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Transportation Reform Legislation Unveiled

April 30, 2013

Legislation to implement the transportation reform plan previously announced by Governor Pat McCrory was unveiled in the House Transportation Committee today. A Proposed Committee Substitute for House Bill 817 Transportation Appropriations Financing was considered and given unanimous approval by the Committee. You can view the new version of HB 817 here, and the summary of the bill by legislative staff here.

The new version of HB 817 appears to largely mirror what was previously announced by the Governor. Under the terms of the bill, transportation revenues would be divided between three categories of projects: State, Regional (consisting of paired transportation divisions), and Local (transportation divisions). Forty percent of revenues (about $6 billion) will go to Statewide projects, 40 percent to Regional projects, and 20 percent to Local. The Regional money will be assigned on a per capita basis, while the 14 transportation divisions will receive equal shares of the Local money.

Decisions on projects will be made through a combination of data-driven criteria and local ranking. At the State level, decisions will be 100 percent based on criteria. At the Regional level, decisions will be based on a weighting of 70 percent data and 30 percent local ranking, with decisions split 50-50 at the Local level. Criteria include such possible factors as benefit-cost, congestion, economic competitiveness, safety, and more.

In addition to redirecting project funding, the bill has some additional provisions of note for municipalities. Most importantly, Powell Bill funding will now be equal to 10.4 percent of the net revenues produced by the gas tax, as opposed to a combination of 1-3/4 cents of the gas tax and a supplement from the Highway Trust Fund (see Page 16 of the bill). While legislators stated that this change is intended to hold Powell Bill distributions harmless, this will tie Powell Bill distributions more closely to the State’s gas tax and leave them more susceptible to changes in either the rate of the tax or gasoline consumption.

The legislation also includes incentives for local funding of transportation projects (see page 6 of the bill). If a local government commits funding to a project to increase its chance of being selected, once that project is authorized, the NCDOT will make available for allocation an amount equal to one-half of the local government’s funding commitment for other eligible highway projects that serve the government(s) providing funding.

Were this legislation to pass, there would still need to be a number of decisions made with regards to its implementation. To that end, the N.C. Department of Transportation has convened a working group to help implement the legislation, including selecting the data-driven criteria that will be used to make project decisions at each of the project levels and in the various areas around the state. The League is serving on this working group and will be representing the interest of all of North Carolina’s cities as part of this process. We will be soliciting input on the project selection process as we have more details, but please share any feedback you have now with Chris Nida.

We will have more information on the impact of this legislation on transportation funding in the state as further information and data is made available to us. Please let us know if you have any additional questions we can address at this time.

Posted on April 30, 2013 by Chris Nida