Will the road formula stick?

| April 30, 2014

John Hood Headshotby John Hood, John Locke Foundation and NC SPIN panelist, April 30, 2014.

Last year Gov. Pat McCrory and the General Assembly managed to accomplish something that many longtime legislative observers thought was highly improbable if not impossible: a substantial rewrite of North Carolina’s system for funding roads, bridges, and other transportation infrastructure.

The new system got nearly unanimous support on Jones Street. But don’t assume that means that political controversy about road funding is over. The next test will be if lawmakers, local officials, and community leaders across the state accept the state’s new funding priorities without indulging some predictable second thoughts.

The 2013 legislation created an annual funding formula with three levels. The first one is based on the current 14 transportation divisions, and receives 30 percent of total transportation spending. This District Needs money will be distributed according to a priority list that gives equal weights to two sets of data: 1) rankings by local and district officials and 2) rankings by state DOT officials on the project’s projected safety effects, congestion effects, and cost-benefit ratio.

The next level of funding, called Regional Impact, follows a similar process and receives the same share of money, 30 percent, but is based around seven two-division groupings. After all, the state’s longstanding 14 divisions don’t necessarily comport with modern commuting patterns and metropolitan markets. For example, Greensboro is in District 7 and Winston-Salem is in District 9. These two districts are now grouped into a region that forms of the core of the Piedmont Triad. (On the other hand, the system groups District 10, including Charlotte, into a new region with District 8, including Asheboro, Sanford, and Laurinburg. Building off the old districts does generate some perverse results.)

The key formulaic difference between District Needs and Regional Impact is that the latter gives rankings by local officials only a 30 percent weight rather than a 50 percent weight. Hard statistical projections on congestion, safety, and other factors matter more here.

At the top level of funding, called Statewide Mobility, only hard statistical projections count. The remaining 40 percent of transportation dollars will be spent on these projects, which have the greatest potential effect on the state’s congestion index, traffic safety, and economic growth.

According to DOT’s preliminary rankings, most of the top-ranked projects for Statewide Mobility are, not surprisingly, located in the state’s fastest-growing regions. For example, out of a potential Statewide Mobility score of 100, 15 projects get at least a 60. Ten of them are in the Triangle area, including interchanges, lanes, or other improvements to I-40, US 70, US 1 (Capital Boulevard), and US 15-501 between Durham and Chapel Hill. Three more projects are in the greater Charlotte region, including the continued conversion of US 74 (Independence Boulevard) into a freeway and new interchanges on I-77 and I-85. The two remaining projects are the widening of NC 68 near Greensboro and an improved interchange on US 421 near Winston-Salem.

As you go further down the list, projects from other regions crop up, such as extending Military Cutoff Road in Wilmington, upgrading US 70 in New Bern, completing the Fayetteville Outer Loop, and widening I-26 and I-40 in the mountains. Even so, several other Triangle and Charlotte-area projects still rank highly.

From a statewide perspective, funding projects by these objective criteria make a lot of sense. Improving the flow of people and goods through North Carolina’s worst traffic bottlenecks has broad benefits. Motorists in fast-growing metros also generate a large percentage of the state’s gas and car taxes.

And remember that most transportation funds will continue to flow through the Regional Impact and District Needs categories, guaranteeing that projects with relatively smaller footprints — but local significance — will still get built. On the other hand, rigorous rating means that some highly touted projects in urban areas, such as the proposed Garden Parkway toll project in Gaston County, will turn out to be lower priorities.

To argue the merits of applying a cost-benefit test to state expenditure is not necessarily to win the political argument, however. Those who favored the 2013 reforms — myself include — must continue to make an affirmative case for them.

Here’s what the last 25 years of empirical research tells us: states do not necessarily increase their rate of economic growth by spending more money on transportation, since the taxes required have their own offsetting costs. Rather, states boost their economies when they truly invest their money in high-demand, high-value-added projects.

In other words, successful states build (or widen) roads to Somewhere.


Category: NC SPIN Perspectives - Opinions from NC Leaders & Organizations

Comments (1)

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  1. TP Wohlford says:

    John is gonna destroy that straw man argument from the Left that says that “Conservatives don’t believe in roads.” Providing of course they bother to read this.

    Having said that, the folks in Morrisville will probably wonder when their traffic needs will be addressed. Most of the area roads are controlled by other political entities, making the political process of getting our needs met a bit like having intimate relationships via remote control.