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House And Senate Reach Deal To Slow Gas Tax Fall

Clark_PumpingGas.jpg
Rusty Clark
/
Flickr

Lawmakers in the North Carolina House and Senate have reached a compromise to stop a dip in the state gas tax, which would have led to deep cuts in the state Department of Transportation.

Most of the funding for the state transportation department comes from the gas tax, which changes twice a year based on fuel prices. When the gas tax next resets—incorporating recent, low fuel prices—the transportation department could lose as much as $400 million, according to the NC League of Municipalities.

So, both the House and Senate voted to freeze the tax at a slightly lower rate than it is currently, but much higher than where it would otherwise reset.

The Senate also created a new formula to prevent the longer-term dip in future years. The House removed that section from its bill. Both chambers want to find a less volatile, less dwindling funding source for transportation than the gas tax, so House lawmakers view the bill as a stopgap, which does not need a long-term formula.

The compromise announced Thursday has a bit of both versions. It drops the tax a cent-and-a-half below the current price starting next week, to 36 cents a gallon, where the House wanted it. Next year, it drops again to 35 cents, where the Senate wanted it.

If no larger deal is reached by 2017, the tax drops another cent. Then, a new, less volatile formula, based on population growth and the Consumer Price Index kicks in.

Governor Pat McCrory says he supports the compromise.