April 5, 2010

RALEIGH — A better project selection process is more important than new funding sources in addressing North Carolina’s transportation needs. The John Locke Foundation’s top budget expert will deliver that message today in testimony to state legislators.

Click here to view and here to listen to Joseph Coletti discussing this press release.

“The question of how to address North Carolina’s long-term transportation challenges is not fundamentally a question of where or how to find new money,” said Joseph Coletti, JLF Director of Health and Fiscal Policy Studies. “It’s a question of how to select road projects that best meet the needs of the state.”

It’s an important question, since a recent study of North Carolina’s road system estimated that residents waste $5.7 billion a year in lost time, lost fuel, and vehicle repairs because of poor roads, Coletti said. “Congestion relief alone in the state’s six largest regions would have a positive economic impact of about $850 million,” he said. “Other improvements also would help lower that huge figure of road-related economic losses.”

The “most critical” action lawmakers could take to improve the state’s current transportation funding system involves changing funding formulas, Coletti said. Current formulas rely too heavily on distribution of dollars to seven predetermined geographic regions.

“Present funding distributions based on geography waste both money and public trust,” Coletti said. “Formulas that evaluate individual projects, rather than steering dollars automatically based on geography, would ensure that the state’s highway dollars are used as wisely as possible.”

Coletti testifies during the 1 p.m. meeting of the General Assembly’s Joint Legislative Transportation Oversight Committee. He’s basing his comments on research compiled in a new JLF Spotlight report. That report builds upon various state and national research projects conducted by Dr. David Hartgen, emeritus professor of transportation studies at the University of North Carolina at Charlotte.

Recommendations in the latest report focus on six key areas. One involves a better project selection process. The new process would turn North Carolina away from funneling dollars toward seven existing “distribution regions.”

“Remove geography from funding allocations,” Coletti said. “Replace geography with formulas that evaluate projects. For interstate and primary roads, lawmakers should direct the Department of Transportation to compare projects head-to-head across the state, using objective data relating to cost-effectiveness. Those data would include total savings from reduced congestion, savings in reliability, savings in operating and accident costs, and pavement condition.”

A second major recommendation urges transportation planners to “live with less,” Coletti said. “The highway program must be refocused on stewardship rather than ribbon cutting,” he said. “Improving, and then maintaining, road conditions must be the first priority, not the last.”

That means avoiding new construction projects with very low levels of cost-effectiveness, Coletti said. “The state could impose a cost-effectiveness criterion on new projects, such as rejecting any project that costs more than three times the average rate per vehicle-mile,” he said. “Steering money away from those projects would boost the amount of money available for maintenance.”

Coletti’s third recommendation urges lawmakers to be “very cautious” in seeking new revenue sources. “It is tempting to suggest that additional funds for highway maintenance should come from additional user taxes,” he said. “We do not believe this is a wise policy. North Carolina already has one of the highest fuel taxes in the region. Further increases would hurt consumers and businesses.”

Road funding already has increased almost 20 percent since 2002, Coletti said. “The problem is that we’ve decreased attention to maintenance, relative to other needs,” he said. “This hurts us in the long term. We have a long way to go in addressing areas such as deficient bridges and poor road-surface conditions.”

Another recommendation calls for close management of the state’s Transportation Improvement Program. “That means ensuring that the program is not overly optimistic, with too many projects and understated future costs,” he said. “It also means conducting a thorough review of all money diverted away from the highway program. The time has come when we must set priorities between highway needs and other uses of highway funds.”

The fifth recommendation would prevent DOT from using existing funding formulas too restrictively to block worthwhile projects, while the sixth calls for a restructured Board of Transportation. “The board should be a policy-setting group with significantly fewer members,” Coletti said. “Board members should be knowledgeable in transportation issues. They should be charged with setting the state’s vision for transportation, not with approving individual projects.”

North Carolina must have a better road system, Coletti said. “Our transportation system is the backbone of our economy, yet we have frittered away the quality of this critical asset by not attending to its maintenance and upkeep.”

“More money is not the only issue, or even the most important issue,” Coletti added. “Spending what we have more wisely is the key, by acting to delay or delete funding for the most cost-ineffective projects and moving that money into maintenance needs.”

Dr. David Hartgen’s Spotlight report on transportation funding reform, “Distributing Transportation Funds: N.C. needs a better project selection system to make better use of scarce resources,” is available at the JLF Web site. For more information, please contact Coletti at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].