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Carolina Journal Radio No. 833: Two stories highlight ongoing incentives debate

Carolina Journal Radio / Donna Martinez and Mitch Kokai
The Truth Network Radio
May 6, 2019 8:00 am

Carolina Journal Radio No. 833: Two stories highlight ongoing incentives debate

Carolina Journal Radio / Donna Martinez and Mitch Kokai

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May 6, 2019 8:00 am

Tax incentives are back in the headlines. Carolina Journal reports the rare story of a major aircraft industry company building operations in Winston-Salem without seeking any handouts from state local government. Meanwhile, S.C. legislators squabble over a multimillion-dollar incentives package designed to lure the Carolina Panthers business operations south of the state line. Rick Henderson, CJ editor-in-chief, analyzes the latest incentives news. North Carolina has made billions of dollars in promises to retired state workers. Those promises involve both pensions and health care. State Treasurer Dale Folwell focuses on the price of those promises. He’s warning policymakers about the importance of ensuring the state’s ability to keep those promises. Medicaid expansion dominates much of North Carolina’s current discussion of health care reform. But some leading state senators continue to object to the expansion proposal originally tied to the Affordable Care Act. You’ll hear their alternative plan for shoring up the existing Medicaid program. Members of the University of North Carolina System’s Board of Governors continue to raise questions about rising costs linked to tuition and fees. You’ll hear highlights from their most recent public discussion of the topic. Policymakers have been looking for ways to address North Carolina’s transportation needs as the gas tax becomes a less reliable funding source. Joseph Coletti, John Locke Foundation senior fellow, recently testified before a state Board of Transportation committee on tax principles to consider when modernizing transportation revenues. Coletti summarizes his key findings.

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From charity to Currituck from the largest city to the smallest and from the statehouse into the schoolhouse Carolina Journal radio your weekly news magazine discussing North Carolina's most of public policy events and issues welcome to Carolina Journal radio what Michiko got during the next hour, Donna Martin, is that I will explore some major issues affecting our state. North Carolina has made billions of dollars of pension and healthcare promises to retired government workers will or what the state treasurer focuses on the price of all of those promises. Medicaid expansion dominates the healthcare debate in the general assembly, but some leading Republican state senators propose an alternative, members of the UNC system's board of governors continue to raise questions about rising tuition and fee costs you hear highlights from their remarks and will learn some tax principles. Policymakers ought to keep in mind as they consider ways to modernize the state's transportation funding. Those topics are just ahead. But first, Donna Martinez joins us and she has the Carolina Journal headline the best way to attract jobs to North Carolina is the subject of ongoing debate is a matter of offering special tax breaks and incentives for certain industries or companies or is it about creating an attractive climate for business and families a beacon for everyone to come to North Carolina to stories and making news in our state are putting this question back in the spotlight. Rick Henderson is editor-in-chief of Carolina Journal he joins us now Carolina Journal has been reporting on a lot of issues about attracting business in North Carolina. Rick joins us to talk a little bit about some of the specifics that welcome back to the show. Thank you. All right, first of all, one story out of Winston-Salem is really good news for the Triad community. We've got a new business that is going to be operating. It's a major aircraft industry players tell us that this is a group that's called our O holdings, Inc. this is their North American subsidiary company was based in El Salvador. What the company does is MRO that is maintenance, repair and overhaul of largely commercial aircraft and they have been in business for a number of years or one of the biggest players in the world and what they have done is I have come to offer for the company known as North state aviation, which operates the maintenance operations MRO operations Smith Reynolds airport Winston-Salem and this is really good news for the Triad area because state aviation had taken over what was left of the maintenance, repair crews who were formally Piedmont Airlines and USAir and have continued to keep some maintenance and repair operations going at Smith Reynolds with the company itself and a lot of financial trouble and this infusion of capital and management expertise is going to be big news for for the Triad because it may mean the Smith Reynolds has the opportunity to become one of the largest MRO locations on the East Coast. Looks like there's several hundred jobs that are associated with this since something very interesting. On top of the good news that a company wants to be here, and it's a growing industry.

They have not asked in happen asked for and they have not received any sort of government financial incentives to come.

That's right, they did not get any sort of special deal to come here.

The only thing that happened from my understanding was that there may have been some arrangement made with the owners of North state aviation to get some debt forgiveness because the company itself had reorganized for bankruptcy protection.

