Gas Tax Cap At Issue Next Legislative Session

By: Jim Niedelman | WNCT-On Your Side
Published: November 26, 2008

State lawmakers will have several difficult financial issues to tackle in the next legislative session. One is what to do about the cap on the gas tax. It's set to expire next year. Extending the cap satisfies people who are against higher taxes, but it would also come at a price.
There's no denying it's been a volatile year at the pump and the idea of paying higher taxes for a fill-up doesn't exactly hit the comfort zone.
"I don't like 'em. I think they're a waste,” said driver Todd Alexander.
"Of course I'd rather not have it," said driver Chris Johnson
"People are always gonna need gas. So, I'm still gonna have to pay whatever they charge," said driver Pancho Bell.
North Carolina charges a tax of about 30-cents a gallon. Only 13 states charge more. But, that could change if lawmakers let the tax cap expire next summer. State leaders say right now the tax would be five-cents a gallon more without the cap.
Yet, that savings hammers state highway projects, which get their funding from the gas tax.
It's impossible to ignore the impact of gas tax cap. State research shows this year alone, when gas prices soared to record levels, North Carolina lost out on $400-million for roads and highways. And, $600-million overall since the cap took effect.
"People may not like to pay that extra few cents at the pump, but they love to have roads that they're able to drive on also," said Rep. Marian McLawhorn, (D) Pitt County.
That's the dilemma. Mclawhorn voted for the tax cap in 2006 and would like to see it extended. She admits highway projects need more money, but offers other options like a higher sales tax for cars, taxing drivers based on their annual mileage or overhauling the transportation department.
Facing massive budget shortfalls, it's clear lawmakers have their own rough road ahead. There are long- term implications as well, at the current rate. By the year 2030, the Department of Transportation says the money it raises will be $65-billion short of what the state needs for roads and highways.