North Carolina motorists might not get a break in gas and diesel fuel taxes this summer, after all.

The tax is scheduled to drop by 2 cents to 27.9 cents a gallon on July 1. The current tax, 29.9 cents, has been the highest allowed by state law since 2006, Bruce Siceloff reports.

But — to boost revenues for the state Department of Transportation — the Senate Finance Committee this week proposed to make 29.9 cents the minimum rate, instead of the maximum.

If the General Assembly agrees, the July 1 tax cut will be canceled and the rate will stay the same — and it could go higher in the future.

North Carolina's motor fuel tax rate is set by a formula that rises and falls with a percentage of recent wholesale gas prices. The rate is fixed at 17.5 cents plus either 3.5 cents or 7 percent of the wholesale average, whichever is higher.

The Senate Finance proposal would fix the rate at 17.5 cents plus either 12.4 cents or 7 percent of the wholesale average, whichever is higher. That adds up to a minimum tax of 29.9 cents per gallon.

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N.C. Transportation officials expect road construction money to continue decreasing over the next two years.

The department's revenue from gas and car sales taxes is down 11 percent, or $317 million, from what was budgeted in July, according to Mark Foster, the department's chief financial officer.

"We're not anticipating a rebound over the next couple of years," Foster told the Joint Legislative Transportation Oversight Committee Thursday.

Foster said the department expects a similar decline in the budget that runs from July 2009 to June 2010. Prices for construction material have skyrocketed, especially on petroleum-based asphalt, while gas and car sales taxes have fallen due to fewer car purchases and less driving. The gas tax also was capped at 29.9 cents two years ago instead of rising with gas prices to pay for similar rises in asphalt prices.

The current dip in gas prices and lower construction bids have helped, Foster said. Both could speed up construction — the good news — but that creates a cashflow problem of having the money to pay for construction that finishes early — the bad news.

"We're not sure where this story ends," Foster said.

Transportation Secretary Lyndo Tippett has been invited to explain to legislators Tuesday how DOT selected a management consultant that won a $3.6 million contract to help DOT make itself more efficient, businesslike and accountable.

In April, DOT picked McKinsey & Co. and agreed to its bid price, $1.1 million, for a contract to evaluate the department. McKinsey was the high bidder out of seven consultants that sought the job. The other bids ranged from $30,000 from the Shpigler Group to $495,000 from Mercer Management Consulting.

Mark Foster, DOT’s chief financial officer, said in a March 30 memo that four bidders were rejected because they lacked experience or “lacked development and use of proprietary organizational and strategic thinking tools and techniques.” The three finalists were Mercer, McKinsey and Booz Allen Hamilton, which offered to evaluate DOT for $143,000.

Foster said McKinsey was the best qualified because of the depth of its experience and the resources it would commit to DOT. Public agencies are not required to hire the lowest bidders for professional services. The State Purchasing Office agreed in April to pay McKinsey $1.1 million and in June an additional $2.5 million for McKinsey’s help in implementing changes at DOT.

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McKinsey & Co.'s bid for the state Department of Transportation came with strings attached.

The company wanted to keep secret every word of its 43-page proposal for a tax-funded project to evaluate the DOT and give advice on how to restructure it to be more businesslike.

Much of the material that was not released after a request by The N&O concerned McKinsey's techniques, which include such phrases as "deep-structure interviews (DSIs)," "Organizational Performance Profile (OPP) analysis" and "the 'portfolio of incentives,' or POI, model."

In an interview, the DOT's chief financial officer, Mark Foster, had claimed that there would be no written reports. But the documents released yesterday show that the original contract included a requirement for two written reports.

The DOT released the documents under instructions from Gov. Mike Easley and state Attorney General Roy Cooper's office. (N&O)