01/05/2006

By NATALIE GOTT  / Associated Press

A repeal of a recent gas tax increase won't guarantee a drop in prices at the pump, an industry representative told lawmakers grappling with higher gasoline prices Thursday.

"It just depends on what's going on with prices at that time," said Gary Harris, executive vice president of the N.C. Petroleum Marketers Association.

Harris was among several speakers at the first meeting of a special legislative committee that is examining the state's increasing energy prices, including the nearly 3-cents-per-gallon increase in the gas tax that took effect Sunday.

The state motor fuel excise tax grew by 2.8 cents per gallon to 29.9 cents, largely due to higher gas prices after hurricanes Katrina and Rita. The tax is recalculated twice annually based on the average wholesale cost of fuel and is among the highest in the nation.

Harris, whose petroleum group last year proposed capping the gas tax rate, said if the wholesale price of gasoline rises at the same time the increase in the tax is repealed, consumers still might pay more.

Still, Senate Republican Leader Phil Berger, R-Rockingham, said consumers would benefit if the tax component of gas prices is reduced.

"I feel very strongly that the tax component of the price of gas needs to be reduced because we do have total control over that," Berger said.

But others sounded more skeptical.

"There is no assurance if you cut the (tax) by 3 cents, the consumers get a dime of it," committee co-chair Sen. Clark Jenkins, D-Edgecombe, said later in the meeting.

Berger and other Republicans and some Democrats have urged Gov. Mike Easley to call a special legislative session so the increase in the gas tax can be repealed.

Easley has opposed the push and has said such a repeal would widen the divide between transportation dollars and road-building needs while providing little tax relief to motorists. Each penny of the gas tax generates about $53 million annually, according to the Department of Revenue.

The committee, which is to make a recommendation on whether a special session is needed, did not announce a date for another meeting. During a break, Senate Majority Leader Tony Rand was noncommittal about whether he thought one should be called.

Mark Foster, chief financial officer for the N.C. Department of Transportation, said if the increased tax is repealed, consumers could face lost time on the roads and more wear and tear on their vehicles. He also said the department would have to make adjustments so it does not run out of money by the end of the summer.

"Reducing revenue by tampering with the gas tax would set our transportation infrastructure back years and result in a greater backlog of unmet needs," Bill Carstarphen, co-chairman of the group NC GO!, which advocates for increased transportation funding, said in a written statement.

The 2.8 cents-per-gallon tax increase will cost the average consumer, who drives 11,000 miles a year at 20 miles-per-gallon, less than $15 a year, NC Go! said.

But Berger said if the Transportation Department cannot meet its needs after the tax is reduced, then lawmakers should reduce amount of money they transfer from the state's highway trust fund to the state's operating budget.

Meanwhile, Senate leader Marc Basnight, D-Dare, and House Speaker Jim Black, D-Mecklenburg, sent a letter to North Carolina's congressional delegation urging its members to take action on the issue of higher fuel prices.

Easley and other governors have asked Congress to spend an additional $1.3 billion this winter to pay for home heating costs for low-income residents and families displaced by the hurricanes in the Gulf Coast.

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On the Net

N.C. Petroleum Marketers Association: http://www.ncpma.org/

NC GO! http://www.ncgo.org/