Highway Fund is Flawed, but Fat

By LYNN BONNER, Staff Writer
The News & Observer, Raleigh, North Carolina.
Monday, April 29, 2002 10:40AM EDT

The Highway Trust Fund was a political marvel. It was born in 1989 on the promise of building a system of multilane highways and urban loops in 13 years using $9 billion raised from new taxes and fees.

The taxes part of the equation has worked, but the road-building has lagged.

Although the state will have spent about $9 billion from the trust fund by the end of this year, it has begun or completed about 860 miles of the 1 800 miles of highway projects on the fund's "to do" list.

Meanwhile, the state will continue to collect the taxes and fees that feed the fund - at a rate faster than the state expects to spend it.

Over seven years, beginning in 2003, transportation planners project the trust fund will take in nearly an additional $6 billion. But about $2 billion in roads will be ready to be built, meaning that the fund is expected to buildup a $3.7 billion surplus.

Now, legislators, environmentalists and road planners are taking a fresh look at the trust fund, to see whether the program still works or if the money could be put to better use.

Legislative budget writers have talked about using the trust fund to help fill next years $1.2 billion budget gap. State transportation officials want the General Assembly to allow trust fund money to be spent for road projects that were not included in the 1989 law.

Some say the state should not break its promise to the people by tampering with the fund.

"I just feel like I promised folks a lot of things --that we would protect this bill," said former state Sen. William Goldston of Eden, one of the trust fund's architects. "They keep trying to mess with it, but I keep fussing with them"

The fund's origins

The trust fund was approved in 1989 to clear a frustrating backlog of highway work. The General Assembly decided to use money from tax and fee increases to complete a system of four-lane highways connecting most cities and towns, construct loop roads around seven cities, pave 10,000 miles of dirt roads and increase aid to municipalities for maintenance of city-owned streets.

Legislators originally figured that, by this year, the highway work in the trust fund would be almost done. But environmental concerns, objections from residents and increased construction costs slowed progress. 

Of the seven urban loops, contractors have started on four. Three loops, including Northern Parkway in Durham, are still in the planning stages.
"The loops have probably moved as rapidly as they could, when you consider all the permitting factors and environmental factors involved in building loops, particularly through a fairly densely populated area," said state Transportation Secretary Lyndo Tippett.

The trust fund law identified 30 highways and a bridge to be built or widened, and it specified where the seven urban loops should go. It set criteria for which dirt roads would be paved according to the number of vehicles that traveled them each day, and it specified what portion of the trust fund would go toward each category of work.

Rethinking projects

The law's strictures are getting in the way of better roads, state transportation planners say, because it's becoming harder to spread the money around.

More than three dozen counties don't have any projects eligible for money from the trust fund, including a 14-county area that runs down the state from the northwest border with Virginia to South Carolina.

Some roads that cities want -- a bypass around Shelby, for example -- aren't in the law, so they cannot be built with trust fund revenue. Improvements to Interstate 95 are not eligible for the trust fund.

The mismatch between the roads regional officials want and the list of highways required in the trust fund law helped inspire the new state Department of Transportation's repeated assertion that 80 percent of the available money is going to 20 percent of the state's transportation needs.

"The way the trust fund is structured, you have more and more money targeted at fewer and fewer projects," said Calvin W. Leggett, manager of the transportation department's Program Development Branch.

Transportation Department officials are asking the state Board of Transportation and state legislators to consider spending some of the trust fund money on projects not listed in the law.

The transportation board is considering a recommendation to the General Assembly that all highways in the state system be made eligible for trust fund money.

DOT officials have spoken to the chairman of a new legislative study commission that plans a broad review of the trust fund this year. They say spending could be planned so as not to shortchange roads the law requires.

Some in the state -- controlled-growth proponents, public health consultants, community development and affordable-housing advocates, and transportation reform groups--want the state to ask a more fundamental question about the trust fund law:

Are the projects the law calls for still needed, and are the plans environmentally sound? 

Should goals change?

"The world has changed a lot since 1989," said Joe McDonald of Richmond County, president of the NC. Alliance for Transportation Reform.
"I think it is indeed time for the entire highway trust fund to be reviewed."

The 1989 law set out requirements for seven urban loops and established a goal of bringing four-lane highways to within 10 miles of 96 percent of the states population. McDonald said these priorities should be reexamined to take residents' needs and environmental impacts into consideration.

"Blanket policies like this should not be simply mandated,' he said. "There has to be better input by local communities as to whether they really want these things or not. We need to be looking at transportation systems, not just highways."

Sally Jones, who for years has fought the loop around Winston-Salem that would cut through her family cattle farm, wishes the transportation department would drop its plans to build it.

"You always hear it will solve every traffic problem that ever existed," Jones said. "But from my perspective, it will create more traffic problems out here in the county than it will solve."

To settle a lawsuit, the state DOT agreed to do a more extensive environmental impact study for the planned Winston-Salem loop. The road is years behind schedule but the state still intends to build it.

Jones said roads became part of the trust fund law for political reasons, forcing state resources to support projects that some people don't want.

"They threw in something for everybody to get the votes to pass it," Jones said. "There should never be a law that a road has to be built. If they keep at the pace they're going, it'll be 20 to 30 years before they're done."

Tapping the fund

Cracking into the trust fund isn't a new idea. Last year, the General Assembly approved a provision allowing DOT to use $420 million in trust fund money over three years for road maintenance and $120 million for public transportation.

Last February, Gov. Mike Easley reached in for $80 million to help cover this year's budget.

State Sen. Wib Gulley, a Durham Democrat and co-chairman of a new Highway Trust Fund Study Commission, said the group would make a project-by-project review of the fund. He said legislators will listen to the transportation board's suggestions for the money.

"I'm certainly open to the idea of using trust fund monies for other purposes, other critical needs," Gulley said, "because I think we have to provide more flexibility in how our transportation dollars are spent. But at the same time, we have to ensure all of the trust fund projects, those commitments, will be fulfilled"

The trust fund has a balance of about $500 million at any onetime. Budget writers have talked about taking money out of the fund, but the idea has detractors.

Gulley thinks it's unlikely that legislators would tap the fund to balance next year's budget. Ongoing spending needs won't be solved with one-time money, he said.

Leslie Bevacqua, lobbyist for the NC. Citizens for Business and Industry, cautioned against using 
trust fund money to patch the budget.

Though she supports the review of the trust fund and its place within the transportation spending scheme, she questioned using the money for other purposes, public transit included.

"I think that would be a mistake," Bevacqua said.

"We have great transportation needs -- there are economic development needs all across the state. I'm not sure how, legally, you can take transportation money or trust fund money to meet some of the other needs of the state."