primarily with federal gasoline tax funds but poorly funded for repair and maintenance by the North Carolina Legislature,” said Parsons.

The N.C. Turnpike Authority currently has approval to conduct six projects. An I-95 toll road is not among them.

North Carolina’s gas tax is adjusted twice a year – on Jan. 1 and July 1. The amount is based on the wholesale price of motor fuel during a preceding six-month base period. For the Jan. 1 change, it is based on the average wholesale price of gasoline between March 31 and Sept. 30 – $1.7755 per gallon. During the previous six months, retail gasoline prices at peaked at $3.18 on Labor Day. These prices made this the largest jump in the state gas tax since 1989 when the state gas tax formula was recalculated.

Glad to see Hill try and do something about this. Could it be that this is related to his decision to run for office again?

I first posted on the tax in increase 2005-12-17

posted by David at 8:55 PM :: Permalink ::