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Business and Regulation
Transportation Policy

Highways and transportation facilities are some of the most visible programs that state and local governments operate. But they are not without controversy. Some believe that North Carolina has in vested too much money in highways and not enough in mass transit. At the local level, bus systems receive significant operating subsidies, yet continue to attract only a small minority of commuters. Current projects such as outer loop highways and the proposed Global TransPark in Kinston have sparked a broader debate about the proper scope and amount of state transportation spending and the value of past infrastructure investments. Reforming the scandal-plagued N.C. Department of Transportation also must be a priority, especially in such areas as the Board of Transportation — a large, unwieldy body primarily composed of political activists whose role is largely unnecessary — and the Enforcement Branch of the Division of Motor Vehicles, currently mired in charges of corruption, influence-peddling, and political patronage.

Trends In Transportation Spending

North Carolina taxpayers pay for state highways through taxes on motor fuels and vehicles. Expenditures from the state’s Highway Fund have grown significantly in nominal dollars over the past 20 years, to $2.1 billion in FY 2001-02, and North Carolina currently levies a relatively high motor fuels tax rate. But that’s not the whole story. Adjusted for inflation and the numbers of vehicle miles travelled, highway expenditures actually decreased over the past two decades. Per-capita state and local spending on transportation grew at a much slower rate than spending on education, welfare, health care, and overall government spending.

Nevertheless, transportation remains a significant expense, and deserves the scrutiny of state and local lawmakers. The Government Performance Audit Committee (GPAC) recommended in 1993 that the N.C. Department of Transportation make greater use of private contractors for engineering and other oversight and preconstruction needs. GPAC also faulted the state for deferring highway maintenance needs in favor of new road construction. A more recent report by the State Auditor’s Office found that cost estimates for the department’s Transportation Improvement Program were wildly off-the-mark (see graph) and that pavement resurfacing alone was underfunded by about $95 million a year, putting commerce and the safety of North Carolina drivers at risk. A study by UNC-Charlotte found that North Carolina’s highway system, ranked 8th in the country in 1984 for its quality and efficiency, had fallen to 25th by 2000.

The Transit Distraction

Bus systems in North Carolina’s major metropolitan areas continue to attract only modest ridership. Given the state’s relatively low population density, this is unlikely to change, even if some activists are successful in their attempts to construct light rail in Charlotte and the Triangle. As data from across the country demonstrate, transit projects are almost invariably wasteful attempts to entice or coerce commuters out of their personal automobiles and into buses or trains. The percentage of commuters willing to use buses or trains is far below 10 percent in most communities, and is likely to stay that way regardless of expenditures on transit unless, of course, transit advocates are successful in forcing families to live in densely packed neighborhoods through rigid land-use policies. These policies should be resisted on philosophical grounds — they rob families of their chance at the American Dream of owning property — as well as on practical grounds. Highways are, to put in simply, a more useful transportation technology that allows maximum consumer choice and convenience.

More promising tools for relieving traffic congestion include new computer technologies and the use of ‘peak pricing” on limited-access highways to charge variable tolls depending on the time of day. North Carolina should also pursue public-private partnerships to build new highways using electronic toll collection.

One endeavor the state should abandon is the Global TransPark, which has yet to attract any significant interest on the part of manufacturers, as was originally intended. Projected to bring tens of thousands of new jobs to North Carolina by the late 1990s, it has resulted in no net job creation. Similarly, the state should explore the sale of the state ports as well as the North Carolina Railroad, which is now wholly owned by taxpayers. These capital assets are relatively unproductive for taxpayers, and should be made liquid for investment in higherpriority needs such as debt reduction or highway improvements.

Recommendations

1. State officials should work to improve the efficiency and quality of North Carolina’s highway system. New technologies and tollways should be used to relieve traffic congestions and promote economic development.
2. The state should end all subsidies for the Global TransPark and issue a request for proposals for the sale of the state ports at Wilmington and Morehead City and the state-owned North Carolina Railroad.
3. The Department of Transportation should be retooled to perform its job better. Reforms should include downsizing the Board of Transportation and making it an advisory panel only, merging highway divisions and eliminating bureaucracy, using competitive contracting for design and planning functions, and giving a portion of gas taxes collected directly to local governments for local needs. To reduce corruption in the Division of Motor Vehicles Enforcement Branch, it should be merged into the more professional Highway Patrol.
4. State lawmakers should end the diversion of highway user fees to non-highway uses. All revenues from motor fuels and auto use taxes should be dedicated to road construction and maintenance. Together with reductions in rural secondary road paving, DOT administration savings, and the use of public and private tollways, dedicating gas and car taxes only to their appropriate uses would yield $400 million a year in additional highway spending, which would eliminate the backlog of Transportation Improvement Projects over five years.

To view higher quality graphs, download Agenda 2002 [560KB Acrobat].