Dec 21, 11:31 AM EST

After new road plan, McCrory, legislators grapple in 2015 with how to pay for other projects



RALEIGH, N.C. (AP) -- Gov. Pat McCrory and North Carolina legislators praised each other for the new method they approved last year to fund transportation projects they say is based not on who you know but more on reducing gridlock and creating jobs.

The result, the state Department of Transportation says, is efficiencies to fund 300 additional projects in its first 10-year road-building proposal released this month under new evaluation formulas.

"Everybody understood that we needed to get politics out of the road and transportation decision-making business," Transportation Secretary Tony Tata said.

There will be new political pressure in 2015 upon GOP legislative leaders and the Republican governor to locate tens of billions of dollars over the next generation to pay for needed but yet-funded projects. McCrory has said he'll offer options and a recommendation early next year. The gap between anticipated transportation funds and needs was estimated two years ago through the early 2040s from $32 billion to $60 billion.

"We know the (current) long-term economic model to fund our infrastructure is not sustainable," McCrory told reporters recently.

McCrory is keeping most of his ideas close to the vest. Previous state government proposals included higher fees, taxes, or more debt. Republicans are cool to raising taxes. Levies on gas or car sales comprised two-thirds of the $3.2 billion in state-generated highway funds last year.

"As far as any tax increases, it's not something I'm interested in," said Rep. Tim Moore, R-Cleveland, likely to be elected House speaker next month. "I want to find a way to be more efficient with the money we have."

Efficiencies are likely only to go so far. More than 2,500 of the 3,100 transportation projects local planning organizations say are needed didn't make the proposed 10-year list.

At the very least, McCrory says he'll recommend borrowing at least $1 billion to pay for road projects his administration says have environmental permits but barely missed the cut in the 10-year proposal. McCrory said the bond wouldn't require a referendum.

The 2008 recommendations from a blue-ribbon panel created by Democratic Gov. Mike Easley and his party's legislative leaders included more than doubling the annual vehicle registration fee and raising the tax on car purchases - called the Highway Use Tax - from 3 percent to 4 percent. Both combined would have generated another $400 million annually.

The panel also suggested examining whether to charge motorists a set price for every mile traveled on roads as an alternative to North Carolina's gasoline tax, which remains one of the nation's highest. Adjusted semiannually in part on the wholesale price of gas, the motor fuels tax will rise a penny to 37.5 cents per gallon starting Jan. 1.

Replacing the gasoline tax with a sales tax and allowing local governments to collect sales taxes for projects also should be considered, said Marc Finlayson with NC GO!, a coalition of local governments and road-building trade groups. Other options discussed in a 2012 DOT report during Gov. Beverly Perdue's administration included interstate tolling and an auto insurance surcharge.

"Two governors later, we're still describing the problem, but we're not solving it," Finlayson said, adding no solutions for the funding shortfall means "we're going to have more pavement failures, more bridges failing" and a harder time attracting new businesses.

Raising the Highway Use Tax could discourage sales of more expensive cars and could ultimately affect employment levels at dealerships.

"Now that they're talking about helping our highways, we know they're coming after us," quipped George Anderson, president of the North Carolina Automobile Dealers Association. He said the association wants to be at the negotiating table.

Senate Majority Leader Harry Brown, R-Onslow and a car dealer, said Senate colleagues would be cautious about agreeing to raise taxes "but I think we also know the needs in transportation are great."

Getting public buy-in will be key to any revenue plan, said Rep. William Brawley, R-Mecklenburg. Voters want to know elected officials are using existing funds on truly needed projects and not for pork, he said.

"We have got to demonstrate that we can be trusted before we can ask people to trust us," said Brawley, co-chairman of the House Transportation Committee, but added "if we look toward the future, we see what's coming and we must address it."

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