Yesterday Gov. McCrory signed into law Senate Bill 20, which would result in a net $800 million increase in the state’s gas tax according to estimates.
The immediate impact is a 1.5 cent drop in the tax, but the new law sets the tax higher than it would have been as of July 1 if the previous gas tax formula remained in tact. The law also establishes a floor for the tax effective 2017, and automatically adjusts upward thereafter.
The old tax rate, 37.5 cents a gallon, will be reduced to 36 cents Wednesday and stay there through December. Then the tax will fall to 35 cents in January and 34 cents in July 2016.
Starting in 2017, the gas tax will be adjusted once a year according to a new statutory formula based on population growth and energy cost inflation. It is expected to rise slowly in future years to about 36 cents in 2019. The law gets rid of a volatile formula that produced wide swings in the tax rate, moving with the ups and downs of global fuel prices.
It’s a clear tax cut for the remaining three months of this fiscal year, which ends June 30. But the new 36-cent rate is 6.4 cents higher than the tax would have been starting in July if the law had not been changed.
Fiscal researchers for the legislature estimated that the new law will boost DOT revenues by $266 million during the fiscal year that starts in July, and an average $181 million annually for the three years after that.