North Carolina General Assembly Week in Review

January 28, 2022

Pardon Our Dust

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At the risk of sounding like a broken record, North Carolina is bracing for a fourth winter storm this year. Since the General Assembly did not convene this week, we felt it appropriate this week to review the funding opportunities from the state and federal government, and cover the multiple responsibilities that the Department of Transportation oversees, in addition to salting the roads ahead of winter storms.

Following the appearance of the first confirmed case of the omicron variant, COVID cases rapidly increased, but over the past couple of weeks, cases have gradually declined. As of this morning, in the state of North Carolina, there were 28,753 confirmed cases of the coronavirus. There are 5,158 individuals hospitalized, and sadly, 20,517 confirmed deaths. 74% of the total adult population has been vaccinated with at least two shots. 

As we all continue to feel the effects of the global pandemic and adjust to a new normal, we want to highlight a few ways our clients across North Carolina have worked to support residents and make this time a little easier for those throughout the state. Read more about what our clients are doing to help by clicking here.

For more information on COVID-19 in North Carolina, click here to visit the Department of Health and Human Services website, and be sure to stay up to date on the latest federal guidelines issued by the Centers for Disease Control and Prevention (CDC) by clicking here.

Review of 2021 Transportation Funding

North Carolina is the tenth largest state in the nation and has one of the most extensive highway systems. Anyone who crosses the border into North Carolina (sorry, South Carolina) instantly sees that our roads are appropriately maintained. But over the past couple years, the coronavirus pandemic, which put fewer drivers on the roads, combined with changing social, technological and economic trends have shifted the way state leaders are thinking about the future of funding for our transportation system. In 2021, several ideas were instituted in the state budget to begin increasing revenue from sources other than the traditional motor fuels gas tax. Additionally, in November, President Biden signed the Infrastructure Investment and Jobs Act, which provided significant amounts of funding for various transportation funds. This section will review the transportation-related sections of the state budget passed by the General Assembly in 2021, and the impact of federal legislation.

State Budget

Funding Sources: The motor fuel tax, that each driver pays when filling up at the pump, changes at the beginning of each year based on a statutory formula that takes into consideration population and energy cost inflation. On January 1, 2022, the motor fuels tax rate changes to 38.5 cents per gallon, up from 36.1 in 2021. Additionally, the General Assembly enacted an 8% use tax for short-term vehicle rentals and changed the statute to credit 100% of proceeds from the tax to the Highway Fund; before the budget’s enactment most of those proceeds went to the General Fund. The Highway Fund primarily supports projects that help take care of the state’s existing transportation system, including resurfacing highways, replacing bridges, and paving roads.

Most of the state budget funding for infrastructure projects, roughly $6 billion, is allocated to paying down debt and existing projects, including paying down the remaining $400 million of authorized Connect NC bonds.

The passage of the state budget is positive news for the North Carolina Department of Transportation, who coordinates new projects through the Strategic Prioritization Funding Plan (STIP). The STIP will receive more than $2.8 billion over the biennium, meaning many transportation projects will be able to proceed.

Additionally, the state budget provides funding to assist economic development projects. The spending measure allocates $283.8 million to the Wilmington Harbor Navigation Improvement Project, which will deepen the Wilmington Navigational Harbor to allow for larger, deep-draft container vessels to access the port. Additionally, the State Ports Authority will receive $90 million over the biennium. The northern part of the state’s coast also received funding to invigorate tourism and travel, as an Inner Banks Ferry System was funded to the tune of $5 million. This system will maintain two or three vessels to transport people to various towns throughout the Albemarle Sound.

Federal Legislation

According to the White House, in North Carolina there are 1,460 bridges and over 3,116 miles of highway in poor condition. The Infrastructure Investment and Jobs Act is one of the largest sources of funding to repair and rebuild bridges in the state. Based on the formula funding, North Carolina can expect to receive $7.2 billion for federal aid highway apportioned projects and $457 million for bridge replacement and repairs over five years.

The federal legislation also invested significantly in sustainable transportation options, including public transportation and electric vehicles. The funding formula dictates that North Carolina will receive $910 million over five years to improve public transportation options across the state. Additionally, our state will receive $109 million over five years to support the expansion of an Electric Vehicle charging network. State leaders already seem to be jumping on these opportunities. Earlier this month, Governor Roy Cooper (D) signed an Executive Order that requires the Department of Transportation to encourage an increase in the number of “zero-emission vehicles” in the state.

Finally, North Carolina will receive from the federal government approximately $460 million over five years for the development of new airports and airport renovations. This, combined with the state funding for the ports, will prepare the state for new economic opportunities in both urban and rural communities.

For more information on what the Infrastructure Investment and Jobs Act will do for each state, you can view this fact sheet.

Legislative Meetings

Tuesday, February 1

1:00PM: Joint Legislative Commission on Governmental Operations, Subcommittee on Use and Distribution on Federal COVID Funding