Last Friday, January 24, the Triangle Business Journal published an article on North Carolina’s gas tax that featured JLF’s Joe Coletti. The piece, written by senior staff writer Lauren Ohnesorge, focused on how North Carolina could deal with its aging highway system, relatively high gas taxes, and the rise in electric vehicles. Ohnesorge explains:

The gas tax, which funds 54 percent of the state’s overall transportation resources, brought in $2 billion for fiscal year 2019. But state officials don’t expect the number to keep rising, raising concerns about how the cash-strapped NCDOT will pay for improvements going forward… North Carolina has the fifth-highest diesel fuel tax already [and] the seventh-highest gas tax.

Ohnesorge quotes JLF’s Joe Coletti to explain why those gas taxes might not be sustainable into the future:

Joe Coletti, a senior fellow with the John Locke Foundation, says the point of the gas tax was a “user fee.”

“Vehicles cause wear on roads because of their weight and what they drive,” he says. “You have a car, you have a truck that weighs a certain amount, you drive a certain distance, the fuel economy is largely tied to the size of the vehicle, you buy gas based on how many miles you drive.”

But, as automotive technology has advanced, the math problem has gotten more complex – and the gas tax hasn’t really changed, Coletti says.

As the usage of electric cars rises, fewer people will be purchasing gas to fund the state’s highways. This comes at a difficult time when construction costs for roads keep rising. Ohnesorge writes:

In 2016, construction costs came out 66.6 percent higher than in 2000, according to [Institute on Taxation and Economic Policy]. That means a $5 million road project in 2000 cost $8.3 million in 2016 – and with less gas tax dollars to spend, it’s a strain on resources.

While many supplements to the gas tax have been proposed, few have gained traction with the public. In the piece, Coletti explains:

Coletti says one solution is a carbon tax, based on power input. “If you count the power source that generates the electricity, you end up with electric and hybrid vehicles being no more fuel efficient than a standard car,” he says.

A more popular plan is the vehicle-miles traveled tax, charging based on miles traveled – no matter what you drive.

But controversy comes in how it would be applied. Coletti notes tracking mileage through a transponder could come at a loss of privacy. “Implementation comes at a real challenge,” he says.

Toll roads can be an even more difficult challenge, as many residents are not in favor of them, and they would likely only help pay for the large heavily-trafficked highways where the toll is present.

One solution proposed by Coletti is for localities to pay to maintain their roads, rather than the state maintaining all roads. Ohnesorge quotes:

“It doesn’t make sense to have a road if you can’t maintain it,” Coletti says.

You may read the full story here with a subscription to the Triangle Business Journal. Learn more about the state’s road funding dilemma and how to fix it here, here, and here.