North Carolina Senate Rejects Capping Fuel Taxes

The North Carolina State Senate has killed a proposal to cap the state’s 35-cent tax on gasoline and diesel, which is about to rise sharply, by voting to end its session.

House members, who argued that motorists needed a break, backed a bill last week that would have kept the fuel tax at the current level through June 30.

The tax is recalculated automatically twice annually, on Jan. 1 and July 1, based on a formula based on wholesale fuel prices.

The legislature’s nonpartisan fiscal staff estimated that without the cap, the fuel tax will grow to as high as 38.9 cents a gallon next year, the Associated Press reported.

But Senators were worried about losing the road-building funds the tax generates and about who would get to decide which projects would be scrapped if projected fuel tax revenues were lost to a cap.

The cap would have meant $95.8 million less in revenues, AP reported.