Finance & Budget
Finance & Budget
The N.C. Department of Transportation has an annual operating budget of nearly $5 billion. These monies come from four primary sources: the Highway Fund, the Highway Trust Fund, federal funds and NC Turnpike Authority financing.
The Highway Fund dates back to 1921, when the North Carolina General Assembly first imposed the gasoline tax of .01 cents per gallon on all motor vehicles fuels sold or distributed in the state. Revenue for the Highway Fund comes from a variety of sources, including the state gas tax, motor vehicle registration fees, title fees and federal-aid reimbursements. Traditionally, the Highway Fund has supported highway construction and maintenance, the State Highway Patrol and the Division of Motor Vehicles. In the 1990s, the fund also began supporting public transportation and rail programs.
The Highway Trust Fund law was enacted in 1989 and identifies specific highways that will be four-lane or improved in order to complete a 3,600-mile intrastate system. In addition, the law provides funding for urban loops around nine of our largest cities, including Asheville, Charlotte, Durham, Fayetteville, Greensboro, Greenville, Raleigh, Wilmington, and Winston-Salem. This fund also provides money to complete the paving of most of the state's secondary roads as part of the Secondary Road Improvement Program and provides extra money for the state's cities and towns to adequately maintain their streets through the Powell Bill Fund.
Additional funds come from the Federal Government for federal-aid highway, transit, ferry, rail and airport projects. It should be noted that NCDOT must first expend its own state monies and is later reimbursed by the US Treasury. All federal funding is subject to annual Congressional Budget Appropriations, which in recent years have not been enacted by the start of the Federal Fiscal Year (FFY) which is October 1st. In the case of highway and transit funding, these funding levels are authorized by Congress in multi-year reauthorization bills. The current law is called Moving Ahead for Progress in the 21st Century (MAP-21) and is set to expire on September 2014.
The North Carolina Turnpike Authority (NCTA) was created in 2002 by the General Assembly in response to concerns about rapid growth, heavy congestion and dwindling resources. Its purpose is to supplement the traditional non-toll transportation system serving the citizens of North Carolina by accelerating the delivery of roadway projects using alternative financing options and facilitating the development, delivery and operation of an integrated, creative system of toll roads. NCTA leverages private dollars to finance and build toll roads. In most cases, NCTA sells bonds to private investors and repays those bonds with the tolls collected on the new roadway.
State transportation revenues are derived from user fees in the form of Motor Fuel Tax (MFT), driver and vehicles fees collected by the NC Division of Motor Vehicles (DMV Fees) and a Highway Use Tax (HUT) on vehicle title transfers. Federal transportation revenues are derived from a federal MFT tax and vehicle fees (mostly on trucks). North Carolina's transportation funding comprises 75 percent state revenues and 25 percent federal. The following pie charts illustrate the sources and uses of these funds.
Motor Fuel Tax — the state Motor Fuel Tax (MFT) is added to the cost of each gallon of gasoline and diesel sold in North Carolina. The state MFT rate, under state law, has a fixed portion and variable portion that is based on wholesale prices that can adjust every six months, on January 1st and July 1st. The N.C. Department of Revenue calculates and sets the state gas tax. For a historic look at state gas tax rates, visit http://www.dornc.com/taxes/motor/rates.html. The state MFT rate for the period of July 1st 2012 through June 30, 2013 was established by the NC General Assembly at 37.5 cents per gallon. The federal gas tax is 18.4 cents per gallon, and the federal diesel tax rate is 24.4 cents per gallon. These rates are established by the U.S. Congress and have not changed since 1993. Motorists pay these taxes at the gas pump.
DMV Fees — these fees are collected primarily from licensed drivers and vehicle registration. The various fees are set by the NC General Assembly, which was last updated in 2005. A listing of most fees can be found at: http://www.ncdot.gov/dmv/fees/.
Highway Use Tax — is a user tax based on the value of a vehicle at the time it is titled in North Carolina Revenue and the legislative tax rate of 3% which was not been changed since it was enacted in 1989 as part of the creation of the Highway Trust Fund (see below).
Of the three revenue sources available for transportation funding these are allocated to the two state funds as follows:
Motor Fuel Tax
Highway Use Tax
Highway Trust Fund
Highway Fund Distribution Formulas — the majority of the monies within this fund are distributed by formulas such as:
- Maintenance (90% Mileage + 10% Population);
- Contract Resurfacing (50% Needs + 37.5% Mileage + 12.5% Population);
- Secondary Road Construction (County Mileage/Statewide Population);
- Powell Bill (75% Population + 25% Mileage)
Highway Trust Fund Distribution Formula — Equity Formula
The equity formula was created in 1989 by the General Assembly. It requires that State Transportation Improvement Program funds be distributed equitably among regions of the state. Monetary distribution is based 50 percent on the population of a region, 25 percent on the number of miles of intrastate highways left to complete in a region and the remaining 25 percent is distributed equally among the regions for the STIP. Urban loop, congestion mitigation and air quality funds, and competitive/discretionary federal grants are exempt from the formula.
NCDOT reports all actual agency expenditures quarterly. Expenditures are subdivided into the following categories, which are noted in the chart below.
- DOT Labor (Internal Costs) includes all DOT employee salaries, longevity pay, social security contributions, LEO allowance, and other benefits.
- Transfers to Other Agencies includes transfers to the Department of Public Instruction, State Highway Patrol, DENR, etc.
- Debt Service includes bond payments.
- External Payments includes all expenditures directed towards the delivery of transportation services and projects including construction contract payments, right of way acquisitions, vendor payments, service contracts, grants, equipment and material purchases and all professional service contracts with firms.
- Equipment Purchases includes all vehicle, auto, truck, and other construction and maintenance equipment acquisitions, vehicle parts and tire purchases, oil and fuel costs.
- Material Purchases includes sand, gravel, concrete and asphalt, tar, road signs, other hardware, other materials, etc.
- Construction Contracts includes construction contracts (STIP) and division construction projects (non-STIP), and all construction and maintenance activities contracted externally.
- Professional Engineering & Consultant Contracts includes all contracted professional service contracts (i.e. private engineering firms, etc.)
- Right of Way Purchases includes land acquisitions, legal fees associated with right of way and easement purchases.
- Vendor Payments includes all other payments such travel costs, office supplies, utilities, data processing fees, miscellaneous building repairs, postage costs, maintenance agreements, building rents, etc.
- Grants include allocations awarded for public transit, rail, aviation, general grants, and Powell Bill payments.
- Miscellaneous Service Contracts includes general service agreements such as security, janitorial, recycling/waste removal, legal, auditing, etc.