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Local drivers welcome gas tax freeze
Governor keeps automatic hike from taking effect July 1
Shawn Kennedy fills up his van Friday afternoon at the Kangaroo station on EE Butler Parkway. Gov. Nathan Deal has frozen Georgia’s gas tax, preventing a tax hike that would have kicked in July 1.

ATLANTA — Gov. Nathan Deal on Thursday froze Georgia's gas tax, preventing an increase that would have kicked in July 1.

The state gas tax had been set to rise 1.6 cents a gallon, as a result of a formula tied to fuel prices. Aides say it will save motorists an estimated $40 million in taxes.

"I'm thankful for any help we can get with this economy," Sharon McClain said as she pumped gas into her small SUV on Friday. She and her husband moved to Gainesville from Habersham County in order to cut their commute.

Shawn Kennedy was glad to hear the news, too.

"It buys us time to make things more affordable for ourselves," he said. "But in the end they will raise it back up again."

Texaco owner M.P. Patel said he thinks prices will stay at about $3.30 and $3.40 for the summer, but they likely will go up again later in the year.

But for now, "it's a win-win situation for customers and store owners," he said.

Deal declined to step in and freeze the state sales tax when it rose by nearly 3 cents a gallon on May 1.

Spokesman Brian Robinson said Friday the governor decided to act this time because the state sales tax would be rising even as the price of gas is falling and Georgians had already been hit with an increase in May. The tax would rise because it is based on average gas prices over six months.

The average gas price in Georgia is $3.52 a gallon, below the $3.60 a gallon national average, according to the AAA Daily Fuel Gauge Report.

Georgia's gas taxes are made up of several parts.

The first is a charge of 7.5 cents per gallon that doesn't change. The second is a more volatile per-gallon charge that can go up or down as the gas price varies.

The executive order means that rate will remain at 12.9 cents a gallon rather than rising to 14.5 cents a gallon.

Many Georgia counties impose a third additional fee that's also pegged to gas prices.

A majority of the revenue from the gas levy goes to transportation projects. Of the $40 million in lost revenue, $30 million would have gone to transportation and $10 million to the general fund, according to state Department of Transportation spokesman David Spear.

But Spear said the department budgets to account for fluctuations in the gas tax so it is unlikely it will need to adjust spending.

The move to steady the gas tax in Georgia comes as President Barack Obama said the United States will release 30 million barrels of oil from the country's emergency reserves in response to turmoil in the Middle East and North Africa, particularly Libya.

That could drive prices down in Georgia and elsewhere.

A mechanism in Georgia's gas tax formula prompts the gas tax to be recalculated if there are wide swings in price. The release of oil from the reserve could drive prices down so far the state might need to recalculate again.

Robinson said the governor's action must be ratified by state lawmakers either when they return for a special session in August or during their regular session in January.

Associated Press reports contributed to this story.