Secretary Tippett's Remarks
N.C. Citizens for Business and Industry Legislative Conference
May 10, 2006
Raleigh, NC
Good afternoon.
Thank you, Graham, for that introduction.
NCCBI has been a long-time partner of the North Carolina Department of Transportation, recognizing that a reliable, cost-effective and seamless transportation system is essential to be competitive in today's global economy.
Maintaining such a system is certainly challenging in today's world.
That is why it is so important to have groups like NCCBI aware of the situation and willing to help address it.
The state's transportation needs far outweigh available funding, limiting our ability meet the state's mobility needs.
You have probably heard that our latest financial forecast is not good news.
Once again, we are facing some difficult, challenging times and will have to make some tough decisions. We are having to respond to economic forces beyond our control.
Soaring gasoline prices; higher steel, concrete and asphalt costs, plus declining revenues are straining our resources even more. As of the middle of last week, we were facing a $920 million shortfall.
The bottom line is that there is not enough money to go around, and we need additional funding options to meet our mobility needs and sustain the state's vibrant and growing economy.
Compounding the problem are major oil companies making record profits, while consumers are getting nailed at the pump.
These steep gasoline prices are hurting our economies at the local, state and national levels.
The federal government has been cutting back on its allocations to state governments due to lack of available funds. We are looking at a $720 million reduction in federal allocations over the next three years alone.
Motor vehicle sales and fuel consumption are also dropping. This directly affects our revenue collections; most principally the Highway Trust Fund.
When you add double-digit inflation into the mix, 14 percent per year, you're looking at a major hit for North Carolina.
Now, keep in mind that North Carolina is already facing a conservative $14 billion gap between transportation needs and funding over the next six years as identified in the Statewide Long-Range Transportation Plan in 2004. This number is likely to be considerably larger when updated figures are available later this year.
The Governor's recently announced budget proposal to provide $218 million to help offset some of this reduced revenue was certainly good news. This announcement last Friday was most welcome news indeed.
We are now working to determine the best course of action to help us meet our needs. And like we did in 2005, we may have to delay some highway projects.
As an agency, we continue to look for innovative approaches to project delivery and improve on traditional methods.
We have had good success with design-build method for example. In fact, the first several design-build projects which include the U.S. 64 Knightdale Bypass and the widening of both I-77 and I-85 were each completed about one year sooner than by traditional methods.
A number of innovative options are also available to supplement transportation funding and meet more of our needs over the near and long term.
Through House Bill 749 the department is seeking to expand our authority to enter contracts with private sector partners to build or improve highways. Public-private partnerships help encourage private investment and innovation in transportation.
One public-private partnership we have already have the green light for is toll roads.
As you know, in addition to my role as Secretary of Transportation, I also serve as the chair of the North Carolina Turnpike Authority, which the General Assembly created in 2002.
Last year, the authority's powers were expanded, allowing us to design and construct up to nine toll facilities across the state.
Toll funding is one of our most promising solutions for the future, allowing us to complete projects much sooner than by traditional funding methods.
In the past several months, we have begun taking a careful look at six projects and evaluating their potential for development as the state's first toll facilities.
For each project, a detailed study is being conducted to estimate future traffic and gauge potential toll revenues.
The results of those financial feasibility studies are due within the next couple months.
Just as here in the Triangle, communities and leaders across the state are seeing toll funding as a promising solution to allow us to get critical roads on the ground and open to traffic faster than we could using traditional funding methods.
In the search to fund new highway construction, many states have turned to toll roads as a viable alternative.
Currently, there are more than 5,000 miles of toll roads in 35 states, including South Carolina, Virginia, Georgia and Maryland. In fact, every state along the East Coast from Florida to Maine - except North Carolina - is using toll roads to supplement the state-built roads.
But toll roads are only one solution.
We must look at a menu of other options for funding our critical transportation needs and it is clear that these options must be expanded down to the local level. This has already been used to a limited extent in Mecklenburg County and the Triangle to help fund regional light rail systems.
This would provide local governments a mechanism to enhance transportation funding and better meet their needs, which can no longer be met by the state alone.
Transportation infrastructure and the ability to move goods efficiently are critical to the well being of our state.
It is said that "necessity is the mother of invention" and this is true of the challenge we are facing.
We are no doubt at a crossroads with our transportation system and in order to meet our ever-increasing transportation needs, we cannot afford to be content with the status quo.
We must be inventive and we must be willing to take bold steps if we want to sustain the state's vibrant and growing economy.
I know that together, we can find viable solutions to meet this challenge head on and keep North Carolina moving forward.
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