Cars are becoming more fuel-efficient and there are more electric and hybrid options available. This is good news for drivers and the environment, but poses hard questions for state and federal legislators: How do you continue to build and improve roadways with an ever-shrinking pool of gas tax revenue?
On June 5th, State Transportation Secretary Jim Trogdon spoke to members of Moore Partners in Progress about the Build NC initiative. Introduced earlier this year as Senate Bill 758 and House Bill 1010, the proposal is for a 10-year, $3 billion bond for road construction across the state.
“We have to have a plan for where we are going in the next decade or two. Vehicles are becoming automated, connected and shared,” Trogdon said. “In 2035, North Carolina will be the 8th most populous state. The people will come. The question is will we be in the position to support that growth or will we be constrained by it?”
“Transportation is critical to support a growing economy,” he added.
The Senate Finance Committee was expected to begin discussion on the Build NC Bond Act Tuesday afternoon. The measure would not require voter approval like a general obligation bond. Instead, it would allow the state treasurer to issue $3 billion in “special indebtedness” for road and infrastructure projects with consultation by two legislative committees prior to each round of spending.
A New Way to Invest
Transportation funding comprises approximately 80 percent state revenues and 20 percent federal, with 57 percent of the state’s transportation funding coming from gas tax revenues. North Carolina has the second largest highway system in the nation and, last year, NC-DOT’s annual operating budget was $4.7 billion — or about $60 per mile in spending.
Significantly, only 22 percent of improvement project requests were funded in 2017, leaving another $44.5 billion in potential projects in line for future prioritization.
“How do we invest more and deliver more of what people in local communities know they want, need and will use?” Trogdon said.
Five years ago, state legislators passed the Strategic Transportation Investments law that allows NC-DOT to use its funding more efficiently while supporting economic growth, job creation and quality of life. This shift created a cash balance of more than $2 billion. Legislative leaders asked Trogdon when he was appointed last year to make it a priority to spend down that cash balance by accelerating the highest-scoring projects.
“Spending the cash balance increased our investment but this will only last 2.5 years. So how can we extend this over a 10-year period across the state? We needed to have a new tool to do that,” he said.
Trogdon described the Build NC initiative as a new financing tool that would allow NC-DOT to leverage its existing financing capacity. Funding would be based on future revenues from fuel tax collection, similar to the federal Grant Anticipation Revenue Vehicle (GARVEE). Unlike sales tax which is set based on a percentage, motor fuel taxes are set on a specific dollar figure due to the volatility of gas prices.
“We want to replicate GARVEE to maintain the integrity of our strategic investments,” he said, noting that multiple funding tools would be necessary in the long run to meet future needs.
Partnership is ‘Paramount’
As proposed, Build NC could only be utilized if NC-DOT continues its strong project delivery by spending down cash balances, and would only be used to fund projects already included in the Statewide Transportation Improvement Plan (STIP). It would be backed by the Highway Trust Fund, and not impact the state’s general fund.
The Highway Fund primarily supports projects that take care of the state’s existing transportation system. The STIP primarily funds new construction and expansion projects, with funding allocated on local, regional and statewide levels based on data, local and public input.
Trogdon said DOT’s goal is make sure it offers solutions that will work, and thanked Division 8 Engineer Brandon Jones and his team for their willingness to listen and find compromise when working with the local community.
“Partnership is always paramount. That is how we achieve success,” he said.
DOT Projects underway or to start this year in Moore County include:
* Adding a center-turn lane to about one mile of N.C. 5 in Aberdeen. The $750,000 project is scheduled to be completed by November.
* Construction of a roundabout at Midland Road and Central Road. Construction begins soon on the $1.3 million project.
* Five bridge replacement projects are under contracts totaling $3.7 million.
* Four resurfacing contracts are underway totaling $9.7 million and 176 miles of roads.
Other upcoming major projects:
*Synchronized “super street” design for the U.S. 15-501 and U.S. 1 in Southern Pines and Aberdeen. Construction on the $27.8 million is expected to begin in 2020.
* Improvements at the Pinehurst Traffic Circle. Construction on the $6.6 million project is expected to begin in 2026, but that timeline will likely be accelerated to 2024.
* Widening N.C. 211 from West End to Holly Grove School Road. Construction on the $44 million project is expected to begin in 2020. In addition, a widening project on N.C. 211 from Aberdeen to Raeford is expected to begin in 2022.
In addition, the DOT Aviation Division recently announced Moore County Airport would receive $1.4 million for upgrading an airfield drainage system.