by Joseph Coletti
Senior Fellow, Fiscal Studies, John Locke Foundation
The Highway Fund and Highway Trust Fund pay the transportation needs of North Carolina. For most of their existence, these funds also transferred money to the General Fund and paid for operations of the State Highway Patrol. Bipartisan efforts since 2005 have ended these payments, meaning state government has $470 million per year in additional money for transportation needs than it had just 15 years ago.
It was a bumpy road to get here, but the Democratic General Assembly took its first steps in 2005 with a two-year suspension of $16 million in Highway Fund transfers. The following year, legislators ended an $80 million recurring transfer from the Highway Trust Fund and repaid the final $115 million of $250 million they had borrowed from the Trust Fund to cover General Fund appropriations in FY2002-03.
Beginning in 2008, the still-Democratic General Assembly began redirecting the Highway Trust Fund transfer from the General Fund to a Mobility Fund that provided start-up capital to the North Carolina Turnpike Authority. In 2010, legislators set a path for transfers to end in 2013. This was reaffirmed in the Strategic Transportation Investment law of 2013, passed by a Republican General Assembly.
Transfers from the Highway Fund took a little longer to eliminate, in part because of the State Highway Patrol. In 2012, the Republican General Assembly and Democratic Gov. Bev Perdue merged three departments into a single Department of Public Safety. With the change, funding for the State Highway Patrol went from being a Highway Fund appropriation to a General Fund appropriation covered by a nearly $200 million transfer from the Highway Fund. This transfer ended in 2015.
At their high points, the Highway Fund spent or transferred $218 million per year on items now paid directly from the General Fund and the Highway Trust Fund transferred $252 million. Thanks to the efforts of Republican and Democratic legislators and governors between 2005 and 2015, the last of those transfers took place in the 2014-15 fiscal year. The budget being developed for the fiscal year beginning July 1 will be the fifth year in a row without these transfers, which would push the total additional amount available for transportation maintenance and construction over $2.3 billion.