NORTH CAROLINA:Non-Toll State Sees Virtue in Tolls

“With technological improvements making toll collection more efficient and traditional funding insufficient to meet demand, tolls may be a tool, that in selected locations, will help North Carolina address its transportation needs. This could be especially useful in high growth areas that require more facilities than can be paid for by traditional sources.”

Among the possible candidates for tolling in NC are I-95, I-40, US-64 and beltways or loops around Charlotte, Raleigh, Winston-Salem, Greensboro, Fayetteville, and Wilmington, and connections between I-95 and the Atlantic coast beaches. A year or so ago the state legislature authorized a toll bridge over Currituck Sound to the Outer Banks barrier island at Corolla. Just north of the NC/VA state line Virginia’s city of Chesapeake is building VA-168 as a toll road bypass that will serve traffic to NC’s Outer Banks and NC will be scrambling to match VA’s improvements on its side of the border. The Currituck Sound bridge seems mired for now in environmental permitting issues.

Larry Goode, former director of finance at NCDOT, now senior fellow at the Institution for Transp Research & Ed NC State University has become a strong advocate of tolls. He would like tolls on I-95 the length of the state from the VA line in the north to SC in the south. He says the state gas and diesel tax at 22.3c/gal has been raised to the maximum the electorate will support (it is well above the national average). There is already a sales tax on cars devoted to highway funding and other taxes are likely to be unacceptable. He says another problem with reliance on taxes is their divisive effect on state politics with rural legislators liable to block badly needed urban highways. (The NC fuel tax is 17c/gal plus 7% of average wholesale price)

“Our needs (for funding) are quite incredible. I think we have no alternative but to look very hard at tolls,” Goode says.

He reels off a long list of projects that he thinks should be discussed and studied for tolling in the state. These include: (1) I-77 north of Charlotte which could use toll express lanes (2) unfunded sections of the Charlotte Loop (3) I-40 toll express lanes Raleigh through Chapel Hill (4) Raleigh Outer Loop (5) a missing link in US-64 east of Raleigh (6) Winston-Salem Loop (7) Greensboro Loop (8) Outer Banks connections (9) I-95 VA-SC.

The boldest proposal is the last – 290km (180mi) of presently 2x2-lane motorway with 39 interchanges, Goode says it needs reconstruction to 2x3 and 2x4-lanes. Tolls are the way to go, he says. Much of the traffic enters at one end of the state and exits the other end, so it may not pay fuel taxes in the state. The rebuilt and widened I-95 is about a $2b job.

When you start talking more detail, you hear objections. The project manager for the US-64 missing link (Knightsdale Bypass) told us he thinks it most unlikely tolls will fly for that project because it is already largely funded. It is too late to introduce the idea of tolls to people in that area, he says.

I-40 Chapel Hill to Raleigh is in an alternatives study which now seems to be a competition between light rail and straight HOV lanes. The Winston-Salem loop was previously funded but ran into environmental opposition. It may emerge again and then tolls may be the only financing available.

Truckers would probably fiercely fight tolls on I-95, as they did when the Arkansas Highway Commission proposed them last year on intestates in that state. None are likely to be easy.

The departmental report is however quite positive and optimistic.

“(P)ublic opposition to toll roads may be waning,” it says. It cites the referendum in Dade Co Florida where the public voted to keep tolls, and surveys elsewhere, as well as the success of new tolls roads in Virginia and southern California, and smaller projects in Alabama. It cites the emergence of “new types of toll facilities” including toll express lanes and HOT lanes, and of the attractiveness of electronic transponders as a payment method.

Variable pricing

The NCDOT report says that intraurban toll lanes can help bus transit by improving trip times and reliability. When toll rates are varied, it says, tolling becomes a tool for managing traffic flow: “Through the use of variable toll rates we can encourage drivers to make more of their trips during off-peak times when the rates will be cheaper. This has the effect of giving our roads more capacity by using existing roads more efficiently throughout the day. This... is called value pricing.”

NCDOT says it will be up to the state legislature to lay down a legal framework for toll roads in the state. It suggests different funding alternatives. The state has an elaborate ‘equity formula’ under which gas tax monies are supposed to be distributed. Toll projects will have to be seen as outside the state equity funding formula, or else there will be no incentive for communities to support them.

(1) Traditional approach: the full cost of the project would be assessed to the region, but tolls collected would be used to pay back the local equity funding contribution (it would be an alternative to use of local taxes)

(2) Equity funding becomes a fallback only drawn upon if a toll road’s revenues could not pay costs of operations and debt service.

(3) If a mix of gas tax money and tolls were used then only the gas tax money would be assessed against the state equity funding formula.

The report concludes: “The Department believes the toll financing of highways (in NC) is a legitimate option that the state should consider when addressing the transp needs of our state. The state should develop rules and legislation enabling North Carolina to allow public toll financing in specific situations. These rules should outline criteria that can be used to select and operate toll facilities. The rules to guide how these facilities are selected, constructed, operated and how they affect the funding equity formula need to be clearly defined in any enabling legislation.”

A ‘blue ribbon committee’ is urged to report on these detailed rules. That committee is already at work. Comprised of retired and active heavies including several past secretaries of transp it will suggest a framework for toll roads in North Carolina.

The NCDOT report also calls for changes in legislation to allow municipalities to initiate and partner in highway projects. (Presently highways in NC are solely a state DOT responsibility.) It says that the state alone relying on existing revenues will have “limited ability to address all of the urban (highway) priorities.” Municipalities need to be encouraged to participate in highway projects, both to bring some money to them, but also to move projects along more quickly and solve problems of local opposition.

The NCDOT tolls report says that the present funding mechanisms are quite insufficient to keep up with demand, and congestion is growing seriously in the ‘piedmont areas of manufacturing and services development such as Charlotte (pop 1.3m), Greensboro-Winston Salem (pop 1.2m) Raleigh-Durham-Chapel Hill (pop 1.0m), at mountainous Asheville (near Tennessee where I-40, I-181 and I-26 cross) and along the coast. Rural areas, especially the flatlands east of I-95, are in decline and have suffered a serious blow from last fall’s severe and prolonged flooding. Recovery from the floods will take much state money.

In 1996 state voters approved bond sales of $950m to finance some of the planned metro area loops and intrastate highways, but the tolls report says this cannot be repeated because there is no further capacity to service bond debt from the state highway trust fund. Flat revenues and existing commitments foreclose sale of more future tax-based debt. It also sees limited opportunities for federal Grant Anticipation Revenue VEhicles (GARVE) bonds.

The principal author of the tolls report was Danny Rogers (Contact Rogers 919 733 2039)

The Allen Factor

It’s difficult to call anyone in the US South in roads who doesn’t know Jim Allen, the toll bridge builder and operator. He’s out there looking for business of course for his company United Toll Systems, based in Montgomery AL, but in the process of talking to state legislators, the media and others, he is very effectively selling them on toll roads, often getting them to enact enabling legislation.

He did it first in his home state Alabama, then in Georgia, now he’s in the process of working his magic in North Carolina. An official at the NCDOT told us that Allen singlehandedly persuaded a bunch of influential legislators that tolls could help the state, and set in motion the NCDOT report and the ‘blue ribbon committee.’

“He is sincere, straightforward, he knows what he’s talking about, he’s done it, he’s got answers to all the questions. He’s just very persuasive,” an official told us of Allen.