North Carolina has an excellent, data-driven prioritization system called Strategic Transportation Investments (STI). However, STI does not create new revenue, which is insufficient for our growing state.
Fuel taxes are failing as a funding source, due to the increasing disparity in fuel efficiency across the fleet of registered vehicles, which make substantial fuel tax increases unfair and politically impossible.
Current RTA position
As a business leadership group, the Regional Transportation Alliance supports the development of a balanced periodic “network access and usage fee” transportation funding framework, as outlined in this blog and draft policy report (Executive Summary). We encourage conversation among key legislators and other partners about the potential for implementing this concept.
A highway network access and user fee-based approach for transportation funding in North Carolina
RTA’s draft transportation funding concept proposes a migration from an indirect highway user-fee paradigm (based primarily on the motor fuels tax) to a more balanced periodic “network access and usage fee” funding framework.
The objective is a sustainable and funding method:
- “Sustainable” = provides resources needed to maintain and expand the system as we grow
- “Fair” = pricing reflects the costs of providing the system and the benefits of having access to it
- “Fair” = also means broadly accepted as being fair, which means that it is politically acceptable
Elements of the proposed draft concept:
Annual or one-time base service / highway network access fees
- Rename and adjust the annual driver’s license fees as “highway network driver access fees”
- Rename and adjust the one-time tax on vehicle purchases as “highway network access fee”
Periodic access and usage fees
- Retain the existing highway and diesel fuel tax system, with reduced fuel tax rates
- Replace the annual vehicle registration fee with a new monthly “highway network access and use fee”; offer annual or quarterly billing options; consider incorporating a lower rate for vehicles registered in economically distressed tier 1 counties due to lower usage and congestion impacts
- Implement a quarterly diesel fuel tax surcharge for interstate commercial vehicles
- Continue to expand the NC Turnpike system which includes per-use pricing
- All fees above already exist in NC, except the diesel fuel surcharge (which exists in neighboring Virginia)
- The primary goal is to elevate the conversation and encourage different language and thinking: this is mostly about rebalancing the fee structure to incorporate access with usage in language and pricing
- Unlike a fuel tax which declines as fuel efficiency increases, access charges grow as the licensed driver and registered vehicle population increases; fee levels could be indexed to CPI etc.
- Annual electric vehicle access fees were recently added in NC; this concept builds upon that framework
- Monthly/quarterly payment options would reinforce that transportation is a service, not simply paid once
- Lower fuel tax rates will encourage interstate travelers to purchase fuel here rather than in neighboring states, as well as other purchases, which will improve sales tax collections
- We are not recommending specific rates; the gist is that fuel taxes would drop while other fees would rise
- Bills introduced in both the House and Senate with access charges do incorporate specific changes
- Going forward, it may be possible to add overhead gantries at state borders and charge out-of-state travelers a monthly access charge to use our entire network (this differs from a per-use toll to use a road)