Graham, Smith, Orr & Perdue: All Wrong

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.

Comments

Gotta run for a few

but I'll be back to happily take the heat from the Perdue supporters.



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Vote Democratic! The ass you save may be your own.

Heat

They're all wrong on this issue, including Richard Moore, who is trying to have it both ways. He hasn't given the slightest detail for how to pay for any of the so-called plans he's proposed - and his rhetoric about the the need for another revenue source is BS. There's only one possible revenue source (taxes), so why doesn't he just say so?

The larger point is that they're ALL pandering to North Carolina's obsession with building new roads, which I consider to be both sick and stupid. At least Fred Smith is honest about his motives. He and his friends get richer and richer every time the State puts down more asphalt.

The less money we spend on new highway construction, the better.

PS This is one area where I agree with the free-market fundamentalists. New roads should be toll roads, built and maintained by private companies. Tax dollars should go into maintenance and transit.


"If boiling people alive best served the interests of the American people, then it would neither be moral or immoral." Max Borders

We will just have to disagree

Moore clearly said the transfer should not be ended unless another source of revenue takes its place. That's simply making a true statement. Perdue doesn't even pay lip service to the fact that another source of revenue to fill the General Fund would be necessary.

Robin Hayes lied. Nobody died, but thousands of folks lost their jobs.



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Vote Democratic! The ass you save may be your own.

Toll Roads Suck - they breed corruption & inefficiency

Privatization of highways leads to a costly, fragmented transportation with little accountability. You can have the Jersey turnpike. I don't want to live like I'm in New Jersey.

I think Betsy got this one right.

I agree that they suck

and I also believe that the free market won't actually build them unless the government somehow backs and underwrites the deal. Which means they won't happen . . . which is what I'm hoping for in the first place.

Sure, there's a legitimate need for some highway construction, but the truth is, every dollar we spend on new roads does four specific things: (1) increases sprawl, (2) threatens watersheds, (3) encourages more automobile use, and (4) dumps more and more greenhouses and acid-rain pollutants into the atmosphere.


"If boiling people alive best served the interests of the American people, then it would neither be moral or immoral." Max Borders

"Free Enterprise" doesn't

"Free Enterprise" doesn't do anything that would actually cost them money. Highways cost money. A lot of money. Which is why:

1. Fred Smith wants more of them.
2. Toll Roads run by the Government make sense.


Be the change you wish to see in the world. --Gandhi

New roads

should indeed be toll roads - but why have private companies build and run them? For goodness sake; it's viable revenue. It only makes sense for the state to undertake that. If the highways support themselves, then the magic accounting won't have to happen.

Let the people who use the roads pay for the roads - and let the state - which will ultimately be responsible for the adequate maintenance of and law enforcement thereon - get the revenue from them. It really seems like a no-brainer to me.


Be the change you wish to see in the world. --Gandhi

Personally, I would just be happy if they would

complete the loop around Greensboro without me having to referee an altercation. ;-)

I would really like to see some planning regarding the need for all these new highways, roads, etc. What is the projection towards the obvious increase in population that North Carolina will continue to gain in the next 10, 15, 20 years? Where will these new citizens settle? Why? What is the cost of making the move to purchase the land and start the construction NOW in area's that are within the 90 percentile area of growth? Purchasing the land and completing the projects prior to ten years from now will save a great amount of money and will allow for (hold your breath here) the preemptive planning process to complete an expected need prior to sometime ten years after we knew we would need it.

I know, I know, if wishes were........

North Carolina. Turning the South Blue!

North Carolina. Turning the South Blue!

The funding problem is a result

of the way transportation dollars are divvied up across the state. The "equity" formula causes a disproportionate share of money to be allocated to projects in rural areas, regardless of whether they have a traffic problem.

The formula distributes money not simply based on population, jobs, and who has crowded roads, but also by who has the largest portion of the state road system that needs improvements. So we end up with fancy multi-million dollar bypasses in places like Pittsboro and Oxford while urban areas get incremental portions of expensive sprawl-inducing "loop" roads that may never become complete loops. Naturally, rural lawmakers of both parties see no problem with this, since they see new roads as the engine for economic development.

So NCDOT is planning to spend $350 million to replace the Bonner Bridge - and as much as $1 billion more on bridges on the low-lying and shifting sands of the Outer banks - to serve a few thousand year-round residents south of the Bonner Bridge, plus the tourists.

Bonner Bridge Replacement

We have our very own Bridge to Nowhere right here in NC. Only ours will cost more than the one in Alaska.

Toll roads affect the poor way too much to be a good thing.

If a person has to pay $4.00 a day to get back and forth to a job that pays $8.00/hr. Then they are working 2.5 hours a week just to get to work. As a percent of income that is unacceptable. Of course the beemer and 'benz crowd won't have to worry about it too much.
Of sure he/she could take the crappy public roads that has fallen into disrepair because the state has "turned over" the road thing to private enterprise, but then their car gets trashed and they go through tires and wheel alignments at a greater rate and so it still costs them more money.
IMO Roads should be built and maintained by the state, and any inefficiencies therein in administration, function or funding need to be worked out in the GA with input from all concerned.

Person County Democrats

I actively oppose gerrymandering. Do you?

Ok. point taken.

But in Linda's perfect world - the minimum wage is an actual living wage - which would be way more than $8 per hour. :)


Be the change you wish to see in the world. --Gandhi

Agreed. What's the deal with the new min. wage,

doesn't it still keep a person below poverty line? Hmmmm 40 hrs. x $8.00 = 320/week x 52 = 16640 a year. I did that in my head so it might be off, buti would seem a pretty crappy way to live.
You are so right. Min. wage still sucks, and the neocons were opposed to the raise that just happened.

Person County Democrats

I actively oppose gerrymandering. Do you?