Finance & Budget
Finance & Budget
The North Carolina Department of Transportation has an annual operating budget of more than $4 billion with funding coming from three primary sources: the Highway Fund, the Highway Trust Fund and federal funds.
State transportation revenues come from user fees in the form of the Motor Fuel Tax, driver and vehicles fees collected by the North Carolina Division of Motor Vehicles and a Highway Use Tax on vehicle title transfers. Federal transportation revenues come from a federal motor vehicle tax and vehicle fees (mostly on trucks). North Carolina's transportation funding comprises approximately 75 percent state revenues and 25 percent federal. For more on the sources of these funds and how they are used, see the charts in the top right column of this page.
Motor Fuel Tax: In March 2015, the North Carolina General Assembly established the following rates for the state Motor Fuel Tax:
- April 1, 2015 through Dec. 31, 2015: 36 cents per gallon
- Jan. 1, 2016 through June 30, 2016: 35 cents per gallon
- July 1, 2016 through Dec. 31, 2016: 34 cents per gallon
- For the calendar year beginning on Jan. 1, 2017, the motor fuel tax rate is a flat rate of 34 cents per gallon, multiplied by a percentage.
- Starting Jan. 1, 2018, the rate will change at the beginning of each year based on a statutory formula that takes into consideration population and energy cost inflation.
DMV Fees: The North Carolina General Assembly sets various fees collected primarily from licensed drivers and vehicle registration. The DMV fees listing was last updated in 2005.
Highway Use Tax: As part of creation of the Highway Trust Fund in 1989, the Highway Use Tax was set by the North Carolina Legislature at three percent (3%) of the net retail value (after trade-in allowance) of a motor vehicle when a certificate of title is issued in North Carolina.
Funding Allocation and Distribution
Of the three state revenue sources available for transportation funding these are allocated to the two state funds as follows:
Motor Fuel Tax
Highway Use Tax
Highway Trust Fund
Highway Fund: The Highway Fund dates to 1921, when the North Carolina General Assembly first imposed the gasoline tax of 1 cent per gallon on all motor vehicles fuels sold or distributed in the state. Revenue for the Highway Fund comes from a variety of sources, including the state gas tax, motor vehicle registration fees, title fees and federal aid reimbursements. Traditionally, the Highway Fund supported highway construction and maintenance, the State Highway Patrol and the Division of Motor Vehicles. In the 1990s, the fund also began supporting public transportation and rail programs. With the passage of the Strategic Transportation Investments law in 2013, the fund now primarily supports maintenance activities, including state aid to municipalities (Powell Bill) and program operations.
The funds are distributed across North Carolina based on need.
Highway Trust Fund — Strategic Mobility Formula: Enacted in 1989, the Highway Trust Fund law identified specific highways that would be four-lane or improved to complete a 3,600-mile intrastate system. The law also provided funding for urban loops around nine of North Carolina's largest cities. In 2013, the General Assembly passed HB 817 (G.S. 136-189.11), creating the Strategic Transportation Investments law law, which established the Strategic Mobility Formula to allocate funding for Strategic Transportation Investments. The Strategic Mobility Formula replaces the Equity Formula, which was created in 1989 by the General Assembly and distributed based on the population of a region (50 percent allocation), the number of miles of intrastate highways left to complete in a region (25 percent allocation). The remaining 25 percent was distributed equally among regions as programmed in the State Transportation Improvement Program.
The Strategic Mobility Formula allocates funding in three categories:
- Division: 30 percent
- Regional: 30 percent
- Statewide: 40 percent
Additional funds come from the federal government for federal-aid highway, transit, ferry, rail and airport projects. It should be noted that NCDOT must first expend its own state monies and is later reimbursed by the United States Treasury.
All federal funding is subject to annual Congressional Budget Appropriations, which in recent years has not been enacted by the start of the federal fiscal year on Oct. 1. In the case of highway and transit funding, these funding levels are authorized by Congress in multi-year reauthorization bills. The current law is called Moving Ahead for Progress in the 21st Century (MAP-21) and is set to expire May 31, 2015. The Fiscal Overview tells the story of our funding needs and the important role of federal funding.
NCDOT reports all actual agency expenditures monthly. Expenditures are subdivided into the following categories, which are noted in this chart.
- Labor (internal costs) includes all NCDOT employee salaries, longevity pay, Social Security contributions and other benefits.
- Transfers to other agencies, including the Department of Public Instruction, State Highway Patrol, Department of Environmental and Natural Resources, etc.
- Debt service, including bond payments.
- External payments, including all expenditures directed toward the delivery of transportation services and projects. This includes construction contract payments, right-of-way acquisitions, vendor payments, service contracts, grants, equipment and material purchases and all professional service contracts with firms.
- Equipment purchases, including all vehicle and other construction and maintenance equipment acquisitions, vehicle parts and tire purchases, oil and fuel costs.
- Material purchases, including sand, gravel, concrete, asphalt, tar, road signs, other hardware, other materials, etc.
- Construction contracts, including construction contracts (STIP) and division construction projects (non-STIP), and all construction and maintenance activities contracted externally.
- Professional engineering and consultant contracts, including all contracted professional service contracts (i.e., private engineering firms, etc.)
- Right-of-way purchases, including land acquisitions, legal fees associated with right-of-way and easement purchases.
- Vendor payments, including all other payments such travel costs, office supplies, utilities, data processing fees, miscellaneous building repairs, postage costs, maintenance agreements, building rents, etc.
- Grants, including allocations awarded for public transit, rail, aviation, general grants, and Powell Bill payments.
- Miscellaneous service contracts, including general service agreements such as security, janitorial, recycling/waste removal, legal, auditing, etc.