Bipartisan agreement on NC gas tax relief, but legislative leaders spar over what else to do

North Carolina lawmakers on Wednesday are expected to vote on a plan to suspend or temporarily reduce the state’s gas tax — a move that could bring some relief to motorists who have seen fuel prices rise since the start of the conflict with Iran earlier this year. 

Top Republican legislators have called themselves back to Raleigh for a special session on gas and diesel costs. The proposal would suspend the state’s tax on gas, which is 41 centers per gallon, through November.

“Everyone has been hearing from people across the state about high gas prices and about the difficulties that they're having,” Senate leader Phil Berger told reporters Wednesday prior to the votes. “Whether they are families trying to get their kids to school to buy groceries, or small business people trying to do their deliveries or make sure their supplies are available, or larger delivery efforts that involve large trucks and that sort of thing. And so we are here today to answer that call.”

Democratic Gov. Josh Stein told reporters Tuesday that he couldn’t commit to signing the bill without knowing the exact details that’ll be in it. He said that while he supports helping consumers, he doesn’t want to take money away from the state Department of Transportation’s work repairing roads and bridges, or building new ones. Nearly half of its budget comes from the gas tax.

“We have got to repair our roads,” Stein said. “We have to build new roads. We are a growing state. We cannot allow our infrastructure to crumble. So they need to hold the Department of Transportation and our road work harmless as they come up with this relief for people at the pump.”

The NCDOT estimates that a monthlong suspension of the gas tax would cut its budget by approximately $225 million. If the bill becomes law in mid-October and lasts through the end of November, the costs could reach $300 million or more.

State Treasurer Brad Briner, a Republican, told WRAL in an interview Tuesday that the state has more than enough money in savings to cover that sort of cost. But that’s a decision for lawmakers to make, he said, on whether that’s a good reason to dip into savings. He noted that hurricanes and other emergencies can also require money from savings.

“We're not talking about an amount of money that will hit the state's credit rating,” Briner said. “We're a AAA [bond rating] state. We have $11 billion of reserves. We have a lot less than that in debt. So we can more than afford it. Whether it's the highest and best use, is for the General Assembly to answer.”

Berger said Wednesday lawmakers plan to cover all the costs of the tax suspension by using those reserves, crediting conservative policies for helping the state build those reserves.

“We're able to do this because, over the past 15 years, Republicans in the General Assembly have been good stewards of the people's money — have reduced taxes, have balanced budgets, and have created substantial reserves that gives us this capacity,” Berger told reporters Wednesday.

Political fight over timing, other action

Democratic lawmakers gathered Wednesday morning prior to the votes to express their support for offering economic aid to people — but also to slam the legislature’s GOP leadership for not acting months ago, and instead waiting until the height of election season. Early voting begins next week, and Election Day on Nov. 3 is less than a month away.

Although only one version of the bill is likely to become law, the House and Senate each introduced identical proposals Wednesday. The House version is sponsored by Speaker Destin Hall. The Senate version is sponsored by Sens. Lisa Stone Barnes, Buck Newton and Michael Lee — three Republicans facing tough reelection bids this year in seats Democrats are threatening to flip.

“Gas is up more than $1 a gallon from last year,” Senate Democratic leader Sydney Batch said Wednesday. “Diesel is over $6. And somehow it took them until the month before an election to figure that out. Well, working families have noticed for months. … What changed? It's certainly not your gas prices. Perhaps it's the reality that they're 27 days away from being sent packing by the voters of this state.”

Democratic state House leader Robert Reives, said if Republicans were serious about affordability then they’d repeal a 2025 law that lowered utility bills for business interests like factories and data centers, which the law pays for by raising rates on residential customers. The legislature could also ban grocery stores from using artificial intelligence to use “dynamic pricing” to charge different costs for the same item, Reives said.

Democrats have proposed those and various other reforms aimed at tackling rising costs, such as an increased tax credit for child care costs. But GOP leaders haven't gotten on board, and they rarely allow any bills with Democratic sponsors to go up for a vote.

Newton, a Wilson Republican who faces 2026 Democratic challenger Jess Rivera, said Wednesday the legislature might not have had enough in savings now to cover the cost of this gas tax suspension if he and other Republicans had agreed to pay for some of the ideas Democrats have proposed. And he pointed to other tax cuts Republicans have backed in recent years.

If lawmakers pass the gas tax proposal and send it to Stein, the tax suspension could go into effect as soon as this week. Echoing the stance of Democratic state lawmakers, Stein has said he’s open to supporting a gas tax suspension, while lamenting that Republican legislative leaders haven’t acted sooner  — or done more to lower costs in other ways.

“I'm gratified that people who are really struggling to pay their bills are going to get some relief. I wish it didn't take the election season to get this attention, but for whatever reason, it's happening, and that's a good thing,” Stein said Tuesday.

Lawmakers’ effort comes about a week before the start of early, in-person voting in North Carolina, and about a month before the Nov. 3 Election Day — timing that Democrats claim shows that Republicans are worried about their prospects in the upcoming election.

The rising fuel prices, tied to the war in Iran, have contributed to President Donald Trump’s plummeting approval ratings in recent weeks. Trump’s approval rating has fallen to 43% among likely voters in North Carolina, according to a poll released late last month by High Point University.

Democrats stand to flip multiple competitive seats in the state legislature this year, which could eat into the GOP’s majority and give Stein and legislative Democrats more power and negotiating leverage.

“We need to not only be focused on this in the session immediately before election, but it needs to be part of our daily work,” Stein said at Tuesday’s meeting, adding: “And there are many things we can do to help working people across the state, whether it's working families tax cut or child care assistance. There are things that we can be doing, and I am eager to work with the next General Assembly to put families of North Carolina first.” 

The average U.S. price of a gallon of conventional regular gasoline was $4.31 last week, up 44% from a year ago, according to the U.S. Energy Information Administration. Regular gas in North Carolina averages about $4.03 per gallon, according to AAA — up from $3.84 a month ago and $2.82 a year ago.

Meanwhile, diesel prices have nearly doubled since the start of the year, rising from $3.46 a gallon in early January to $6.53 a gallon in late September, a new record high, according to consulting firm Bain & Co. In North Carolina, diesel now averages about $6.01 per gallon, according to AAA. That’s up 72% from a year ago.

Trump on Monday signed an executive order to ease limits on the use of tax-free red-dyed diesel, which is typically reserved for off-road agricultural or construction equipment. Trump said the move would help farmers and drive down the cost of goods. In North Carolina, Stein last week directed the state’s Department of Revenue to suspend enforcement of penalties for highway use of red-dyed diesel through Dec. 31. He had also called on the Trump administration to do the same, and said Tuesday he was glad to see the federal government finally follow suit.

The Associated Press and WRAL state government reporter Paul Specht contributed to this article.

North Carolina’s gas tax generates about 40% of the state Department of Transportation’s in-state revenue, agency spokesperson Kim Deaner said in a statement. Based on the estimates the DOT provided, every day the gas tax is suspended would equate to $7.5 million less for the DOT and its road crews. 

“The department remains committed to connecting people and products safely and efficiently. The department will work closely with the General Assembly and provide information about potential impacts," she said in the statement.

The Associated Press and WRAL state government reporter Paul Specht contributed to this article.