North Carolina has a large and diverse transportation system consisting of all modes of transportation, including highways, rail, aviation, ferries, public transit and bicycle and pedestrian transportation.
With an annual operating budget of about $5 billion, the N.C. Department of Transportation is responsible for building and maintaining this transportation network, as well as overseeing the state's Division of Motor Vehicles.
Transportation funding is comprised of approximately 75 percent state revenues and 25 percent federal revenues.
State Funding Resources
Motor Fuel Tax
| 50 percent
| The motor fuel tax changes
at the beginning of each year based on a statutory formula that takes
into consideration population and energy cost inflation. On Jan. 1, 2022 as required by N.C. General Statute 105-449.80, the motor fuels tax rate changed to 38.5 cents per gallon. This rate is in effect through Dec. 31, 2022. |
DMV Fees
| 25 percent
| The N.C. General Assembly sets various fees that the N.C. Division of Motor Vehicles collects primarily from licensed drivers and vehicle registrations. Fees are adjusted for inflation every four years beginning July 1, 2020 per G.S 20-4.02. |
Federal Funding
Appropriated by Congress, federal transportation funding comes from a federal motor fuel tax and vehicle fees (mostly on trucks). It accounts for approximately 25 percent of NCDOT's overall budget and about 50 percent of its construction budget.
Details about the current appropriations bill, called the Fixing America's Surface Transportation Act, are available on the
Federal Highway Administration website.
State Funding Allocation & Distribution
Funding from the three state revenue sources (Motor Fuel Tax, DMV fees and Highway Use Tax) are allocated to two state funds
– the Highway Fund and Highway Trust Fund
– as outlined in the chart below.
| Motor Fuel Tax | 80 percent
| 20 percent
|
| DMV Fees | Approximately 85 percent | Approximately 15 percent |
| Highway Use Tax | 7 percent
| 93 percent |
Highway Fund
The Highway Fund primarily supports projects that help take care of the state's existing transportation system. This includes resurfacing highways, replacing bridges and paving unpaved secondary roads. Funds are distributed across North Carolina based on need.
The Highway Fund also supports the
Powell Bill Program, which provides state aid to municipalities for pedestrian, bicycle and road improvements.
Strategic Transportation Investments
Strategic Transportation Investments primarily funds new construction and expansion projects across all modes of transportation. Funding is allocated on local, regional and statewide levels based on data and input from local planning organizations and NCDOT divisions.
Advance Construction
Advance Construction is a funding tool used by all states. It allows NCDOT to program more projects throughout the year, start them sooner and save money.
When projects eligible for federal funding have been identified, NCDOT can accelerate the project by using state funds to pay for the project’s cost first; then the department will use Federal Highway Administration dollars to reimburse itself for the federal portion of construction, which is typically 80 percent.
People may visit the advance construction webpage to learn more about this funding tool and view related documents.
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