If you drive much on North Carolina’s roads, you know that many state roadways need maintenance and repair. You also know that some areas of our state simply need more roads to keep up with growth and congestion. Some lawmakers say that the answer to these transportation challenges is more money. John Locke Foundation President John Hood discussed the topic with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)
Martinez: Transportation dollars — where do they come from in the first place? How are we paying for this?
Hood: Basically, people who drive the state’s roadways or buy goods that are transported over the state roadways are the ones who are paying for those roads. The major sources of funds would be the gasoline tax or motor vehicles tax because it also includes diesel fuel, as well as the taxes that are levied on cars by the state and by local governments. Some of our streets, of course, are paid for with local property taxes. So you’ve got people buying cars, filling their cars with fuel. They’re paying most of the bill. Then some of the local surface roads are paid for out of local taxes; cities actually chip in additional dollars.
Martinez: As we drive around, we all see it — roads that aren’t in the best shape, or you’re thinking, gee, we need another lane here, that type of thing — you have people saying, “Well, these existing sources of funding are not doing the job.” Do they have a valid argument?
Hood: They do have a valid argument in the sense that, if you think about the gas tax as essentially a fee for driving on North Carolina’s roads, the more driving you do, the more gas you buy and, therefore, the more tax you pay. That was the original idea back when gasoline taxes first came out in the early 20th century. That’s the way that states and, later, the federal government, paid for roads. … If you tax the fuel, you’re basically taxing mileage. You’re taxing how much people use a road.
The problem is sort of the flipside of a solution, in the sense that cars have become more fuel-efficient over time. So the amount of gas that it took to traverse 500 miles 30 years ago is a lot different from the amount of gas it takes for the average car to do that today. But if you tax gas, you’re not taxing mileage — you’re taxing the actual fuel — then you are collecting fewer cents per mile traveled in tax than we did 20, 30 years ago.
So this is an area where it’s actually true — unlike in many other areas where government officials say, “Well, we’re just not getting the tax revenue we used to, we’ve got to raise taxes” — in the case of gas taxes, there is an issue. There’s a technical issue that, as the motor fleet has become more fuel-efficient, we’ve been collecting fewer dollars for the roads that we’re building and maintaining. All of that having been said, to say that there’s a problem with our existing financing mechanism for highways is not to say the solution is just to jack up gas taxes again or create some other tax until we figure out how best to spend the dollars we’re currently receiving.
Martinez: How do we decide now? Who gets the money, and what projects get funded?
Hood: It’s pretty complicated. It’s one of these Rube Goldberg machines. It would be hard to describe … but what I would say is that there is a formula for distributing at least some of the highway dollars that is related to the various regions of North Carolina. Now these transportation regions originated a long time ago. They don’t really comport with today’s commuting patterns. So you’ll have, like in the Triangle area or in the Charlotte area, you will have communities that are similarly situated and kind of next to each other and feeding each other commuters in different regions of the state because the regions were based originally on prisons — you know, they used prison labor to build roads, and so they built the regions around the labor force rather than around commuting patterns — but the point is, there’s an equity formula that spreads money out. It is a very political process.
Martinez: In fact we see this argument all the time — different legislators fighting for money, essentially. Are the areas that are receiving the money really the areas that need to have either additional roads or additional maintenance? Is that essentially our problem — that it’s political?
Hood: Well, it is political. It’s also perception. I have spent more than 20 years traveling around — well, more than that, but professionally, more than 20 years traveling around North Carolina speaking to groups about North Carolina politics. Every single place I’ve ever been to says that they’re below average in highway funding. Now I’ve been to all 100 counties. By definition, that is impossible unless I misunderstand the term “average.” But what happens is, people describe it differently. So in urban areas, people properly say that there’s a lot more driving in my county than I’m getting [in] highway dollars. That’s true. But you go to rural areas and they say, “Well, yeah, we’re getting more dollars than there are miles traveled, but we need the money more. We’re underserved. We don’t have the same highway capacity, which means we can’t compete for factories and manufacturing facilities and retail stores and so forth.”
So different people have different definitions of what’s fair. Also keep in mind that a lot of rural areas say, “Hey, we have a lot of traffic. We don’t have a lot of people, but a lot of people drive through our county to get to the beach or get to the mountains or get to Charlotte or get to Greensboro, and that ought to count for something, not just the number of people but the number of miles.” Now I think that we need to change North Carolina’s formula so that we have these highway dollars track miles traveled. I absolutely think that makes sense. We should disregard all the other stuff. Disregard the politics. Just look at what projects will, or in the future, will move the most amount of people and freight for the dollar invested.
That’s the way we ought to spend the state’s dollars, but that is kind of a romantic notion, I’m afraid. Basically, when you get right down to it, county commissioners and mayors are elected to represent their areas. Legislators are elected to represent their districts, and they don’t often see the state as a whole as the investor in the highway asset. They see their communities, and they just want more money for them.
Martinez: Well, one way perhaps to convince the people who are making the decisions about a better way to decide how we’re spending this money has to do with data. In fact, there is a paper that has been produced for the Locke Foundation by David Hartgen, who is a transportation expert, formerly with UNC-Charlotte. Is there data in this paper, John, that you believe could help move this process forward to a better way of funding?
Hood: Absolutely. One of the main points that Hartgen makes in his paper, based on lots of evidence going back 10 years or more, is that talking about the highway-funding formula is almost a premature point because you can put money into a county fairly and have it spent poorly. So before we talk about the equity of the highway distribution, we need to look at whether the projects that are being funded actually make economic sense. A surprising number of the projects that have been funded since the Transportation Improvement Program was created in 1989 have been roads that have very little traffic on them, that do not have the kind of safety concerns that we see in other places. We’ve been paving some rural secondary roads with some of our highway dollars that are very lightly traveled. And at the same time, we do have major corridors — I-85, some of the stretches between Greensboro and Charlotte, are in a woeful state of disrepair. I-95 has some significant problems. So before we get into this regional political struggle, we should recommit ourselves to spending our transportation dollars on assets … that will deliver the best return on that investment instead of wasting it on transit and wasting it on roads that are very lightly traveled.
Martinez: How do we go about convincing legislators — the decision makers on all of this — that they should look at the data and look at this as an investment process rather than just kind of a food fight for money?
Hood: Sit them down in a room and wag your finger at them for about an hour.
Martinez: Well, that’s always worked!
Hood: I think that’ll work. I hope so.