Despite opposition to insurance tax, NC transportation funding proposal gets positive reviews

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RALEIGH, North Carolina — A proposal to narrow North Carolina's long-term transportation funding shortfall by relying less on gasoline taxes and more on driver's fees and taxes on car sales won mostly favorable reviews Tuesday from lawmakers and road-funding advocates.

Although part of the measure to place a new premiums tax on all automobile insurance policies got panned by the industry and may get pulled by its sponsor, speakers at a House Transportation Committee meeting were pleased such a tough discussion was taking place.

"I want to commend the bill's sponsors for having the political fortitude or guts to introduce this bill," said Berry Jenkins representing NC GO!, a coalition of local governments and road-building trade groups. "I like the fact that you've tried to spread the pain around."

A 2012 report for the state Department of Transportation estimated $32 billion in extra funds will be needed by 2040 to maintain existing conditions, rising to as much as $94 billion to improve conditions. The original proposal, which wasn't voted upon and faces some retooling, ultimately would generate $593 million in net funds annually for the state by mid-2020, according to a legislative staff analysis.

"This is a work in progress," said Rep. Phil Shepard, R-Onslow, one of the committee's co-chairmen who filed the bill, "but I think we all realize that we need to do more for our infrastructure in the Department of Transportation."

While the measure would reduce the state's gasoline tax starting this summer from the current 36 cents to 30 cents, it also raises existing Division of Motor Vehicle fees like for licenses and registrations by 50 percent and the tax on car sales from 3 percent of the price to 4 percent. The gasoline tax would adjust annually starting in 2017 based on a newly approved formula that takes inflation and population into account.

There also would be financial triggers to raise the gas tax or the car sales tax if federal funds for state highway projects decline markedly.

Insurance Commissioner Wayne Goodwin and insurance industry lobbyists spoke in the committee against a proposed new 6.5 percent tax on the value of automobile insurance premiums. Goodwin, a Democrat, said the proposal would raise more than $400 million by the 2016-17 fiscal year, and companies would pass the cost along to consumers.

"It would be definitely an increase in car insurance costs for North Carolina drivers," Goodwin said.

Rep. John Torbett, R-Gaston and another bill sponsor, said the provision would be removed from any later version of the bill that is debated. After the meeting Torbett wouldn't rule out inserting a similar tax proposal later. But "I don't see it" resurfacing, he added.

The bill would also spend $300 million the next fiscal year and $530 million annually for the following three years to repave both state and city-maintained roads, repair bridges and improve state ports with dredging projects. Dredging got attention of lawmakers this year after an inlet channel at the Morehead City port became too shallow for full ships to enter, prompting emergency federal funds to deepen it.

The earmarked money would be used for more general transportation projects after those four years.

"We've got a lot of roads that need to be fixed," said Rep. Michael Speciale, R-Craven, adding the bill "is a great start."

The proposal would also phase out the state's annual $196 million transfer from the Highway Fund to pay for the state Highway Patrol and envisions a program whereby DOT would repair potholes reported by motorists within two business days.

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