Budget Preview: North Carolina’s transportation budget faces long-term $60 billion shortfall
North Carolina’s transportation system helps form vital social and economic structures by connecting people to services, jobs, and other opportunities across the state and beyond. Although North Carolina has been known as the Good Roads State, its transportation system is under considerable pressure due to aging infrastructure, increasing demand, and declining revenue sources that are failing to keep pace with rising costs to maintain and improve the system.
Just last August, the North Carolina Department of Transportation confirmed that there is a large and growing gap between transportation needs and funding. They released a report estimating that the state is facing a $60 billion shortfall for transportation improvements through 2040, and that the state needs to come up with $32 billion just to keep the status quo. Ultimately, legislators control the purse strings as well as revenue options so solving this budget shortfall is largely up to them.
State legislators are still in the beginning stages of the months-long budget process when department and agency heads, as well as the non-partisan legislative staff, provide overviews of policies and programs to members of the appropriations subcommittees. But soon, legislators will carve out a new transportation budget. As they put together the biennial budget, here are a few things to look for:
- How will they treat the gas tax? In the FY2012-13 budget, legislators chose to cap the gas tax—which accounts for more than half of state revenues dedicated for transportation projects—at 37.5 cents through the end of June even though the state was already facing a revenue gap. It is important for lawmakers to allow the cap to expire and maintain a gas tax that generates sufficient revenue to address growing demand and the current backlog of stressed infrastructure.
- How will public transit projects fare? The FY2012-13 budget eliminated the Regional New Starts & Capital Program within the Public Transportation Division and required that funding for fixed-guideway projects compete with highway and road projects for funding. Projects will receive funding based on how well they score according to the data driven formula guiding the Mobility Fund. A lot of legislators, however, aren’t too happy with the current funding formulas. Changes to the distribution formulas may be in the works.
- Will they continue to divert transportation funds for non-transportation purposes? The FY2012-13 budget took nearly $240 million from the Highway Fund and Highway Trust Funds to improve General Fund availability. There has already been a bill introduced to end this practice.
Lawmakers, especially the Governor, have talked a lot of the intersection of transportation and economic revival. Indeed, transportation policy has the ability to connect people to businesses and other opportunities—especially those who are transit-dependent and living in rural areas where there has been little job growth since the economic downturn.