Unlocking the Highway Trust Fund: Using North Carolina's Transportation Dollars Wisely

Transportation spending in North Carolina is big money ­ just shy of $3 billion per year. Approximately $1 billon of this is raised from gasoline taxes and vehicle fees, and flows into the Highway Trust Fund, where by law it is reserved for new construction. As a result, last year the state spent $2 billion on new roads, and only $520 million on maintenance of existing roads. Increasingly, advocates are asking whether Fund dollars should be available for a range of uses ­ and if so, what kind of coalition can muster the political strength to 'free the Fund' for these broader uses.

Background: The Fund was established by legislation enacted by the General Assembly in 1989. That law anticipated that monies in the Fund would be spent on $9.2 billion worth of new projects, including widening major highways and building sprawl-inducing beltways around seven cities: Asheville, Charlotte, Durham, Greensboro, Raleigh, Wilmington and Winston-Salem. The 1989 legislation envisioned that these controversial 'loop' projects would be completed by 2003. However, in 1998 the Office of the State Auditor revisited the plan, and found that the cost estimates for the Fund projects had increased 53% since their initial authorization. The Auditor's report found that all of the projects would probably not be completed before 2019, with final total costs certain to be far in excess of the original estimates.

Recent history: Recent trends in state politics suggest that the Highway Trust Fund may no longer be untouchable. For starters, as a result of the last census, power in the General Assembly is shifting to urban and suburban districts, in which voters are increasingly hostile to sprawl and endless road construction.

The state's sagging budget also plays a role. Last year, despite the delay in finishing many of the projects required by the original legislation, the Fund held a balance of over $850 million. Meanwhile, the state Department of Transportation estimated that the state faced a backlog of $7 billion in needed maintenance spending, with the backlog growing by an estimated $300 million each year. A worried General Assembly faced with an overall budget shortfall passed legislation that freed $470 million from the Fund to be used for road repairs and $120 million for public transportation projects. The General Assembly also created a study committee, comprised of legislators and private citizens, to study all aspects of the Fund and offer recommendations to the 2003 legislative session.

The Problem: A large amount of money remains locked up in the Fund, where its presence encourages poor transportation planning by funding the construction of new and expanded highways when dollars are not available for the basic maintenance of existing roads and bridges. Meanwhile, maintenance and transportation alternatives are grossly under funded. Moreover, with the state facing a projected shortfall of $900 million, they are likely to suffer further cuts.

Towards a Solution: Opening up the Fund to other uses would (1) reduce the incentive to waste huge amounts of money on new roads, because new construction projects would have to compete directly with alternative projects for Fund dollars; and potentially (2) increase spending on repair and alternative transportation modes, which are presently cash-starved.

The national Surface Transportation Policy Project (STPP) transportation charter offers one broad but compelling vision of how the dollars in the Fund might be better spent. This charter which was signed onto by over 300 diverse groups throughout the nation calls for using transportation investments to enhance public health, safety and security, promote social equity and a better quality of life; sustain economic prosperity, and protect the environment while saving energy.