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Celebrating a Win > Sustainable, Diversified Revenue for Transportation

| Infrastructure

Transportation funding policy included in the North Carolina state budget, released yesterday, is cause for celebration.

The state is committing to allocate a percentage of the total sales tax collected for transfer from the state’s General Fund to the Highway Fund and the Highway Trust Fund. The transfer would be marked at 2 percent in the 2023 fiscal year (est. $193.1 million), 4 percent in 2024 (est. $401.2 million), and 6 percent in 2025 and thereafter (est. $628.3 million in 2025, $655.9 million in 2026, and $684.8 million in 2027). The revenue is split at 25 percent to the Highway Fund and 75 percent to the Highway Trust Fund.

Passage of the budget is subject to votes in both chambers, as well as the signature of Governor Roy Cooper.

The NC Chamber praised the action in this news release, which includes quotes from business leaders engaged in the effort.

Surging costs from historic storms, revenue shortfalls, widespread project delays, and the COVID-19 pandemic have all contributed to our transportation challenges here in North Carolina. Even more alarming, however, are the objective studies showing that North Carolina depends far too heavily on increasingly inviable funding sources, like the motor fuels tax, to generate transportation revenue.

As growing numbers of motorists adopt electric vehicles (EVs) and vehicle manufacturers commit to ever-higher EV production targets, traditional funding options like the motor fuels tax are becoming less and less viable. And unfortunately, North Carolina is highly dependent on the motor fuels tax to fund transportation projects, with 54.7% of total state transportation revenues provided by this tax, according to the NC FIRST Commission.

With states across the nation grappling with this same challenge, North Carolina has the chance to become a leader in creating new models for capturing transportation revenue that can remain viable in the coming decades. This sales-tax transfer is a major step forward in that effort.

In addition to our appreciation of the legislators who made this happen, we appreciate the collaboration of our more than 160 Destination 2030 Coalition members.

The NC Chamber and the business community have a history of leading on infrastructure issues. In 2015, we launched our NC Can’t Afford to Wait initiative, which helped secure more than $1 billion in transportation revenue for our state, including millions in recurring revenue – the first true long-term transportation funding reforms passed in North Carolina since 1989. We continued that success in 2019 and 2020 with our NC Can’t Afford to Stop Coalition – the successor to that first initiative – which helped pass legislation that infused almost $300 million into DOT by way of the Highway Trust Fund and Build NC bonds.

We will continue to advocate for the diversification of revenue to secure North Carolina’s infrastructure. There are many opportunities worthy of future exploration, including removing the cap on public-private partnerships, a tool with proven success in our state.