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August 31, 2007

Where’s the money for roads?

Anyone who drives knows that North Carolina's roads have gotten busier, and many need not only expanding but also major repairs. Some estimates put the backlog in road construction and maintenance at between $25 billion and $65 billion. Mike Walden outlines the debate over where the money will come from.

"This is a big issue in North Carolina, and we may have actually a special meeting of the General Assembly to deal with it. There are many options," says Dr. Walden, a professor of agricultural and resource economics. "Many people have heard the fact that there is some money –- it's about $170 million -- that's transferred each year out of the highway fund into what's called the general fund for non-road uses.

"And some say, 'Well, we ought to just take that.' Well, that's actually a swap because when a particular sales tax was put in -- a sales tax on cars -- and that money was devoted only to road use, that sales tax used to go to the general fund, and so this is really a compensation," he explains. "So if we take that $170 million out of the general fund, a replacement would have to be found.

"Some people say that there are things in the highway fund that are paid for that are paid for that aren't road construction and maintenance -- things like the highway patrol, the D.M.V., and drivers' training. Well, again, if you take that money and use it for roads, you'll have to find other money to pay for those functions," he says.

"We could increase the gas tax. No one wants to hear that, but every penny we go up with the gas tax would yield about $50 million.

"And then finally the state could say, 'Let's just let counties build roads.' In North Carolina the vast majority of road building and maintenance is done at the state level. Most other states share that function between counties and the state," Walden says.

"So what North Carolina can say is, 'Alright counties, we are going to allow you to tax your residents through a property tax or maybe a special gas tax -- whatever you'd like to build roads in your area.' So we could have that movement to deal with this shortfall."

Posted by deeshore at August 31, 2007 10:04 AM

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