A 2015 report commissioned by the NC Chamber Foundation and conducted by N.C. State’s Institute for Transportation Research and Education (ITRE) found that every $1 billion of transportation investment in North Carolina supports 14,300 jobs, $10.3 billion in wages, and $10.8 billion in gross state product. Simply put, a strong transportation network means more high-quality jobs and a healthier statewide economy – and with our state attempting to rebound from the impacts of COVID-19, we simply cannot afford to neglect this critical piece of our infrastructure any longer.
However, a new Chamber Foundation/ITRE report that builds on that older research is showing that we still have a long way to go to improve our mediocre infrastructure rating and ensure we’re making the most of our network. That report, Modernizing North Carolina’s Infrastructure Through Sustainable and Diversified Revenue Streams, includes numerous recommendations to create a stronger transportation investment portfolio for our state. In this update – part one of a four-part series – we’re diving deeper into one of the four key recommendations outlined in the report.
We start with the recommendation that lays the groundwork for many of the rest: a gradual phase-out of North Carolina’s motor fuels tax. The motor fuels tax is an excise tax imposed on the sale of gasoline, diesel, and other forms of motor fuel, and in North Carolina it’s the primary funding mechanism for state-funded road construction projects. While drivers across the U.S. pay an average of 28.5 cents in state taxes on every gallon of gas, North Carolina motorists pay a whopping 36.2 cents – the eighth highest state motor fuels tax in the nation. Despite this high tax rate, however, the new report shows that our state’s motor fuels tax is not generating enough revenue to sustain adequate transportation investments.
The COVID-19 pandemic, by curtailing traffic and reducing NCDOT’s projected revenue by more than $500 million for Fiscal Year 2021, has highlighted the obvious risk we face in relying on this outdated tax during a large-scale crisis. But the prospect of a sustained movement toward remote work and the growing number of motorists opting for more fuel-efficient vehicles means this risk is not something that will simply go away when the virus does. The research is clear: Relying on a motor fuels tax as the main pillar supporting our transportation network will only put us behind other states that are already exploring more viable options. Like those states, North Carolina’s path to a more secure transportation future lies in phasing out this problematic funding mechanism while at the same time increasing the revenue generated from more sustainable sources.
This is the route to a modernized transportation investment portfolio proposed in the Chamber Foundation’s new report. In the coming weeks, we’ll explore three additional recommendations put forth in the report: the implementation of a road user charge program, the modernization of our highway use tax, and the dedication of a portion of North Carolina’s statewide sales tax to transportation funding. In the meantime, you can do your own research by checking out the full report here.
With the NC FIRST Commission currently working to provide a new framework for our state’s transportation future, the business community must make our collective voice heard loud and clear on this issue. To that end, the NC Chamber’s Destination 2030 Coalition is leading a business-driven effort to transform viable funding options into workable policy solutions. Right now, many options are on the table – and in the coming months, we’ll be holding exclusive calls with coalition members to decide on the solutions we’ll support as part of our 2021 advocacy agenda. If you don’t want to miss out on these important discussions, click here and add your company’s voice to this growing movement in support of a stronger transportation future for North Carolina