Charlotte’s Complaints over Transportation Stimulus Spending Highlight Need for Reform

The equity formula that guides the distribution of Highway Trust Fund dollars around the state made a shadowy appearance in a Wall Street Journal article today that highlighted some of the friction between municipalities and states in the distribution of ARRA/stimulus dollars. Transportation stimulus dollars were distributed around the state based on the equity formula and to projects ready to start within 120 days.

Charlotte Mayor Pat McCory has been busy complaining to the Governor’s office about the lack of money the city has received from the transportation stimulus. I-485, the loop around Charlotte, has missed out.

What the WSJ article does not point out is that loops tend to be self-defeating mobility strategy. As Anthony Downs observed almost 50 years ago, build an expressway and it will fill up. While I disagree with Downs on many of his proposed solutions to congestion, there is power in his diagnosis: multi-lane roads, far from being a congestion solution are a primary cause.

Notwithstanding, the WSJ article does rightly highlight that municipalities get a raw deal under our current funding system. The Mayors are lobbying for change. There is a pressing need to re-visit the equity formula and, more broadly, how we spend money on transportation in this state.

Under the Highway Trust fund ‘equity formula,’ one-quarter of money in the HTF not allocated to urban loops or secondary roads through the secondary road program is allocated equally among seven geographic regions infamously drawn based on 1930s prison and corrections regions. One quarter is allocated based on miles to complete a politically-motivated web of intrastate highways mapped out in the 1980s. The relevance or importance on having these roads prioritized in such a way is not readily apparent. One-quarter lane miles of this profligate system remain unbuilt. The final 50% is distributed according to population.

It is a source of constant bemusement to this observer of transportation policy that the single most important transportation expenditure formula in this state makes no mention of traffic volume, cost/benefits or project life-cyle costs. Say what you may about South Carolina, but on this issue they have us clearly beat. Their spending is governed by a 2007 reform that allocates construction money based on these vital factors. But not us. We obviously don’t mind throwing good money after bad.

There is a bill in both the House and Senate to study the equity formula. There is also one in House appropriations that would allocate HTF funds 50/50 based on traffic volume and population of the seven regions. It may not be the optimal formula, but it is good deal better than the current one. Ominously, the study bill in the Senate is parked in the Rules Committee, the place where bills go to die. Lets hope Senate leadership take up the challenge to at least study the formula and have some open, honest debate about it.

But wider reform is needed – our transportation problems go beyond the need for equity formula reform. North Carolina spends 70% more on new construction than maintenance. Virginia, by contrast, spends 70% more on maintenance than highway construction. Our spending on public transportation is low – just 3% of the state transportation budget.

Changes to the equity formula need to be mindful of the fact we need to re-prioritize maintenance in our roads budget, and to substantially increase our funding of non-road mobility – public buses and light and commuter rail, ports and rail freight. The House has passed a bill that gives local governments enhanced public transportation revenue options and that creates a state fund for non-road project grants to local governments and transportation authorities. Senate Finance will soon act on the bill. Advocates are cautiously optimistic that the bill will become law. But once passed, the new state Congestion relief/Intermodal Fund will need a dedicated revenue stream like the Highway Trust Fund, which relies on vehicle sales and gas taxes and title fees. This issue will co-mingle with the debate over the equity formula and the general problem that transportation revenues are having coping with the transportation demands of this growing state.

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