At almost the same moment our state was boasting of a $900 million cash surplus, one important sector of state government was encountering serious shortfalls. Lawmakers should address the funding problems with the NC Department of Transportation before considering refunds to taxpayers or other options.
Last winter DOT Secretary Jim Trogden warned there were financial problems that would delay several projects in the Transportation Improvement Plan (TIP). He attributed the problems to underestimated project projections, specifically listing increased costs to purchase land, increased costs of materials and labor increases. That warning turned into a red flag signaling big troubles, with some 900 road projects postponed and layoffs of as many as 1,000 contract and temporary employees to meet projected shortfalls.
There are two budget-busters. The first is more than $300 million spent last year for cleanup and repairs resulting from Hurricanes Matthew and Florence, along with rockslides, snowstorms and other extreme weather events. From 2004 to 2016 the average expended from the operations and maintenance budget for such events was $65 million annually, but as our state encounters more frequent extreme weather those numbers continue escalating.
The other factor involves some $300 million spent last year in MAP Act lawsuit settlements. The MAP Act was an ill-conceived scheme to delay paying for highway land purchases. Enacted in 1987, DOT was allowed to freeze development on private properties within future highway corridors; property owners were unable to either develop their property or, practically, sell it. Understandably, they took the state to court and the NC Supreme Court agreed these were illegal takings of private property by the government. The settlement totals could be as much as $1 billion.
These two issues are symptomatic of a larger problem. Believe it or not, our $5 billion annual DOT budget isn't sufficient for a large state with many miles of paved roads. The principle source of revenue has been state and federal gas taxes, but more fuel-efficient vehicles, more vehicles powered by electricity and lower gas prices at the pump have combined to yield declining revenues at a time our state is growing by some 100,000 people per year and traffic congestion is an increasing condition.
Secretary Trogden has repeatedly told us North Carolina needs to re-think the way we fund transportation. We've enjoyed a recent spike in funding from GARVEE bonds (Grant Anticipation Revenue Vehicles), borrowing tomorrow's anticipated future federal transportation receipts to use for road construction projects today, but this isn't a lasting solution.
Some suggestions: First, stop robbing the department's routine operations and maintenance funds for severe events like hurricanes, floods, snow and ice storms and rockslides. The Rainy Day fund was established for such emergencies. Next, let's agree that those who use our roads should pay for them. Our gas taxes are among the highest in the Southeast; raising them more isn't ideal. Higher vehicle sales taxes, license fees and Vehicle Miles Traveled taxes are potential sources but will likely need to be combined with other revenues.
To meet our state's current transportation needs we need more money. Now we can pay for roads through a large multi-billion dollar road bond package, we can dramatically increase current taxes and fees or we can start imposing tolls on roads. Choose your poison, but we've needed to address this problem for decades and it's time to stop kicking the can down underfunded roads.
Publisher's note: Tom Campbell is former assistant North Carolina State Treasurer and is creator/host of NC SPIN
, a weekly statewide television discussion of NC issues that airs on UNC-TV main channel Fridays at 7:30pm, Sundays 12:30pm and UNC North Carolina Channel Fridays at 10:00pm, Saturdays at 4:00pm and Sundays at 10:00am
. Contact Tom at NC Spin.