This morning, Gov. Josh Stein signed a law to temporarily repeal the state’s gas tax, rolling back the state’s 41 cents per gallon tax.
“It will enable people to get 15, 20 bucks more than they otherwise would have. So it’s a positive thing because every dollar counts when folks are struggling to pay their bills at the end of the month,” Stein said. “But this is not a comprehensive solution to people’s struggles–we know that people are struggling with their housing costs, with their electricity costs.”
Stein announced his approval of the measure at Hickory Nut Gap Farms, a Fairview business owned and operated by Democratic congressional candidate Jamie Ager.
“This is helpful relief. Forty cents a gallon is meaningful,” he said. “But when gas has shot up a buck thirty because of this disastrous war of choice by the president against Iran, we need to end the war.”
Gas prices have skyrocketed across the country since the Trump administration started the war with Iran in late February.
North Carolina lawmakers called a special session at the General Assembly to pass the “Relief at the Pump” bill earlier this week.
House Speaker Destin Hall (R-Caldwell) and Senate Leader Phil Berger (R-Rockingham) announced their rationale for the special session through their social media platforms on Saturday.
“Rising fuel costs are squeezing North Carolina families’ pocketbooks and creating challenges for farmers across the state,” Hall wrote.
“North Carolina families and farmers are feeling the impacts of rising fuel costs every day,” Berger posted. “They need real relief and they need it now.”
The bill passed both chambers with bipartisan support.
Stein questioned the timing of the move, saying Republicans were motivated by polling, according to NC Newsline.
Even at the announcement of his signing of the law, Stein criticized lawmakers for not doing more to address affordability.
“They should not be passing laws—the legislature—that is going to raise the cost of electricity, yet that’s what they have done,” he said.
The repeal comes just weeks ahead of the midterm elections — a situation the progressive NC Budget Center called “a political gimmick.”
What are the effects on government spending?
The gas tax is set by state law at the beginning of every year using a formula that “takes into consideration population and energy cost inflation,” according to the North Carolina Department of Transportation (NCDOT).
The Department receives about $5 billion total each year to maintain roads, railways, ferries and other transportation infrastructure across the state. About 25% of the funding comes from federal sources with state funding, including the gas tax, making up the remaining three-quarters.
Of the state money, about 40% comes from gas tax revenue. Other revenue sources include sales tax, highway use tax and DMV fees.
The conservative John Locke Foundation cautioned that the new temporary suspension “should be structured to protect transportation funding.”
The think tank encouraged a move away from gas tax revenue, suggesting a replacement of a mileage-based user fee that would put the heaviest burden on those who drive the most.
The lost revenue from the temporary repeal will be made up with money from the state’s reserve fund, The News & Observer reported.
North Carolina has about $7.7 billion across all reserve funds, according to the State Controller’s office.
When will the changes show up at the pump?
The law goes into effect tomorrow, but consumers may not see an immediate drop in pricing at the pump.
Stein said gas stations have to cycle through their stored fuel that they’ve already paid taxes on before they buy the next tax-free load of fuel.
“You may see it happen faster in a city where the gas turns over more quickly than you do in a rural area where that gas could sit in the tank for a week or two,” he said Friday.
According to AAA, the average cost of a gallon of gas in North Carolina is hovering around $4.10. Check out this county-by-county map to see who has the lowest prices.
The temporary suspension of the gas tax will continue until the end of November.
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