Gas Tax Becoming An Unreliable Source Of Revenue

Aug 27, 2013

Gas prices in Carrboro from April 2013. The average price for a gallon of regular unleaded is now $3.47
Credit Laura Candler

The state Department of Transportation's main source of revenue will drop sharply over the next decade. 

That's according to the DOT's chief financial officer, who recently told the Board of Transportation that more fuel efficient cars are cutting into state revenue from the gas tax.  That source of funding accounts for 70 percent of the department's budget.  The DOT's CFO, Mark Foster, says growth in revenue from the gas tax depends on more drivers using more gas.

"And you reach a point somewhere around 2017-2018 where the drop in consumption due to fuel efficiency far surpasses any growth in the state, so we will see a significant decline in the gas tax base after that," Foster says.

The recently passed Strategic Mobility Formula is designed to make DOT spending more efficient by giving priority to projects that provide the most jobs and return on investment.

"First order of business is maybe reduce some of the dependency on the gas tax and replace it with something else on a revenue neutral basis - while we're working through the Strategic Mobility Formula - and then later on, obviously, we will look at a revenue reform package," says Foster.

North Carolina has one of the highest gas taxes in the country at 37.5 cents per gallon, but the state also has the nation's largest network of state-maintained highways.