Business calls for more transportation spending, but no more taxers

by Bruce Siceloff, News and Observer, January 28, 2015.

North Carolina business leaders on Wednesday called for the legislature to increase state transportation spending by billions of dollars over the coming decade – but they refused to discuss possible new taxes.

“We’re not endorsing any specific idea,” Lew Ebert, president of the N.C. Chamber, told reporters. “We think that’s what elected officials are here to do.”

The state Department of Transportation said last year it expected by 2040 to take in only $60 billion of the expected $94 billion it will need just to maintain roads and bridges in their current condition.

That money gap is expected to grow even wider because the state’s 37.5 cent-per-gallon gas tax rate – pegged by law to fuel prices that have plunged in recent weeks – is scheduled to drop by a projected 6 to 8 cents per gallon on July 1.

“Over 10 years, this is about a $5 billion problem for North Carolina,” Ebert said of the gas tax rate.

Gov. Pat McCrory promised last year to outline new transportation revenue proposals for consideration by the 2015 General Assembly, which began its work Wednesday. McCrory said in September he would call for a bond issue worth about $1 billion to help pay for new road and bridge projects, but he has offered no hints about what else he will recommend.

Several studies have documented that North Carolina’s transportation needs are growing sharply, with an additional 3 million residents expected by 2030. State and federal per-gallon gas tax collections are declining as average automobile fuel economy improves.

“We don’t need to study this any more,” Jerry Cook, vice president for government relations of Winston-Salem-based Hanesbrands, told reporters. “We know what the answer is, and it’s time to act.”

Ebert’s organization, the state’s leading business lobby, recently commissioned another study of the state’s transportation money needs and their economic impact. He said the N.C. State University analysis will give legislators a menu of 16 options for new revenue. He gave reporters a few pages from the 79-page report but declined to discuss its contents or to mention any of its suggestions for tax increases.

“Our hope is some hybrid of those ideas is the best combination for North Carolina,” Ebert said. “Some of it involves more efficient use of dollars, and some of it involves more new dollars.”

The N.C. Chamber and other business groups have cheered the legislature’s tax cuts over the past two years. Ebert declined to promise an endorsement of whatever state leaders propose for new transportation fees and taxes.

The  full NCSU report, provided later by an N.C. Chamber spokeswoman, gives top marks to three options for raising more transportation money: Higher fees on heavy trucks, an increase in the highway use tax collected on automobile sales, and eventually a fee based on the miles traveled by each vehicle.

Kit Cramer, president of the Asheville Area Chamber of Commerce, said business leaders in western North Carolina agree that more money is needed to widen highways. Like Ebert, she said it will be up to legislators to decide where the money comes from.

“Everybody wants the improvements, but nobody can agree on how to pay for it,” Cramer said. “So the General Assembly has a tough row to hoe in that regard. But we are confident that they can find a solution.”

Berry Jenkins, one of the leaders of N.C. Go, which advocates for transportation improvements, said later that his organization has several recommendations for bolstering transportation revenues.

Jenkins said the legislature should take steps to prevent the gas tax from falling sharply in July and should halt the transfer of $255 million a year in state transportation funds to the General Fund, which covers other needs.

In addition, the 3 percent highway use tax should be raised to 4 percent, he said, to bring North Carolina more in line with neighboring states.

“Realistically, there’s nothing that can be suggested that’s going to make general citizens happy,” Jenkins said. “Because they don’t want to pay more.”