North Carolina directs more money to transportation

July 14, 2022

Keith Goble


North Carolina Gov. Roy Cooper has signed into law a budget deal that includes more transportation funding via an existing revenue source.

The North Carolina Department of Transportation has an annual operating budget of nearly $5 billion.

More money from sales tax

House and Senate lawmakers passed a plan to send 2% of sales tax revenue this year to the state highway fund and highway trust fund. The transfer from the general fund will result in an additional $190 million for roads and bridges.

The amount will double next year to 4% before topping out at 6% in 2025. At that time, the transfer will bring an additional $600 million annually for road and bridge work.

The 6% allocation will remain each year thereafter.

Currently, the state’s fuel excise tax is the main funding source for the state highway fund. The 38.5-cents-per-gallon excise tax accounts for $1.8 billion annually.

Advocates on both sides of the aisle say new funding sources for roads and bridges are needed with the increasing number of drivers switching to more fuel-efficient vehicles and electric vehicles.

The governor signed the bill, HB103, on Monday, July 11.

Transportation group endorses change

NC Go, a group that supports efforts to benefit transportation funding, championed the budget but says more needs to be done.

“This is the time for creative solutions. NC’s motor fuels tax will not be a sustainable source of revenue in the future, with more hybrid and electric vehicles on our roads – and with vehicle fuel-efficiency increasing overall,” a statement from the group reads. “Inflation is driving up the costs for asphalt, diesel fuel, concrete, steel and labor – and is busting transportation project budgets.”

More money for highway fund

A 2-year-old law increased the share of fuel excise tax revenue routed to the state’s highway fund. The share allocated to the Highway Trust Fund was decreased.

Specifically, the highway fund now collects 80% of revenue. The Highway Trust Fund receives 19%.

Previously, the state’s highway fund received 71% of revenue from the excise tax. The Highway Trust Fund got 29%.

Starting with the next fiscal year, the amounts will settle at a 74-25% split each year thereafter. LL

More Land Line coverage of news from North Carolina.