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 invested too much money in highways and not enough in mass transit, but others observe continuing declines in road conditions, rising congestion, controversial project selection, and directionless system management. The state's needs are estimated at $50 billion to $70 billion over 25 years.

Transit systems receive significant capital operating subsidies, yet they attract less than 1 percent of commuters. Massive investments in light rail in Charlotte have failed to stem rising congestion. And major highway projects such as outer loop highways and the Global TransPark in Kinston have sparked debate about the proper level of spending and the ability of investments to spur development.

Reforming the scandal-ridden Department of Transportation also must be a priority. Transportation Board votes display lockstep logrolling for pet projects while real needs languish. Projects are approved without cross-state comparisons of worthiness or impact. The state's formulas for distributing money favor sparse rural areas at the expense of congestion-plagued cities. Discretionary "loop" projects get priority in small regions while those of large regions get delayed.

Trends in Transportation Spending North Carolina

North Carolina taxpayers pay for state highways through taxes on motor fuels and vehicles. Expenditures from the state's highway funds have grown significantly in nominal dollars during the past 20 years to $2.3 billion in FY 2006-07, and North Carolina currently levies the 15th highest tax rate on motor fuels in the nation. The rate increased from 24.2 cents per gallon in 2004 to 30.2 cents per gallon in 2008. But adjusted for inflation and vehicle-miles traveled, highway expenditures actually decreased during the past two decades. Per-capita state and local spending on transportation grew at a slower rate than spending on education, health care, and overall government spending.

A recent national study for the Reason Foundation by UNC-Charlotte's David Hartgen found that North Carolina's highway system, ranked eighth in the U.S. in 1987 for quality and efficiency, had fallen to 36th by 2003. Although the state has recently improved its overall ratings, only two states have a higher share of congested urban interstates — California (83 percent) and Minnesota (79 percent) — than North Carolina (70 percent). The state also ranks 41st in deficient bridges, 25th in the condition of urban interstates, 40th in rural interstate condition, and 39th in the condition of rural primary roads.

A detailed study of congestion in the state's 17 major cities, also by Hartgen, found that congestion was rising rapidly in all regions and was expected to double in the next several decades. In the largest cities (Charlotte, Raleigh, and Durham), transportation plans would not even keep up with traffic growth, and 40-60 percent of funds were targeted to transit which carries less than 1 percent of commuters.

But the Board of Transportation, the governor, and the General Assembly have ignored the dismal condition of North Carolina roads. Since 2002 they have diverted about $1 billion from the Highway Trust Fund (HTF) to the General Fund. The HTF obtains 99 percent of its funds from drivers and is supposed to be used for building roads.

Given the continuing deterioration of North Carolina's road system, there is no good reason to continue forcing drivers to drive on inadequate roads while their gasoline tax funds and other tax funds are used to subsidize other government spending. The state is risking its economic future by permitting its road system to decline.

The Transit Distraction

According to a recent Locke Foundation transportation study from Hartgen, the ten largest transit systems in the state cost $127 million and are on target to reach $200 million in operating costs by 2010. All that spending impacts only about one-quarter of one percent (0.28) of the travel in these areas, however. What is worse, the promised reductions in congestion and air pollution do not exist. If all ten public transit systems stopped service tomorrow, congestion and air pollution in these cities would increase by only one-quarter of one percent.

Building rail systems in Charlotte, the Triangle, and the Triad will not have the promised results. Charlotte's new light rail line, costing more than $500 million, carries about 11,000 riders daily, less than 1/2 the capacity of a single lane of freeway and just 1/10 the traffic on nearby Interstate 77. It has had no effect on even nearby road traffic. Yet Charlotte's long-range transportation plan proposes to spend more than half its money on transit expansions. Raleigh's proposed transit plan would spend more than $2 billion but the federal government has previously indicated that it will not meet funding criteria.

More promising actions for relieving traffic congestion and pollution include new computer technologies and the use of "congestion pricing" on limited-access highways to charge variable tolls depending on the time of day and amount of congestion. North Carolina should also pursue public/private partnerships to build new highways and high-occupancy-toll (HOT) lanes on existing highways using electronic "no toll booth" collection technology. However, these actions alone will not relieve growing congestion. The sober truth is that more road capacity will be needed.

Recommendations

1. State officials should focus their attention on improving the efficiency and quality of North Carolina's highway system. More highway capacity, new technologies, and tollways should be used to relieve congestion and promote economic development. Projects should be selected according to worthiness, not geography.

2. The state should end all subsidies for the Global TransPark. Furthermore, the state should 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 restructured 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. A state infrastructure bank should be established for assisting localities, as South Carolina has done.

4. State lawmakers should end the diversion of highway user fees to non-highway uses. All revenues from motor fuels and auto-sales taxes should be dedicated to road construction and maintenance. The "loop" program should be ended and replaced with project selection based on worthiness criteria. Together with reductions in low-priority road building, administrative savings, and the use of public and private tollways, dedicating gas and car taxes only to their appropriate uses would yield $470 million a year in additional highway spending. That would eliminate the gap between legitimate needs and expected revenues over eight years, according to an analysis conducted for the John Locke Foundation in 2000.

5. Innovative designs for major roads should be considered, to reduce impacts but provide needed capacity. The state should insist that local planners spend state dollars on major state roads, rather than delay them in favor of less important local projects.