- Associated Press - Wednesday, March 4, 2015

RALEIGH, N.C. (AP) - A majority in the House tentatively agreed Wednesday to set North Carolina’s state gasoline tax at 36 cents a gallon for the rest of 2015, rather than let it fall several additional cents this July if current law remains in place.

Republican bill sponsors said allowing only a 1.5-cent drop compared to the current rate of 37.5 cents per gallon would give stability to road-building funds in the near future. Otherwise, lower wholesale gas prices would likely drop the tax below 30 cents per gallon under the variable-rate formula currently on the books, according to legislative analysts. Several Democratic opponents called the measure a tax increase.

The 70-47 tally included more than two dozen party defections - 12 Democrats voting yes and 15 Republicans voting no. A few GOP members questioned the urgency of the problem or suggested the tax should be allowed to fall to what the current law allows.

But the state’s road-building schedule can’t afford such a sharp drop and would curtail needed repairs in the short term, said Rep. Bill Brawley, R-Mecklenburg, the bill’s chief spokesman. Brawley said keeping the rate fixed through the end of the year hopefully would put heat on lawmakers to locate new transportation revenue sources before the session adjourns this summer.

Experts say year-to-year gasoline tax revenues are flattening. A 2012 report for the state Department of Transportation estimated the range of the cumulative gap between current transportation revenues and needs from $60 billion to $94 billion.

The bill needs one more vote Thursday before it returns to the Senate, which last month voted to lower the tax to 35 cents through the end of the year but also set the amount as the floor under its reworked gas-tax formula.

The two chambers also disagree on parts of the measure that direct whether state income tax laws will conform to new federal tax rules heading to the April 15 filing deadline.

The House proposal mirrors federal law in agreeing to keep cancelled debt during certain home sales from being treated as income. The Senate wants to count the value of forgiven debt as income. The provision could affect 4,000 homeowners and cost the state $14 million in tax revenue if the debt isn’t counted as income, according to legislative staff.

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