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YOU DECIDE: Should counties build roads?

December 28, 2007

MEDIA CONTACT: Dr. Mike Walden, 919.515.4671 or michael_walden@ncsu.edu

Dr. Mike Walden
Media representatives: For a black-and-white or color copy of this photo, call 919.513.3127 or e-mail dave_caldwell@ncsu.edu.

There could be a new builder of roads in your community: your county.

That's right, the state General Assembly approved legislation in the past session allowing counties to construct highways. This new authority resulted in nods of approval from some, but questions of doubt from others.

First, here's a little helpful perspective.

North Carolina counties could build roads up until the 1930s, when the economic depression of the time so threatened county finances that the state took over their road-building function. And to this day, the state is the dominant player in highways, accounting for almost 90 percent of construction and maintenance.

Actually, the way North Carolina finances roads is different than most states. In the typical state, road building is shared between the state and local governments, with the average split being 60 percent state and 40 percent local governments.

The dominance of the state government in paying for roads also explains why North Carolina has a high gas tax (14th highest in 2007). State roads financing is through the gas tax, whereas local highway spending is funded from tax sources like the local property tax. Since North Carolina does most of its road spending at the state level - and does this more so than the average state - it makes sense to me that our state's gas tax is high.

What would be the advantages of returning to a pre-1930s situation, with counties directly involved in providing roads?

One is that it would make us like most other states. There may be some advantage to this in business recruiting if time and effort isn't needed to explain North Carolina's unique public finance features.

Another is it will take some pressure off the state gas tax.

Presently the gas tax rate is capped, but of course this could change. Most drivers are averse to higher gas taxes (although, I should point out, the state gas tax rate per gallon is today half of what it was in 1970 after taking out general inflation). So moving some highway spending to the counties, which don't have a gas tax, could mean good news for drivers' wallets.

But the biggest advantage seen by some in having counties get back into the road business is that it could allow highway building to be more responsive to local needs. Some counties - mainly urban ones - think they are shortchanged by the state's control of new roads. While this is a controversial subject with positions on both sides, permitting counties to build roads would put some highway decisions closer to the end users.

However, everyone is certainly not on board with counties starting up the bulldozers. Some critics see the move as the state simply passing off unpopular decisions about how to pay for roads to counties.

There's also a worry that more local control and financing will mean a wider difference between road "haves" and road "have-nots." Wealthier counties will be able to build more and better roads than less wealthy counties. And since roads are one of the key factors in economic development, there's a concern roads will be used less as an economic equalizer between regions.

Yet the biggest issue in county road building is money and where it will come from.

Most, if not all, counties have little slack in their budgets. Low-wealth counties don't have the economic base to draw on and high-wealth counties - often the fastest growing - struggle to keep up with school construction and other public service demands.

Realistically, most counties will have to use property taxes to fund roads (as is done in other states), so we will have to address questions about fairness and ability to pay. One strategy is for counties to link property tax increases to specific road projects desired by residents.

Counties can now build roads in North Carolina, so that debate is over.

However, you can help decide if your county should take the next step and pay to move the dirt and put down the pavement!

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Dr. Mike Walden is a William Neal Reynolds Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of N.C. State University's College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The Department of Communication Services provides his You Decide column every two weeks. Earlier You Decide columns are at http://www.cals.ncsu.edu/agcomm/writing/walden/decide.htm

Related audio files are at http://www.ces.ncsu.edu/depts/agcomm/writing/walden/index.html

Posted by Dave at December 28, 2007 08:00 AM