Earlier this week, the House approved a $3.1 billion transportation budget. The transportation budget is not supported with revenue from the General Fund like other areas of the budget. Transportation investments are supported with revenue from the Highway Fund and Highway Trust Fund, which receive revenues from the state’s gas tax, highway use tax, and fees collected from the Division of Motor Vehicles. Due to a revised revenue forecast and budget writers’ anticipation of capping the state’s gas tax at 37.5 cents, the transportation budget was reduced by more than $150 million from the continuation budget.
One casualty of the budget cuts is a reduction to the Division of Public Transportation, which provides grants to local governments for transit systems. The House’s proposal would reduce public transportation funding by nearly $2.6 million over the continuation budget, which already imposed a 15 percent recurring cut to the Division when passed in 2011. This $2.6 million cut was once slated to be an $8.6 million cut but members of the Appropriations Subcommittee on Transportation reduced the cut, citing the value of public transit to North Carolinians. This value is especially true for low-income residents.
There is a big misconception, however, that public transit constitutes a large percentage of the state’s transportation budget. Public transit is woefully underfunded and only makes up about 3 percent, or $90.6 million, of the state’ current transportation budget even though the money leverages additional dollars from the federal government. Rather than cap the gas tax—which would cost the state $81.6 million over the next fiscal year according to the Fiscal Research Division—the budget writers could use this foregone revenue to nearly double the amount of state appropriations for public transportation.
While this scenario is unlikely to happen, it highlights options that are available to budget writers. Going forward in the budget process, it is critical that legislators take a hard look at the state’s true transportation needs such as the growing demand for public transit. Capping the gas tax will only delay the state’s ability to meet these needs.