RALEIGH — More people are traveling North Carolina highways these days, but they’re pumping less gas and diesel fuel into their trucks and cars. So our fast-growing state will have less money to spend for its transportation needs in coming years.
That may be the biggest message in the transportation budget released Wednesday by Gov. Pat McCrory.
The gasoline and diesel fuel tax is the primary money source for the state Department of Transportation, which is expected to spend $3.87 billion in state funds for the fiscal year that starts July 1.
But fuel consumption is falling steadily as Americans move to cars that get more miles out of every gallon. .
“Fuel efficiency is clearly having a significant impact in terms of total gallons consumed across the state,” said Mark L. Foster, DOT’s chief financial officer. “… The price of gas and the economy also have had an impact.”
In North Carolina, a fast-growing population and an expanding economy pushed fuel sales higher in the early years of the last decade. Taxed fuel sales peaked at 5.6 billion gallons in 2007 and have declined steadily since then, dropping below 5.3 billion gallons last year – even as the state added 700,000 residents.
The state brought in more fuel tax money for several years because the legislature allowed steep increases in the state tax on each gallon. But North Carolina’s political tolerance for higher gas taxes appears to have hit a ceiling. There is no talk in Raleigh of increasing the rate, now 37.5 cents.
So McCrory’s budget predicts that fuel tax collections will begin a steady decline, from a peak of $1.84 billion this year to $1.75 billion in 2015. The highway use tax on car sales – $529.7 million this year and rising – is expected to show continued improvement, but not enough to keep up with the road, transit and ferry needs.
“We believe we have large, unmet transportation needs that go beyond our funding capacity and the current revenue model,” said Julie White, who lobbies for urban transportation needs as director of the N.C. Metropolitan Mayors Coalition. “We’d like to see new revenue sources identified.”
Prospects were a bit brighter in other parts of McCrory’s budget.
The General Fund’s biggest money source is the personal income tax, which is on track to continue the growth it has seen since it bottomed out in 2010. Individual income tax collections are expected to increase from $10.65 billion this year to $11.8 billion in 2015.
One way to set aside more money for roads and bridges, White said, is to stop diverting gas tax money from the state Highway Fund to the state’s General Fund, where it is spent for non-transportation purposes.
Members of the Senate’s transportation appropriations subcommittee were briefed Wednesday on transfers of $258 million a year to the General Fund. The money is spent for a variety of purposes outside DOT, some of them with connections to transportation.
“Our position is that we need to be honest with taxpayers about how we’re currently spending money we get from them in transportation taxes, before we ask for more,” White said.
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