We Can Fix Roads, Bridges Without Higher Taxes

A version of this article first appeared in the Charlotte Observer.

Rumors about a special transportation session for the Legislature are bubbling in Raleigh.  Attending such rumors is a pervasive myth about how roads, bridges and highways will have to be funded. For example, David Ingram writing in the Observer says: “Policymakers in Raleigh can raise the taxes that pay for infrastructure, such as the gas tax, at the risk of alienating many voters. Or they can cut money from other programs, such as health care for the poor.” It’s true that our transportation system is broken. What’s not true, however, is that roads must be fixed at the expense of welfare programs or else new taxes.

An obvious point about this false dichotomy is that it overlooks all manner of budget items that could be cut before entitlement programs. While Medicaid, for example, eats up more and more of the state budget annually (and desperately needs reform) we can address infrastructure problems independently of welfare monies. We already have the nearly the highest excise gas tax in the nation at 30.15 cents per gallon. And our 3% highway use tax on title transfers brings in an additional $580 million a year. None of this includes federal highway subsidies. Indeed, the problem of roads is one of resource misallocation, not underfunding. Even if we overlook recent raids of the Highway Trust Fund beyond the statutory diversions of $170 million each year from transportation coffers, we can go very far towards becoming the Good Roads State again—without raising taxes. Consider these fixes:

First, scrap the Equity Distribution Formula. This formula means areas of the state losing population are nevertheless getting new roads. Apologists for this formula claim that new roads in rural counties spur economic development. But after nearly eighteen years of four-laning the flatlands, it’s pretty clear this “build-it-they-will-come” theory won’t bear out in reality. Thus resources that could be going either to congestion relief in fast-growing urban centers, or road maintenance statewide are instead going to unnecessary projects.

Second, use a formula based on “vehicle-miles traveled” (cars on the road) to distribute resources. Areas that generate the most transportation revenues also have the greatest infrastructure needs. Thus if we ensure resources are drawn from and remain with those areas, we will have an allocation strategy that reduces waste and keeps resources closer to the point-of-need. In fact, UNCC transportation expert David Hartgen found that had the 50 least cost-effect transportation projects built between 1990 and 2003 been eliminated, about $2.5 billion would have been saved. Hartgen also argues that proposed projects over a 5.3 cents-per-vehicle-mile traveled threshold (twice the state average) should be abandoned by law. These funds could then be diverted to, say, bridge and road maintenance. Currently, NCDOT builds new roads faster than they can be maintained.

Third, increase the use of creative financing. These include mechanisms like: converting HOV lanes to HOT lanes (congestion pricing lanes that allow paying drivers to enter lower-traffic lanes, while the remaining lanes get free relief); embrace toll roads and other public-private partnerships that will allow new roadways to become self-financing; and consider also GARVEE bonds – a form of advanced credit based on N.C.’s share of federal transportation dollars.

Finally, the State of North Carolina controls more state-highway miles than any other state except Texas, which ranks first in both population and size in the lower 48. (N.C. ranks 10th and 28th, respectively.) N.C. should devolve much of the construction, maintenance and funding responsibilities to the counties, along with the taxing authority. Efficiency gains realized by management that’s closer to the point-of-need would not only benefit the state in dollar terms, but administrative terms, as well. Our Soviet-style system currently sucks up lots of resources and makes life difficult for municipal planners with more intimate knowledge of their local infrastructure needs than NCDOT central planners. Of course, making counties responsible also makes them more accountable.

So as debates about our transportation infrastructure get louder, we should not only be wary of the familiar reflex to throw money at the problem, but we should be willing hold leaders’ feet to the fire on why they have been so neglectful of our roads.  We should question the corruptive arrangements in the Transportation Board, which give discretionary funds to members for use on good-ole-boy projects and wasteful special-interest relationships. And we must keep transportation money safe from raiders who would use those funds to balance budgets not built to withstand economic ebb tides. The citizens of North Carolina deserve a safe and efficient 21st-century transportation system. And they shouldn’t have to pay any more taxes to get it.