• 41°

NC may need to spend more on highways

North Carolina governments can improve our state’s competitiveness by limiting spending, finding ways to deliver core services more efficiently, and using the resulting fiscal capacity to reduce the state’s marginal tax rates on work, savings, and investment.
That’s not to say there aren’t particular programs that wouldn’t benefit from a bigger budget within a context of lower overall spending. Let me give you an example.
North Carolina remains a fast-growing state with escalating demands for passenger and freight transportation. Systems funded with direct user fees, such as airports and freight railroads, are responding to the demand with new capacity. Mass-transit fetishists are trying to respond with new tax-funded rail schemes, but that’s not where the demand is. The vast majority of North Carolinians want new or less-congested routes for commuting or shopping by car. They also want their roads kept in better repair.
Automotive transportation is overwhelmingly a private system funded by users. Some 80 percent of the cost of the system is contained in cars and trucks that are purchased, fueled, insured and maintained by private households and businesses. The remaining 20 percent consists of roads and bridges that are mostly paid for with dedicated taxes on motor vehicles and fuel — which are indirect, rough approximations of user fees.
North Carolina’s gas tax is relatively high because our property taxes are relatively low. In most states, localities play a major role in highway finance. That’s not how North Carolina does it. Our counties don’t build or maintain roads, for example. If you factor in all taxes and fees destined for roads, North Carolina ranks below the national average, not above it.
Moreover, rising construction costs and greater fuel efficiency have eroded the relationship between highway demand and highway revenue collected. Over the past 15 years, the number of miles traveled on state roads has grown 35 percent. Total spending on the road network has grown, too, but not as much in real terms. Adjusted for inflation and miles traveled, North Carolina spent 14 percent less on roads in 2010 than we did in 1995.
Some solutions to this problem are better than others. Raising the gas tax would anger motorists and boost revenue at gas stations just across our borders. Raising general sales taxes would break the link between highway use and revenue altogether.
There are three solutions that fiscal conservatives ought to embrace. First, spend existing gas and car taxes more wisely by setting better statewide priorities, as Gov. Pat McCrory has recently proposed. Second, use dedicated tolls to fund new high-demand capacity along major commuting corridors, such as the new southern loop in Wake County.
Finally, end all remaining transfers of highway-related revenues to the state’s General Fund, which amount to slightly more than $200 million a year. Most of this amount consists of gas-tax funding for the Highway Patrol, which is in effect a state police force and ought to be integrated with other law-enforcement programs within the General Fund, where revenue is rising at current tax rates.
We can have better roads, and thus a healthier economy in the long run, without raising taxes.

Hood is president of the John Locke Foundation, which has just published “First In Freedom: Transforming Ideas into Consequences for North Carolina.”

Comments

Comments closed.

Local

Rowan Rescue Squad sets record straight on fundraising typo

Local

City approves DOT agreement, Salisbury Station project could begin next year

Local

County plans to use vulture effigy, enforce violations to remedy animal carcass feeding problem

Education

Two weeks after ending enhanced protocols, Catawba has no COVID-19 cases

News

Council to hear revised version of Downtown Main Street Plan

Local

Veto override of NC school reopening bill fails in Senate

News

Political Notebook: Majority of likely voters, local legislators support school reopening bill

Coronavirus

COVID-19 vaccinations in Rowan top positives since start of pandemic

Crime

Man faces drug charges after breaking and entering call

Lifestyle

Waterworks schedules 2021 Summer ARTventures

Crime

Blotter: Man faces drug charges after being found passed out in vehicle

Ask Us

Ask Us: What programs exist for litter cleanup?

Business

County begins accepting restaurant grant applications

Crime

Blotter: Salisbury man charged with nine more felony sex offenses

Nation/World

Biden team readies wider economic package after virus relief

Nation/World

Spacewalking astronauts prep station for new solar wings

Nation/World

Cuomo sorry for remarks aide ‘misinterpreted’ as harassment

Nation/World

Trump calls for GOP unity, repeats lies about election loss

Education

Rowan County administers 700 vaccines, with majority going to local educators

Crime

Shoplifting at Walmart presents challenge for Salisbury police

Local

Commissioners will hear details about changes to solar energy policies

Business

After overcoming obstacles, local barber Daniel King earns registered status

Lifestyle

39th annual K12 student exhibitions go virtual

Business

Biz Roundup: Chamber of Commerce to host ‘Salute to Agri-Business’ at March Power in Partnership