Remarks for Secretary Lyndo Tippett
Cabarrus County Regional Chamber of Commerce
2006 Transportation Summit
Wednesday, Aug. 30, 2006 at 8 a.m.
Kannapolis Train Station
Introduction
Good morning.
I want to thank John Cox for allowing me the opportunity to share with you the current outlook for transportation in North Carolina.
But first I want to commend this group, especially the program sponsors, for taking such an active role in this county's development and by holding this annual event.
Your input and involvement have made a tremendous difference in the quality of life of this community and in NCDOT's work to help meet your needs.
Because of your efforts, this county, like most of our state is becoming an increasingly popular place to live and work.
And while this rapid growth is a good thing in many ways, it also increases the transportation demands of our state and stretches our limited financial resources.
The Problem of Growth
To put this growth in perspective, let me give you some recent statistics:
· North Carolina's population grew from 5 million in 1970 to 8.5 million in 2004, and is expected to grow by 4 million more people in the next 25 years.
· Vehicle miles traveled more than tripled, from 30 billion in 1970 to 94 billion in 2004, and are expected to increase 50 percent more by 2020.
· Truck freight hauled in North Carolina is projected to increase to 808 million tons by 2020, a 190 percent increase since 1998.
Many of the state's highways were built as farm-to-market roads and were not designed or built to handle the heavy traffic volumes they carry today. As a result, an increasing number of the state's most important corridors need significant upgrades.
Other Contributing Factors to NCDOT's Funding Difficulties
There are several factors besides growth that make this situation especially difficult for North Carolina.
In North Carolina, unlike many other states, a substantial portion of the burden to fund local transportation improvements rests on the state level rather than the local level. We have more than 80,000 miles of state-maintained highway, more than any other state.
According to a recent census report, North Carolina ranks 19th nationally in per capita highway spending on the state level, but only 49th in those same expenditures on the local level.
Construction inflation continues to increase ¾ by more than 30 percent over the last two years alone - making it more costly for us to complete needed projects. And unfortunately, these costs are continuing to rise.
Meanwhile, we are also dealing with a drop in revenues.
North Carolina's primary source of income for transportation improvements is derived from the state's gas tax. However, in recent years as cars have become more fuel-efficient and people are driving less, the gas tax is simply not pulling in the same level of revenue it once did.
The current gas tax rate is 29.9 cents per gallon. While this is higher than some other states, it is relatively low given the high number of miles we have to maintain.
We also collect less money through highway use taxes and fees than many other states.
For example:
· Georgia's current state gas tax is 18.5 cents per gallon and the state maintains just over 18,000 miles of highway.
· Tennessee maintains just 13,752 miles of highway while their gas tax is 21.4 cents per gallon. Additionally, their highway use tax is 7 percent - compared to North Carolina's 3 percent.
Gov. Easley and the General Assembly recognize the strain placed on the department's budget by decreased revenues, and they built $200.7 million into this year's budget to reduce the annual transfer from DOT's Highway Trust Fund to the General Fund.
This means that more of our transportation revenues will actually go toward transportation improvements.
This is certainly a step in the right direction, and we thank Gov. Easley and legislators for their work to include this funding in the budget and help improve NCDOT's financial outlook.
Other Steps We are Taking to Improve NCDOT's Financial Outlook
Our department is looking hard at ways to help generate new funds for transportation and is also maximizing existing resources.
We are working to implement the 25-year Statewide Transportation Plan, which the Board of Transportation adopted in the fall of 2004.
At the time of its adoption, the plan anticipated a nearly $30 billion gap between transportation needs and funding over the next 25 years. However, NCDOT is in the process of updating these numbers and when double digit inflation is factored in, our funding gap is likely to grow significantly.
By allocating our available resources as the plan recommends, we can meet more of the state's needs, particularly through maintenance and modernization improvements.
However, simply shifting our money around will not solve the problem.
We are also working to identify additional and alternative funding for transportation.
Two of the most promising options we are looking at are tolling and GARVEE bonds.
As I'm sure you know, the General Assembly has established the North Carolina Turnpike Authority to oversee the process for bringing toll roads to our state.
North Carolina is one of the few states - and the only state on the East Coast - that does not use toll financing to supplement traditional pay-as-you-go funding for highway projects.
Currently, the Turnpike Authority is authorized to develop and operate up to nine toll roads across the state. The Authority is currently studying a number of possibilities in this part of the state, including the Monroe Connector and the Gaston East-West Connector.
The state cannot toll existing roadways, and toll facilities must have an existing parallel free route.
Additionally and a key point to remember is that local government support is required before a road can be tolled. Locals have to request it and sign off on it.
Another funding method the state has moved forward with is the use of Grant Anticipation Revenue Vehicles, or GARVEE bonds.
Already used by many states, these bonds allow us to borrow against future federal funding and accelerate our transportation dollars to complete needed projects sooner and reduce inflation-related costs.
We have been approved to issue $950 million in GARVEE bonds, and we are currently in the process of evaluating candidate projects.
DOT has also been pursuing the expanded use of public-private partnerships to get more transportation dollars.
These partnerships allow the department to work with private entities to build and maintain mutually beneficial transportation facilities.
In addition to identifying new funding, we're also streamlining our operations and reducing contract lettings to help save money.
We are increasingly using the design-build method, which allows a project's design and construction to be completed under one contract, to reduce overall project completion time and costs.
Another way we are working to improve project delivery is through an important partnership we have in place with the Department of Environment and Natural Resources, known as the Ecosystem Enhancement Program or EEP.
Since its inception in July 2003, about 35,000 acres of valuable environmental assets throughout the state have been protected and preserved and more than $1.9 billion in road construction was facilitated without a single delay due to lack of mitigation.
The department also continues to adjust the Transportation Improvement Program and revise our letting schedule to make sure we have the resources needed to complete top priority projects across the state.
Conclusion
I know I've covered quite a bit of information this morning, and if you take anything away with you, let it be these two points:
1) Funding for transportation is essential for the continued economic prosperity of North Carolina. We cannot continue to attract people, jobs and businesses without a high-quality transportation system that keeps pace with North Carolina's growing needs.
2) This goal is not something NCDOT can accomplish alone. We must all - including members of government, private industry and organizations like yours - work together to ensure that we have the transportation resources to sustain our state in the future.
North Carolina cannot afford to wait for transportation improvements, and NCDOT simply cannot solve the transportation funding challenge alone.
I know that you are already making this issue a top priority, and I ask that you continue to recognize just how critical transportation funding is and join in our efforts to secure additional resources for our state.
Events like this, which allow us to work together to develop transportation solutions, are certainly a step in the right direction.
I congratulate you on your outstanding efforts and thank you for inviting me to join you here today.