Time to Cap the Gas Tax Once Again?
We’ve been here before.
The last time came after Hurricane Katrina, in 2005 and 2006. Refineries shut down. Speculators jumped in. Gas prices started rising. North Carolina’s gas tax, which rises or falls every six months based on the wholesale price of gas, climbed with the increases.
A Republican gubernatorial candidate tried to turn the tax into a campaign bludgeon. Feeling the pressure, Democratic legislators popped his gas balloon by temporarily capping the tax.
That temporary cap ended two years ago. So today, with revolution in the air and on the ground in oil-rich Libya, the price of gas is back on the rise. The tax could go up with it come July.
Legislative Republicans are again discussing a tax cap.
There are, of course, some differences between 2011 and 2006. North Carolina and the nation are still struggling to shake off recession. For state government, the bill for that recession is just now coming due, as federal stimulus dollars disappear.
Tax collections still haven’t recovered.
The good news is that North Carolina generally separates its highway tax collections from its general operating tax collections. Gas taxes go primarily to highway construction, meaning any cap shouldn’t affect teaching jobs or public university budgets.
What a tax cap — or a drop in tax collections due to falling demand during a recession — will do is slow down highway construction and delay road maintenance projects.
The proponents of a gas tax cap say that’s not necessarily the case. Some highway tax collection dollars, about 73 million of them, do feed into the state’s general operating budget.
Critics of that money movement like to call it a “raid” or “supplanting,” but it is part of a swap that’s been in place since the creation of the Highway Trust Fund in the late 1980s.
Gasoline and other highway-related taxes also pay for the operation of the state Highway Patrol and drivers education programs in the public schools. But trying to significantly cut either would be both foolish and politically risky.
Understanding that, thoughts that capping the tax won’t slow down road construction and maintenance are really just wishful thinking.
Capping the tax at its current 32.5 cents per gallon will save taxpayers, though.
The state Department of Transportation estimates that the old tax cap saved motorists $540 million during the three years that it was in place. Not that all those drivers were North Carolinians. Plenty of gasoline sold here is bought by motorists just driving through along interstates and state highways.
The difference between tax rates among the states is another argument for a cap.
When North Carolina’s gas tax rises significantly higher than that of neighboring South Carolina and Virginia, border area residents notice. Making a pit stop in that other state makes more sense.
What North Carolinians and their elected representatives need to decide is whether saving $20 or $30 a year is worth driving through a few more potholes or waiting an additional six months for that nearby road project.
Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at email@example.com.
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