NEW: NC Senate passes gas tax bill, headed to House

Published: Feb. 10, 2015 at 9:05 PM EST|Updated: Jul. 7, 2015 at 11:43 AM EDT
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RALEIGH, NC (WECT) - The state Senate on Thursday gave final approval to a bill that would immediately lower North Carolina's gasoline tax, but would likely lead to higher tax rates in future years. The bill now heads for the state House, where lawmakers could make changes.

SB20 reduces the rate by 2.5 cents per gallon to 35 cents March 1 through the rest of the year. The tax formula would be changed after that date. Republicans say the changes provide stability for road-building revenues and would ensure projects in the pipeline are completed. But Democrats say the GOP is hiding a long-term tax increase. Projections show the tax rate could be 7 cents higher in 2019 compared with the current rules.

The Third reading vote was 35-15, with Democrat Rep. Joel Ford (Mecklenberg) changing his "Aye" vote from Second Reading, Democrats Floyd McKissick (Durham) and Josh Stein (Wake) voted with the Republican majority once again, while Sen. Tamara Barringer (R-Wake) was the only member of the GOP to oppose the bill on Second and Third Readings.

SB20 changes in 2016 the formula that re-calculates the tax periodically, based on the wholesale gas price, and set a 35-cent floor for the tax going forward. A legislative staff member told the committee the tax could exceed 40 cents per gallon in 2018 under the proposal if projections hold.

In a news release sent from his office on Tuesday, Senate President Pro-Tempore Phil Berger (R-Rockingham) claims the bill is "a first step to stabilize and provide certainty for road funding, the proposal replaces biannual gas tax adjustments with a single, annual adjustment set on January 1. And while it provides a near-term gas tax cut, it also shores up transportation funding by freezing the gas tax at 35 cents through technical adjustments to the formula. Recent polling indicates voters support this approach". 

"This balanced plan provides tax relief for all North Carolina drivers while helping ensure the state has the long-term resources necessary to build and maintain safe roadways, bridges and economic corridors," Berger said in a statement contained in the news release.

Sen. Bill Rabon (R-Brunswick), who is Co-Chairman of both the Senate Finance Committee and Senate Transportation Committee, also had a comment in the same news release sent Tuesday from the Senate leader's office.

"This proposal will make us even more competitive with our neighboring states – many of which are actively raising their gas taxes – while keeping scores of important transportation projects off the chopping block," Rabon's comment said. 

In a news release, the N.C. Chamber called the proposal the "Right Step to Stabilize Current Transportation Funding". But criticism of the proposal came from advocacy groups on both sides of the political spectrum.

"The gas tax portion of this bill appears to be a bait and switch on taxpayers," Donald Bryson, North Carolina State Director for the conservative group Americans for Prosperity said in a email news release. "While it does give an initial cut in the gas tax, it sets a new floor on the tax at 35 cents and thereby keeps the gas tax artificially inflated over time. AFP's concern is that this proposal functions as a tax increase over time. Our preference would be to make a clean cut on the gas tax, and not play political games to make taxpayers believe they are getting a good deal over time."

From the progressive group Progress North Carolina came a similar viewpoint: "If Senate Republicans want to pump over a billion dollars in extra taxes out of North Carolina families who are already struggling to make ends meet, they should be upfront about it instead of rushing an intentionally deceptive bait-and-switch proposal through the General Assembly," Executive Director Gerrick Brenner said in an email news release that claims the proposal would cost every driver an extra $50 dollars more in gas taxes every year. "Lawmakers think they can fool voters by passing a tiny short-term cut which hides a massive long-term increase. Governing through bait-and-switch tax schemes is no way to run a state, and North Carolinians deserve better from their leaders."

To read SB 20 and the amendment added to the bill, click here:

Copyright 2015 WECT. The Associated Press contributed material to this report.