NC gasoline tax slated to rise on New Year's Day (RATS mixed on special session to kill it)

Gasoline tax slated to rise on New Year's Day
Lawmakers scramble to freeze nearly 3-cents hike
From staff reports

Macon County motorists are bracing for a state gasoline tax hike that will greet them at the pump on New Year's Day.

On Sunday, the state tax on gasoline will jump by nearly 3 cents to a total of 29.9 cents per gallon. The increase will boost the tax to its highest level in state history.

And North Carolina's gas tax will become the highest per gallon in the Southeast and the sixth highest in the U.S.

The automatic tax also will hit home heating oil users, too, no doubt causing financial hardship to elderly and low-income residents.

State Rep. Phil Haire, who represents Macon County in the N.C. House of Representatives, has joined with other legislators in asking Gov. Mike Easley to call a special session after the first of the year to suspend the increase for six months.

On Wednesday, Easley rejected the request, saying the state needs the money to fund transportation projects. Each penny of gas tax generates about $53 million annually.

Easley also said he has set aside $10 million in a partnership with utilities to help pay the heating bills this winter of low-income families.

Haire was one of four legislators from Western North Carolina who signed the letter to the governor. “My thinking is, we need to try and help the folks on fixed incomes,” he said. “People using heating oil will need the help the most.”

State Sen. John Snow, whose district in the Senate includes Macon County, said he's not opposed to a special session. Snow says his biggest concern is with the rise in the gallon price of heating oil. “People on fixed incomes will have a hard time meeting their cold weather payments in fuel oil,” he said.

Despite Easley's opposition to the special session, lawmakers say they are working on another method to convene a special session. That constitutional method requires the approval of at least three-fifths of the members of the House and Senate. Seventy-two signatures would be needed in the House and 30 in the Senate.

The tax hike could not have come at a worst time, here at the beginning of winter when bad weather can affect workers' paychecks.

Gas prices statewide are now are up nearly 40 cents a gallon, compared to this time last year.

The price per gallon now averages between $2.17 and $2.24. Gas is predicted to remain above $2 per gallon, but that depends on demand and potential disasters.

The tax increase will kick in automatically Jan. 1 based on the way the gasoline tax law is written. A portion of North Carolina's gas tax is based on the average wholesale price of motor fuel.

North Carolina has a flat tax rate of 17.5 cents per gallon, plus 25 cents a gallon inspection fee. The rest of the tax is the variable wholesale component, which amounts to 3.5 cents per gallon or 7.5 percent of the average wholesale price for the preceding six months, whichever is greater.

The wholesale price component has jumped from 4.6 cents in July 2002 to the present 9.6 cents. It is adjusted twice a year.

Bills have been introduced in the House and Senate in the past to cap that portion of the state tax that rises with the wholesale price of gas, but the bills failed to be enacted.

Legislators mixed on prospect for gas tax session
By Mark Binker
Staff Writer
Saturday, December 31, 2005

RALEIGH -- As Tar Heels ring in the New Year at midnight, an automatic increase in the state's gasoline tax takes effect and adds fuel to a political fire legislative leaders will try to put out next week.

North Carolina's gas tax jumps 2.8 cents Sunday to 29.9 cents per gallon, among the 10 highest such levies in the nation.

This latest jump in the gas tax has fueled bipartisan calls for relief locally and across the state. More than half of Guilford County's 10-member legislative delegation say they believe a special session is in order to consider capping or temporarily staying the tax increase.

On Friday, legislative leaders unveiled a quickly formed committee designed to examine the reasons for higher fuel costs. That committee is expected to begin work this week, but its formation drew only tepid reviews from advocates of stronger measures.

"The appointment of the committee indicates the concerns that people have about the gas tax are being heard," said Sen. Phil Berger, an Eden Republican who represents parts of Guilford County. "Whether they'll be acted on remains to be seen."

The committee was called a "fact-finding endeavor" in a statement issued by House Speaker Jim Black and Senate leader Marc Basnight, both Democrats.

After the committee meets, Black said, "members will be more prepared to decide if a special session is necessary to address the issues."

Berger, the leader of the Senate's Republican minority, was one of the first legislators last fall to call for a freeze or reduction in the gas tax as fuel prices rose in the wake of Hurricane Katrina.

Democrats control the House and Senate as well as the governor's office, and the state's top leaders have resisted freezing or lowering the gas tax.

Gov. Mike Easley, in particular, has been outspoken in his opposition to freezing or lowering the tax. He said the money is needed to keep up with the state's road construction needs.

Every penny on the state's gas tax generates about $53 million annually. Meanwhile, a family that bought 10 gallons of gas per week would save less than $15 a year by deleting the 2.8-cent increase coming Sunday, say critics of the tax freeze.

And with mainly Republicans railing for the tax break against what was a solid Democratic wall of opposition, tax-freeze opponents could paint the controversy as a partisan issue with a campaign-season audience in mind.

Now, however, many rank-and-file Democrats are joining the call for a special session.

"We need to give the people some relief, now," said Rep. Alma Adams, a Greensboro Democrat. "This is getting to be outrageous. It's a hardship on people."

Adams said the gas tax has become a frequently discussed issue among members of the state legislative black caucus and Democrats in general.

Along with its effects on the poor, backers of the gas tax break say, those with long commutes and business operators with large motor fleets are being disproportionately affected.

Efforts to muster the signatures of 72 representatives and 30 senators needed to force a special session to consider the issue are under way.

Of the 10 legislators who represent Guilford County, six say they will lend their names to that effort. They include Berger and fellow Republicans Sen. Stan Bingham and Reps. John Blust and Laura Wiley. Democratic Reps. Adams and Maggie Jeffus said that they favored a special session.

Rep. Pricey Harrison, a Greensboro Democrat, said that she favored lowering or capping the gas tax but did not know if a special session was called for, saying the legislature could wait until its scheduled return in May.

Sen. Katie Dorsett, a Greensboro Democrat, said she wanted to see the results from next week's committee meeting before deciding on whether to support a special session.

Sen. Kay Hagan, a Greensboro Democrat, could not be reached Friday.

Only Rep. Earl Jones, a Greensboro Democrat, dismissed the idea out of hand.

"The bottom line is that it's a Republican ploy to try to create an issue that doesn't exist and create a distraction from their national leadership," Jones said.

Guilford County members of the new fuel-cost committee will include Berger, Bingham, Hagan, Jones and Rep. Nelson Cole, a Rockingham County Democrat.

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