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Brother, Can You Spare a Dime?

By Canaan Huie

Once I built a railroad, I made it run

Made it race against time

Once I built a railroad, now it’s done

Brother, can you spare a dime?

In the early morning hours of Wednesday, September 30, the 2015 Regular Session of the North Carolina General Assembly came to a close.  One of the more controversial provisions enacted this session took up a mere six lines in the 429-page budget bill – H 97, 2015 Appropriations Act (S.L. 2015-241).  Section 29.41 of that act[1] placed a limitation on the amount of State funds that could be used for light rail projects.  This provision, and a similar provision applying only to Wake County[2], were the subject of significant debate in the final days of session.

In 2013, the General Assembly passed H 817, Strategic Transportation Investments (S.L. 2013-183).  The goal of the act was to more efficiently allocate the State’s transportation dollars to improve mobility, ease congestion, and foster economic development.  Under the STI, transportation funds are allocated in several tiers.  The first tier is for projects of statewide significance and involves 40% of the applicable funds.  The second and third tiers are for projects of regional and divisional significance respectively and involve 30% of the applicable funds each.  Projects in the first tier are allocated funding based on a ranking of projects relying on a data-driven formula.  Projects in the second and third tiers are allocated funding based on a ranking of projects relying in part on data-driven formulas and in part on local input on priorities.  The total amount of funding allocated within a region for public transportation projects cannot exceed 10% of the total amount of regional funding for that region.

The STI was first used in determining funding allocations for the State Transportation Improvement Program (STIP) in 2015.  The STIP is a document that shows the scheduling and funding of transportation projects over a number of years.  Federal law requires the STIP to cover at least four years and to be updated at least every four years.  In North Carolina, the STIP covers a 10-year horizon and is updated every two years.  In June 2015, the North Carolina Department of Transportation released the STIP for the 2016-2025 period.  That STIP included slightly more than $138 million in State funding over a 10-year period for a light rail project in Durham and Orange Counties to run from the UNC Hospitals in Chapel Hill to Highway 55 in Durham.  These funds were allocated under the second tier (regional-level) of funding described above, and hit the 10% cap for public transportation projects.  This amount was matched by an equal amount in local contributions and $276.5 million in federal Bus Capital Program funds.  Thus, the STIP envisioned a total of almost $553 million in federal, State, and local funding for this project over the next 10 years.  Even with this funding, there was an estimated gap of over $937 million in funding needed in future years.

However, the provision enacted in Section 29.41 of H 97, 2015 Appropriations Act (S.L. 2015-241) will prevent this allocation of State funding.  Under that provision, no more than $500,000 of State funds may be allocated per light rail project.  Thus, almost $138 million in potential State funding for this project disappeared with the enactment of H 97.

The inclusion of the provision in the final version of H 97, 2015 Appropriations Act, was controversial for several reasons.  First, funding for light rail and public transit are always controversial.  While some argue that the State’s major metropolitan areas need to beef up public transit options to prepare for expected population increases, others argue that the State’s major metropolitan areas are not yet densely populated enough to support light rail projects.  But perhaps more controversial than the subject matter itself was the way in which this provision was handled.  The provision first appeared in the conference report for H 97.  Not only had the provision not been in either of the budgets proposed by the House or Senate previously, it had not appeared in any legislation prior to the conference report for H 97.

The controversy surrounding this provision was evident in the final days of the 2015 Regular Session.  On Wednesday, September 23, the House Finance Committee approved a proposed committee substitute for S 605.  A provision in the original proposed committee substitute for S 605 would have prohibited the use of State funds altogether for a light rail project in Wake County if Wake County enacted an additional local sales and use tax to pay for public transportation projects.  Thus, light rail projects in Wake County would have been subject to even more strict funding requirements than light rail projects generally (i.e. no State funds rather than a maximum of $500,000 in State funds).  This provision was removed from S 605 before that bill was approved by the House Finance Committee.  On Monday, September 28, the full House adopted an amendment to S 605 that would have repealed the provision contained in H 97.  The amendment passed 81-28 and was supported by all Democrats that voted on the amendment and a majority of the Republicans voting on the amendment.  Perhaps more surprising for some was the fact that the amendment was sponsored by Rep. Paul Stam, a Wake County legislator who has been critical of State funding for light rail projects.  While S 605 ultimately passed the House, it was not acted upon by the Senate in the final days of session

As of the end of the 2015 Regular Session, the limitation on State funding for light rail projects remains in place.  Thus, supporters of those projects will have to look for other sources of funding to make the projects feasible.  This might lead those supporters to ask if you can spare a dime (or several billion dimes to be more accurate).

[1] In relevant part, that section reads as follows:

“SECTION 29.41.(a) G.S. 136-189.11 is amended by adding a new subsection to read:

(e1) Limitation on Funding for Light Rail Transit System Projects. – Notwithstanding any provision of this section to the contrary, the cumulative amount of funds subject to this section that are expended for light rail transit system projects shall not exceed the sum of five hundred thousand dollars ($500,000) per project.’ ”

[2] As originally presented in the House Finance Committee on September 23, 2015, a proposed committee substitute for S 605 contained a section that would have prevented the use of any State funds for a light rail project in Wake County if Wake County decided to enact an additional ½-cent local sales and use tax for public transportation purposes.  This section was deleted by an amendment adopted in the Finance Committee.  See: Section 6.5, PROPOSED HOUSE COMMITTEE SUBSTITUTE S605-CSSVxr-46 [v.3], http://www.ncleg.net/documentsites/committees/House2015-24/09-23-2015/S605/S605-CSSVXR-46-v-3.pdf

 

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