RALEIGH – North Carolina lawmakers voted Wednesday to suspend the state’s 41-cent-per-gallon gas tax through November 30, interrupting a planned legislative break to pass the measure less than a month before Election Day.
The tax pause takes effect Thursday and runs 55 days. The vote was nearly unanimous, but the two parties sharply disagreed about why the legislature acted now.
House Bill 3, titled “Relief at the Pump,” suspends the state motor fuel tax on gasoline, diesel and alternative fuels. The state has never suspended the tax before, according to legislative staff. Because the tax normally funds the Highway Fund, the Highway Trust Fund and several environmental accounts, the bill backfills them with an estimated $362 million from the state’s Stabilization and Inflation Reserve.
Gas in North Carolina averaged $4.12 a gallon Wednesday, up from $2.86 a year ago and just under this year’s May peak of about $4.23. House Speaker Destin Hall predicted drivers could see prices fall by roughly 30 to 35 cents a gallon, depending on global markets. The bill requires that the savings be passed to consumers, but it has no enforcement mechanism. Retailers also don’t have to cut prices on fuel they bought before the suspension, so some drivers may wait a week or two to see a difference. Senate leader Phil Berger said he expects competition among stations to push prices down.
The bill also waives penalties through December 31 for farmers and other agricultural users who run red-dyed diesel in highway vehicles, and exempts certain users, including farmers, loggers and commercial fishermen, from the fuel tax on that diesel. Gov. Josh Stein announced a similar penalty pause on Sept. 30. The bill also tells the Department of Revenue to ignore the suspension when it sets the 2027 tax rate. Stein is expected to sign it.
Democrats called the timing political. Republican leaders announced the special session just last weekend, and Democrats said they learned of it when the public did. House Democratic Leader Robert Reives said Republicans “must be worried” about their prospects in November. Senate Democratic Leader Sydney Batch noted that gas prices and diesel costs have been climbing for months, and said Republicans could have acted in the budget they passed in July. Democrats said their amendments on grocery pricing and utility costs weren’t allowed.
Berger rejected a gas tax cut in May, calling it a “feel-good kind of thing.” On Wednesday he said pressure on families is greater now and that harvest season for farmers helped tip the balance. Hall said gas prices had dipped by the time the session ended in July, and lawmakers hoped that would continue. Both said they would consider extending the pause past November 30 depending on the economy and road funding.
