Kicking the oil can
Published April 5, 2015
Editorial by Greensboro News-Record, April 5, 2015.
State legislators and Gov. Pat McCrory cut the gas tax by 1.5 cents per gallon last week.
In doing so, they prevented a bigger tax drop this summer.
There’s also a likely tax increase somewhere over the horizon.
If that sounds confusing, it’s no more so than the governor’s news release:
“Governor Pat McCrory signed legislation that will immediately reduce North Carolina’s gas tax as part of a finance plan that will stabilize revenue needed for the state’s transportation projects.
“ ‘This bill will allow us to build roads, strengthen bridges and fix potholes so people can get to their jobs, go to school, see their doctors and drive to the mountains or the beach,’ Governor McCrory said.”
The release doesn’t explain how reducing a tax will allow the state to build and repair roads and bridges.
It doesn’t do that. In fact, it trims transportation revenue by $13.5 million over the remainder of the current fiscal year, which ends June 30.
On July 1, the gas tax would have plunged by at least 7.5 cents, from 37.5 cents per gallon to 30 cents or lower if leaders hadn’t acted to prevent it. That’s because, for the past 25 years, the tax has been linked to the wholesale price of fuel. As everyone knows, the price has fallen significantly in the past year.
Rather than let the tax fall with it, last week’s legislative action sets a flat rate for the gas tax at 36 cents per gallon. It is scheduled to drop again to 35 cents on Jan. 1 and again to 34 cents on July 1, 2016.
So the politicians can take credit for a modest tax cut, until after the 2016 elections.
Most motorists may not understand that it’s less of a decrease than they could have had.
Once the elections have passed, on Jan. 1, 2017, a new gas tax formula kicks in. It will raise the tax based on population growth and increases in the consumer price index. That could mean a big tax increase.
It’s not set in stone, however. Leaders say they may devise an alternative means of paying for transportation needs by then. One legislator, Rep. Charles Jeter (R-Mecklenburg), already has introduced a bill that would replace the gas tax with a flat transportation usage fee paid by all vehicle owners. Jeter said it’s an attempt to spur conversation about a problem everyone recognizes but few want to address: the long-term inadequacy of the motor fuels tax.
In the short term, the governor and state legislators couldn’t let the gas tax drop to 30 cents or less because it would cost too much revenue. Transportation needs are too great.
In the years ahead, even a higher gas tax will yield less money as vehicle fuel efficiency improves. Some vehicles don’t even use gasoline. The driver of an all-electric car pays no gas tax. Other ways must be found to see that all highway users pay a fair share for their upkeep.
The governor and legislature have merely kicked the oil can down the road. They’re very clever in making their ruse look like a tax cut, for now. They’re not so smart in leaving the hard decisions for later.
April 5, 2015 at 12:21 pm
bruce stanley says:
Greensboro News-Record-
If you tax something you get less of it. Lower the tax and you get more of it. People spending less on gas = driving more = more tax revenue to spend on roads and bridges. Make sense?
