As gas and diesel prices soar, the N.C. General Assembly is poised to return this week to consider suspending the state's gas tax in order to provide drivers with some relief.
The special session is the result of an agreement Speaker of the House Destin Hall and Senate leader Phil Berger reached on Saturday.
"North Carolina families and farmers are feeling the impacts of rising fuel costs every day. They need real relief and they need it now," Berger, a Rockingham County Republican, wrote in a social media statement.
North Carolina's motor fuels tax is 41 cents per gallon, an amount The Tax Foundation says is the 10th-highest in the country. The state uses it to fund highway construction and road maintenance, with revenue rising above $2.5 billion in recent years.
Republican lawmakers expressed optimism Monday that they will be able to use the state's budget surplus and reserves to continue paying for roads while providing relief to motorists.
As of Friday, the state's rainy day fund contained $3.77 billion and its Stabilization and Inflation Reserve contained $1.34 billion. The budget enacted over the summer also included a $1 billion surplus which legislators have not yet earmarked for any purpose.
In a video statement, Rep. Grant Campbell, R-Cabarrus, said, "We have the ability to temporarily suspend the gas tax, which will fairly quickly and substantially lower the cost of gas and diesel for North Carolinians, and we can do it in a way that doesn't negatively impact road maintenance and construction."
Legislative Democrats said the special session is an attempt by Republicans to distract from other aspects of their record ahead of November's elections.
House Majority Leader Robert Reives, D-Chatham, wrote in a statement that his Republican counterparts' legislative record has made the costs of living more expensive for most people in the state.
"Now, just weeks before voters can hold them accountable at the ballot box, they are trying the first in what will surely be many attempts to distract from their horrible record," Reives wrote.
Gas prices in NC
Several other states have recently enacted ways to provide tax relief to motorists. For instance, Ohio suspended its gas and diesel taxes for 90 days; Illinois delayed a scheduled increase until 2027; and Utah reduced its tax by 15%.
The average price for a gallon of regular gas in North Carolina was $4.03 on Monday, according to AAA, lower than the $4.37 national average. That's up from $3.84 in North Carolina a month ago and $2.82 a year ago.
Diesel, which is vital for trucking and farming, averaged $6.01 a gallon, according to AAA, lower than the $6.32 national average. That's up from $5.80 per gallon in North Carolina a month ago and $3.49 a year ago.
Last week, Gov. Josh Stein directed the N.C. Department of Revenue to issue a waiver allowing the state's farmers to use red-dyed diesel fuel on highways for the rest of the year. Typically, dyed fuel is only allowed to be used for off-road uses like on farms and in construction equipment.
"Since many agricultural producers have stores of non-taxed dyed diesel fuel on hand for off-road use, suspending enforcement of this prohibition will provide farmers relief during the harvest, the most fuel-intensive component of agricultural production," Stein wrote in a letter to Department of Revenue Secretary McKinley Wooten calling for the waiver.
Questioning the gas tax
The leader of the conservative John Locke Foundation said in a statement Monday that it is crucial any gas tax holiday be structured in a way that protects transportation funding.
Donald Bryson, the CEO of the Locke Foundation, also argued that there should be a broader conversation about how the state's roads are funded, particularly as electric and hybrid vehicles capture a larger share of the state's market.
"Moving from the gas tax toward a mileage-based user fee would preserve the user-pays principle, ensure that drivers contribute regardless of how their vehicles are powered, and provide a more durable alternative to taxing fuel at the pump," Bryson wrote.
North Carolina requires electric vehicle owners to pay an additional $214.50 on their registration, with plug-in hybrid owners paying an additional $107.25.
As of June, there were more than eight million gas-powered vehicles and about 457,000 diesel-powered vehicles registered in North Carolina, compared to about 116,000 fully electric vehicles and 33,000 plug-in hybrids, according to N.C. Department of Transportation records.
