Road funding shift could boost property taxes

Published 12:00 am Wednesday, December 2, 2009

By Mark Wineka
Salisbury city officials are concerned that state government might someday quit funding its secondary roads and shift that ownership and maintenance responsibility to cities and counties.
They say such a shift would have a dramatic impact on local property taxes.
A subcommittee of the 21st Century Transportation Committee has been discussing a possible recommendation that the General Assembly reduce or eliminate funding for a specific Secondary Roads Program and reconsider the state’s role in funding local roads and streets.
If the burden fell to local governments, Salisbury would have to take care of an extra 41 lane miles. Rowan County would gain 940 lane miles.
Doug Paris, assistant to the city manager, said the impact to the city would be at least 2 cents per $100 valuation on the tax rate.
The budget effect on Rowan County would be even greater. If the county maintained secondary roads at the same level as the state does currently, it would need an extra $13.8 million, Paris estimated.
Paris made a presentation to Salisbury City Council last week that went over parts of what the subcommittee of the 24-member 21st Century Transportation Committee has been discussing.
State Rep. Lorene Coates, D-Rowan, is a member of the overall committee. City Manager David Treme said a copy of the city’s report will be sent to Coates, the Rowan County manager and the N.C. Metropolitan Coalition, which represents the mayors of North Carolina’s 25 largest cities.
“Frankly, the mayors have been concerned about it,” Salisbury Mayor Susan Kluttz said. “… The result is, this would raise our taxes.”
When the state can’t make its own budget, it looks to local governments, she said.
“What it is, is an unfunded mandate,” Councilman Mark Lewis said.
City officials emphasized that the discussion has occurred only in a subcommittee so far, but a case is being made to shift the secondary roads funding nonetheless.
The Fiscal Research Division staff has questioned the need to set aside $170 million from the Highway Fund and Highway Trust Fund for the state’s secondary roads program.
It has suggested that the funds be redirected to the state’s “strategic or highest priority roads.”
The staff comments added: “Staff also noted that the state’s financial responsibility for local roads is high in North Carolina compared to other states and suggests that the division of financial and operational responsibility between the state and local government for local roads be reconsidered.”
North Carolina owns and maintains 77 percent of the state’s road mileage, second only to Virginia’s 80 percent.
Paris said that for the United States as a whole, only 19 percent of the road mileage is owned by states.
North Carolina and Texas have the largest state-owned highway systems, each at more than 79,000 miles.
For now, North Carolina’s per capita highway funding of $428 from federal, state and local sources is high for the region but below the national average of $533, Paris said.
The state per capita funding is $263. The local per capita highway funding in North Carolina is $58, below the national average of local spending, which is $150.
Compared to other states, North Carolina’s share of highway funding is relatively high at 61 percent, while its local funding share is low at 14 percent. (Federal funding accounts for the remaining 25 percent.)
And the local property taxes used for highways in North Carolina is low รณ less than $1 per taxpayer. Texas local taxpayers, for example, pay $44 per person toward their highways.
The national average is $27 per capital in local property taxes for roads.
Paris said the transportation committee may recommend to the General Assembly that all secondary roads within municipalities and counties be given to those respective governments and that a revenue source be created to help local governments with the maintenance of these roads.
Or, he said, it could say that local property taxes be used to fund the maintenance.
Maintenance costs involve repairs and resurfacing of streets, the marking of streets, signs, traffic signals, storm water management and right-of-way mowing and landscaping.
Paris judged the budget impact to the city for the extra road miles at $700,000 a year.
Senate President Pro Tempore Marc Basnight and N.C. House Speaker Joe Hackney appointed the 21st Century Transportation Committee in 2007. Some of its objectives included the following:
– Find innovative methods to fund the transportation needs of the state.
– Set priorities for the N.C. Department of Transportation, including methods to ensure funding for corridors and projects of statewide significance.
– Look at local funding options for transportation.
– Find the appropriate division of responsibility for transportation infrastructure between the state and local governments.
– Specifically address the Interstate 85 bridge at the Yadkin River.
Treme said he has concerns that the state wants to hand over responsibility for the roads’ maintenance without providing enough money to do it right. And from past experience, he noted, what would keep the state from taking the money back when it was needed for something else?