In North Carolina, gas tax is now set by a formula rather than the price of fuel

Updated Apr 3, 2015

fuel pumpNorth Carolina Gov. Pat McCrory signed SB20 into law March 31, creating a transportation-funding plan that sets a base motor fuels tax amount that isn’t solely tied to the wholesale price of fuel.

“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,” McCrory said. “We now have a gas tax that is based on North Carolina’s transportation needs instead of the unpredictability of the world oil market.”

The plan has an immediate affect of cutting the gas tax in the state, which is among the highest in the nation, to 36 cents per gallon from 37.5 cents. On Jan. 1, 2016, the rate drops to 35 cents per gallon, followed by another 1-cent decrease on July 1, 2016.

Beginning Jan. 1, 2017, the tax will use 34 cents as the base price, and then will have additional amounts created from a formula using the Consumer Price Index and the change in population in the state.

The bill, first approved by the state Senate in February, had been through a number of debates since then, and finally gained full state House support March 31. The governor signed it shortly thereafter.

While the plan “stabilizes” the tax, it will demand cuts in the North Carolina Department of Transportations budget, requiring a reduction of $13.5 million. The governor’s office reports that the elimination of 40 jobs in the department is part of the budget cuts.

The legislation can be read here.