Variable-rate taxes on motor fuels, registration fees for electric vehicles and road usage charges are among several options North Carolina officials should consider in raising new revenue to fund the state’s growing transportation infrastructure needs, according to the American Road & Transportation Builders Association (ARTBA) Transportation Investment Advocacy Center (TIAC).
Testifying July 12 before the NC FIRST Commission, ARTBA’s TIAC Director Carolyn Kramer provided a summary of the various approaches several other states are taking to generate new revenue for transportation improvements.
The NC FIRST Commission was created in March 2019 by Transportation Secretary Jim Trogdon. The 14-member commission is tasked with evaluating North Carolina’s current and future transportation investment needs and advising the secretary of new or better ways to ensure that critical financial resources are available in the future. ARTBA Vice First Chairman Ward Nye, president and CEO of Raleigh-based Martin Marietta Materials, is a commission member.
Kramer highlighted the ways other states are generating new transportation investment revenue:
- Increase the state gas tax. So far in 2019, four states – Alabama, Arkansas, Ohio and Illinois – have voted to increase state gas taxes bringing to 31 the number of states that have raised the gas tax since 2013.
- Evaluate alternative variable-rate state gas tax formulas under which fuel taxes fluctuate based on external factors. This automatic growth mechanism is popular as states seek to prevent the erosion of their state gas tax’s purchasing power from rising construction costs and inflation.
- Adoption of fees on electric vehicles based on every mile driven (road usage charge) or on the amount of electricity used. Twenty-seven states currently have a registration fee for electric vehicles. Twelve of those also include a hybrid vehicle fee. Six states have indexed their electric vehicle fee in unison with changes to their variable-rate state gas taxes.
- Adopt “congestion pricing” in urban areas. New York became the first state in the country to announce congestion pricing to begin in 2021, requiring motorists to pay a toll when entering zones within Manhattan.
Kramer noted that the federal-aid highway program continues to be important, noting that 46% of North Carolina’s annual highway and bridge capital improvements come via the federal Highway Trust Fund.
“As Congress prepares for the scheduled 2020 reauthorization of the federal highway and public transit programs, the uncertainty over the Highway Trust Fund will be the paramount issue facing North Carolina and every other state,” Kramer said. “While this commission addresses the state funding issues here in North Carolina, we will also need your help to aggressively advocate for a solution with members of the state’s congressional delegation.