Wow. It was a little over a year and a half ago that I wrote one of my first diaries here at BlueNC about the death of the gas tax debate. You see, I had high hopes that a very well written editorial in the Charlotte Observer [no active link available] would put an end to the ignorant rantings of Republicans clamoring for an end to the transfer of funds from the Highway Trust Fund to the General Fund. I will share a large portion of that diary.
The Charlotte Observer has an excellent piece on the editorial page from a couple of weeks ago about the gas tax and the state highway budget funds and how they are used. It gives a lesson of fairly recent legislative history that serves to shine a light on the ignorance of many critics of the gas tax and how the money is used by the legislature.
Revenues for roads/highways goes into one of two funds in the state budget. The Highway Fund is used to pay for general maintenance and repairs of state-owned roads. It also pays for some smaller construction projects and transportation programs. Revenues that support this fund come from the state motor fuel tax and vehicle registration fees. No money from this fund is transferred to the General Funds in the state budget.
The second of the two funds is the Highway Trust Fund. It is used to pay for large construction projects. Revenue from a 3 percent sales tax on motor vehicles along with 25% of the gas tax revenue is deposited into this fund. This is the fund that has transfers to the general fund.Here's where the confusion comes in. When legislators created the Highway Trust Fund, they abolished an existing 2 percent automobile sales tax and replaced it with a 3 percent highway use tax collected when autos are sold or transferred. Until then, those revenues had gone into the General Fund, which funds teacher pay, universities, prisons and other general expenditures.
To avoid a large loss from that "raid" on the General Fund, legislators directed the annual transfer of $170 million from the Highway Trust Fund to the General Fund, about the sum the 2 percent tax had generated before 1989. In 2001, the Highway Trust Fund had a big surplus and legislators ordered adjustment of the annual transfer to reflect inflation, raising it to $252 million.
Some lawmakers carelessly refer to that transfer of Highway Trust Funds as a diversion of gasoline taxes to general purposes. That's not accurate, since most of the trust fund money comes from the 3 percent tax on auto sales and transfers. All the money sent to the General Fund comes from those revenues.
The reason this diary is important is simply to point out that even here at little old BlueNC we've had information available that explained why the transfer takes place. If we have that information, why don't Smith, Orr and Graham have that information. Are they really that ignorant?
Granted, it might be an awkward way of replacing funds transferred out of General Fund revenues in the first place, but you would think that candidates for Governor would at least have a working understanding of North Carolina's budget, its structure and the purpose of different funds and accounts.
Richard Moore obviously understands that. According to Under the Dome, Moore doesn't believe we should stop the transfer until another source of revenue is found to replace the funds intended for the General Fund.
Unfortunately, it appears Bev Perdue is jumping in with the Republicans on this one. She was an original sponsor of the awkward legislation that set up the transfer in the first place, so hopefully she understands that repealing the legislation would create a huge hole in the General Fund. Yes, she's right that infrastructure (roads, bridges, etc) is important, but so are teachers, universities and prisons.
Not one of the Republican candidates for governor in this state appears to have the least little understanding of why the transfer from the Highway Trust Fund to the General Fund is necessary. They are displaying sheer stupidity matched only by the dim wits who will vote for them. Orr, Smith and Graham all want to end the transfer but not one acknowledges the need to find another source of revenue to pay for teachers, universities and prisons.
The $252 ($170) million transferred to the General Fund from the Highway Trust Fund is necessary because revenues originally intended for the General Fund were diverted (actually, it's more like they were eliminated and recreated) to help create the Highway Trust Fund in the first place. If this little old stay-at-home mom gets it, why don't the Republicans and one Democrat running for governor get it?
*Perdue disclaimer - I have not checked with her campaign to see if she has a plan or acknowledges a need to find another source of revenue to replace what would be missing from the general fund if the transfer is halted. I still hold out hopes that she isn't as stupid as the Republicans. No need to check with the Republicans. I expect them to be ignorant of the need to pay for teachers, universities and prisons.
** $252 ($170) million disclaimer - I'm a bit rushed and haven't had a chance to double check the CharO's research on this. Neither amount is easily cut out of a budget.