North Carolina has a growing problem, both figuratively and literally. Being ranked as the #1 state for business two years in a row is definitely a good problem to have, as well as seeing nearly 366,000 people a year move to the state, according to the U.S. Census Bureau’s American Community Survey (ACS) for 2021, some bringing those businesses and all pumping money into the economy. But, with that growth comes problems, including increasing wear and tear on the state’s roads and bridges.
The North Carolina Department of Transportation (NCDOT) has been seeking input from the public during August for the next phase of its State Transportation Improvement Program (STIP) that will cover 2026-2035.
While the plan’s structure is good, it needs some major tweaking, according to Sen. Vickie Sawyer, R-Iredell. Sawyer serves as Chairwoman of the Senate Transportation Committee and Co-Chair of the Senate Transportation Appropriations Committee.
“It’s not taking into account the needs of fast-growing areas, so we have areas like mine that can tell the story all over North Carolina where road construction was promised years and years ago, and it won’t be done for years out (referring to Highway 150 from Catawba County to Iredell County which was to be completed in 2019),” she told Carolina Journal in a recent telephone interview. “So, we continue to be number one in industry and attract all these wonderful people from other states. I’m grateful to have them, and they’re welcome here, but our infrastructure is just lagging behind, and the needs are not being met.”
Sawyer said NCDOT has had a culture of over-promising and under-delivering for a number of years. Case in point, the current 10-year plan is woefully underfunded for both new road construction and maintenance.
In preparation for the interview, she spoke with a DOT board member and found out the estimate for new road construction is underfunded by $8 billion. Others she spoke with said road maintenance is also underfunded by as much as $30 billion. The criticism, she said, has nothing to do with Democrat Gov. Roy Cooper or any governor but just the way that the agency has done things over the years. That is, not putting money behind the plan and being honest about how to get the projects finished.
NCDOT hasn’t had a good track record in recent years for spending.
In Fiscal Year 2019, the department spent $6.8 billion against a budget of $5 billion for that year. Of the $1.8 billion in overspending, DOT depleted $1.1 billion in “short-term” loans from the Highway Trust Fund (HTF) to the Highway Fund (HF) between May 2018 and April 2019. Prior to that, the HTF had not been touched for over 14 years. HTF money is designated for capital projects. The Highway Fund is for maintenance.
Overspending also caused NCDOT to suspend work on 900 projects in August 2019. They wouldn’t be restarted until the spring of 2020.
NCDOT did replenish the HTF with $1.1 billion in January — two years ahead of schedule.
It’s not just highway spending that is an issue. Sawyer said $58 million a year is spent on operating three lines of the ferry division, not including the money spent on new and replacement boats.
At one point, it appeared that the legislature was going to add more ferries to the list of ones charging tolls, but that has since been tabled.
She has suggested adding toll roads, but the notion has been politically unpopular, just like charging a tax for vehicle miles traveled.
Still, Sawyer said the state has to be better stewards of the money it has and figure out how to diversify funding moving forward to fill the present gaps.
The General Assembly did that with the sales tax transfer in the Fiscal Year 2022-23 budget. It will transfer $193 million in sales tax revenue from the state’s General Fund to its Highway Fund. That amounts to 2% of sales taxes collected. By 2025, that ratio will rise to 6%, adding about $600 million a year to the Highway Fund.
Sawyer said the legislature is considering service delivery fees for companies like Amazon. She also thinks there should be an electric tax that gets paid every time an EV is charged away from home.
“Oklahoma has done that, and a few other states are starting to do it so when you charge up away from home there’s an electric tax just like there’s a gas tax,” she said. “As we move forward, there are smart meters that can actually collect tax at home when people are charging. We already pay taxes on electricity that we use, so there would be some parity there. That would be my preference, to treat gasoline vehicles and electric vehicles the same and taxing instead of based on consumption.”
Another suggestion that Sawyer has is to shorten the ten-year plan to five years, especially in times of growing inflation. She said the DOT’s Board of Transportation was only adjusting for inflation over time at 1% but finally made a step in the last year or two to adjust it at 3%.
She also thinks municipalities should be given more localized control over local construction projects since they know best what is happening in their areas.
“I think we need to give local authorities more autonomy and being able to do these construction projects on their own and give them an infrastructure bank,” Sawyer told CJ. “Instead of doing an innovation fund, I would like to have a $1.4 billion infrastructure bank that municipalities could loan against and wait for the reimbursement from the STIP and give them the tools that they can best use. The department (DOT) doesn’t like it because they feel like it’s only going to collapse the STIP, and that gives away their control.”
She said, as an example, if a municipality had a project scheduled in year eight of the ten-year STIP, but they needed to complete it now, they could front-load the construction project with money and with their transportation department, do the project now and then wait to get reimbursed from the department in year eight.
Sawyer said she is also pleased with S.B. 512, Greater Accountability for Boards/Commissions, which transfers some appointment powers from the governor to other members of the executive branch and the General Assembly.
“The agency has that culture of over-promising, and quite frankly, we’ve simply let that executive branch function get away with it for decades,” she said. “I don’t know that there are a lot of people who are willing to ask these hard questions and put them to the carpet like they should and that’s why I’m grateful for this board bill for the Department of Transportation where the General Assembly will be able to appoint the number the majority board appointments. So maybe we will get some board members in there instead of rubber stamping whatever the department says.”
Although Cooper vetoed it on Aug. 24, it will most likely become law with an override, thanks in part to the Republican supermajority in the GA.
The public has until Thursday, Aug. 31, to comment on the ten-year plan.