North Carolina Construction News staff writer
North Carolina Gov. Josh Stein has signed legislation suspending the state’s gas tax, following a warning from Carolinas Associated General Contractors (CAGC) that the move could put transportation funding at risk.
Stein signed House Bill 3 into law on Oct. 7, providing temporary relief from fuel costs for motorists across the state.
CAGC had urged lawmakers not to suspend the 41-cent-per-gallon motor fuels tax unless all lost transportation revenue was replaced.
The association estimated a 45-day suspension could put approximately $320 million in transportation revenue at risk, including about $234 million from the Highway Fund.
CAGC called on lawmakers to use General Fund dollars to replace every dollar lost during the suspension, warning against reductions or delays to planned construction, maintenance, repair and transportation improvement projects.
The governor’s announcement did not specify how lost transportation revenue would be replaced.
“Rising grocery, utility, and gas prices are making the costs too high for people across our state,” Stein said in a statement. “I am signing this bill to keep more money in people’s wallets, but this temporary relief is just one step.”
Stein also called on the General Assembly to address affordability beyond the temporary tax suspension.
The governor’s office said Stein had also directed the North Carolina Department of Revenue to provide penalty relief through the end of 2026 for highway use of red-dyed diesel fuel, which is generally restricted to off-road use. The measure is intended to reduce financial pressure on affected users, including farmers.
The gas tax suspension comes as North Carolina faces significant transportation funding demands. CAGC pointed to more than $1 billion in transportation needs and the continuing recovery of western North Carolina from Hurricane Helene.
The association said the state’s fiscal 2026-27 budget anticipates nearly $2.6 billion in motor fuels tax revenue for the Highway Fund and Highway Trust Fund.
CAGC supports temporary relief from high fuel prices but maintains that any suspension must include a firm commitment to fully replace lost transportation revenue.
“Short-term relief should not create a long-term transportation funding problem,” the association said.