RALEIGH – Among the factors inhibiting economic recovery in major areas of North Carolina is a lack of adequate, uncongested highway service. If policymakers could free up the traffic flow in these areas, they’d be more attractive places to create, relocate, or expand businesses.
But adding lanes, fixing bridges, and building new highways will cost money. There are really only three ways of obtaining the necessary funds: 1) redirect current highway revenues to higher-priority uses, 2) collect additional revenues by direct user fees (tolls), or 3) collect additional revenues by indirect user fees (higher gas and car taxes).
North Carolina’s transportation challenges are obvious and broadly understood. According to the latest comparative study of state highway systems, North Carolina ranks about average (24th) in the pavement condition of its urban institutes, worse than average (35th) in the pavement condition of its rural interstates, and horrendous in the condition of its bridges (41st), the number of narrow lanes (41st), and traffic congestion on its urban interstates (42nd).
On that last point, all you have to do is take a drive on I-77, I-40, I-85, or I-95 near North Carolina’s major metropolitan areas during rush hour to grasp the significance of the problem. Congestion chews up valuable time, decreases traffic safety, and deters many kinds of businesses – from store-front retailers to manufacturers reliant on trucking – from locating or expanding in a congested area. A 2010 JLF study estimated that relieving traffic congestion in North Carolina would have annual economic benefits of approximately $850 million.
Now, to say that North Carolina households and businesses would benefit from greater investment in highway capacity is not necessarily to say that all the new investment must be financed with new revenues. For decades, state policymakers have let other considerations – pork-barrel politics, partisan bias, personal cronyism – trump the goals of safety and efficiency when it came to divvying up transportation dollars.
That’s how we ended up with well-paved but lightly traveled roads in the rural districts of powerful politicians. That’s how we ended up with state subsidies for local transit systems and intercity passenger rail that attract relatively trivial ridership.
And that’s why future policymakers need to exhaust the first option, redirecting current revenues from state gas and car taxes, before considering either of the other two. Past JLF studies estimate that North Carolina could increase valuable highway investment by tens of millions of dollars a year, if not more, by transferring current highway revenues from low-priority projects to high-priority ones.
Still, in my estimation Option 1 is a necessary but insufficient response to North Carolina’s transportation needs. The truth is that our state gas tax, while high by regional and national standards, is somewhat offset by the fact that North Carolina, unlike most other states, has very little local (i.e. property tax) funding for basic highway and road networks. If you combine state and local highway budgets together, which is the proper statistic for comparison across states, you will find that North Carolina collects and spends less on highways (1.3 percent of GDP in 2009) than the national average (1.7 percent). On a per-mile basis, North Carolina is in the bottom five states in the nation in funding for highway construction and maintenance.
Over time, jurisdictions like North Carolina that are heavily reliant on per-gallon motor fuels taxes to fund roads have seen their tax collections per mile driven fall, not rise. Both personal and business vehicles have become more fuel-efficient, so motorists are paying less for every mile of North Carolina roadway they drive than they did 20 years ago, even at a higher per-gallon tax rate.
To some politicians, this trend justifies further increases in the tax rate. I disagree. I like Option 2 better, at least for the new lanes and interstate mileage we desperately need. That is, those who will benefit from the new capacity should pay as they use it – through electronic toll collection, preferably with private-sector involvement and strong protections against having toll revenues swiped by politicians for use elsewhere in the state.
So to those North Carolinians who are up in arms about the possibility of new toll lanes on I-95, I-77, and other corridors, I ask: Would you rather see the gas tax go up for everyone? Or do you think our current interstates are adequate to today’s needs?
I say no and no. That’s why I say yes to tolls.
Hood is president of the John Locke Foundation.