On Road Funding, Something’s Gotta Give

By John Hood

RALEIGH — Fred Astaire is one of my favorite entertainers of all time. For one of his later films, the romance Daddy Long Legs (1955), Johnny Mercer wrote Astaire a fantastic song entitled “Something’s Gotta Give” that has since become an often-covered American standard. “When an irresistible force such as you meets an old immovable object like me,” the song begins, “you can bet just as sure as you live — something’s gotta give, something’s gotta give, something’s gotta give.”

When it comes to romance, perhaps so. When it comes to funding highways and streets, definitely so.

The irresistible force in question is North Carolina’s continued growth and development. Over the past decade and a half, few states have attracted more net migration than ours. According to the latest Census Bureau data, the population of the Tar Heel State grew by 145,907 last year — a larger gain than all but two states (Texas gained 391,243 residents and Florida 196,690). Adjusting for preexisting population, the number of North Carolinians grew by 1.3% last year, faster than all but South Carolina (1.5%) and Idaho (1.4%).

With more people comes more workers, consumers, creators, taxpayers — and travelers. Increases in highway usage aren’t proportional, of course. Only some North Carolinians are daily commuters. Others work remotely or part-time, or are students, caretakers, or retirees. People increasingly do some of their shopping, playing, and congregating online. But to say demand for highway use in the 21st century doesn’t rise in direct proportion to population growth is not to say it doesn’t rise it all. Newcomers are still moving around, mostly on powered wheels. And shopping online for clothes, gifts, household supplies, and food doesn’t eliminate the need to deliver most of these goods by car or truck.

In other words, so long as North Carolina remains an attractive place to live, work, invest, and rear children, highway usage will go up.

As is now evident in Raleigh, Charlotte, Wilmington, and other fast-growing cities, however, there is a seemingly immovable object in the way: an outmoded system for building and financing roadways. In a recent cover story, Triangle Business Journal reported on a troubled project just outside my office window: a planned widening of Six Forks Roads near Raleigh’s North Hills development. Initially projected in 2020 to cost $31 million, its price tag had tripled to $93 million by the time it was nixed in 2025.

One reason was the skyrocketing cost of the asphalt cement used in North Carolina’s road projects. From 2020 to 2026, it increased 55%. The cost of other imported materials shot up, too, as did land-acquisition and labor costs.

Competing bidders, supply constraints, tariffs, threats to shipping through the Red Sea and Persian Gulf — all are factors. But so is the longstanding mismatch, in North Carolina and most other places, between the demand for new capacity and the revenue required to meet it. As vehicles grow increasingly fuel-efficient or electrified, states collect few fuel-tax dollars per mile traveled. As motorists hold onto their vehicles for more years, states collect fewer taxes on auto sales.

To say state policymakers have ignored the conflict between rising demand and inadequate supply would be grossly unfair. Over time, the General Assembly has raised the motor-fuels tax, significantly reduced diversions of its proceeds to non-highway programs, redirected sales-tax revenues from auto parts to the Highway Fund, and changed the way the Department of Transportation sets priorities for highway construction and maintenance.

North Carolina is one of the best stewards of highway dollars in the United States, according to annual rankings by the Reason Foundation. Among the country’s 10 most-populous states, only Georgia fares better. Admittedly some may deem this a form of damning by faint praise, given the competition. Other big states such as Illinois (37th), New York (47th), and California (49th) are transportation basket cases.

But our reforms haven’t gone far enough. Demand continues to rise. Our revenue and construction systems can’t keep up. Something’s gotta give.

John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).