Couple years ago people who were there lost her job. Some got hired back, but the company itself is been operating else shoestring and barely making ends meet since it reorganized a couple years back, and so MRO in the process of purchasing may be getting some debt forgiveness from some local agencies but nothing in the lines of the sorts of incentives you would normally see as certain if certain payments per job are certain sorts of free infrastructure, things like after getting nothing like that at all is basically going to be a turnkey operation and Sam Heep, who wrote a story about this for Carolina journal@carolinajournal.com was talking with the person who warrants MRO holdings and and Mr. Cogan essentially saying were not looking for him like this) refreshing. That is, it is a bit mean they are. They are looking for locations to expand their operations. Smith Reynolds is perfect for that because again it was the primary repair and overhaul side for Piedmont Airlines until USAir took over that it was a pretty big operation. Even so, my best friend from high school started as a maintenance trainer for Piedmont Airlines might actually have an emotional state now and and this is this is something that they're very excited about there because the opportunity for higher paying jobs and more jobs there and Mr. Golden basically said look, these are great babies are great.

These are great places for us to repair aircraft and because the number of commercial aircraft is going to be growing, but because you don't really have to build new planes to have serviceable and and quite modern commercial airliners.

A lot of these airliners are basically putting mothballs when they are not needed by specific good Airlines and so you physically bring them to a location refurbish them completely and keep them in the air for a long time and so the demand for commercial aircraft is going to grow but at the same time, the need for brand-new ones is not that great and so this will be an opportunity to simply rebuild his aircraft to do right here North Carolina in-service PTI which is a big general aviation or airport as well as as well as the commercial report but also other larger ports all run southeast.

What's interesting. I think Rick is that when we hear this debate about how do we retain jobs. How do we attract new companies to North Carolina many times you will hear people who support the idea of government incentives or government tax rates say well it's not possible for for us just to say come here because this is a great steak as we got great infrastructure because we have an educated workforce, etc. they say companies want to come here. We've got to compete with other states and other communities that are offering incentives this story out of Winston-Salem essentially says it can't be done now this is this is a very unusual situation because you had an operating facility that the capacity to handle someone who wanted to come in and make a new capital investment and infuse money and expertise there at Smith Reynolds but by the same token there awful lot of commercial and industrial sites around that could be either built or refurbished to handle new companies and they did cite the fact that there was the workforce in place was experience that there were one tax rates. If there was a good regulatory climate is real important things but when you combine that with the with this infrastructure in place to make this happen. Incentives would you simply have been throwing me but it would've been throwing money at a problem that that didn't exist.

And so that's why so many of these incentives to of proposals really just don't stand up to much scrutiny.

What you really look at let's move over then to what's happening in Charlotte specifically with the Charlotte Panthers sent a fascinating discussion and debate is now playing out having to do with the state of South Carolina wanting to try to attract the Carolina Panthers business operation out of Charlotte over the line into York County, South Carolina talking about incentives that hundred and 15 million bucks worth of incentives to try to do this and now you have some state legislators in South Carolina, saying hey, wait a second, were not so sure about this right will, there's a huge debate about what's going happen with the Panthers because the new owner of the Panthers David Tepper very much wants the area around Bank of America Stadium to be such that with renovations and the like, you could host an event like an NCAA final four or Super Bowl. And right now you can't do that, given the facility that exists. Therefore, there is not a roof on the stadium and know some things going on, and so South Carolina is trying to lure the business operations away from B of a to an area just across the line in this team always says we are to Carolinas but one team and there is a move for the about hundred $50 million in state incentives to the Panthers to do that if you move the operations away from Bank of America Stadium. There might be room to expand the stadium and actually do what David Tepper would like to do and I'm sure Charlotte will come forward and throw some money at him, even. But the that the issue more for South Carolina is that you got some senators followed by Dick carpooling Democrat to buy his family's been very active in South Carolina politics for a long time saying wait a minute. These incentive deals are what they're cracked up to be in at a minimum.

If we can't stop this deal was trying to do. We can't stop this deal. We want our state auditors to look at all the incentive deals we've done over the past 10 years and see what the states actually gotten out of the deal because we are pretty sure that they have a deliverables promised you know that not a fascinating question and I'm good for them and hopefully they'll go forward and try to figure out the answer to that here in North Carolina be a great question to be asked is well sure, absolutely.

Having if there were some so you think that there is possibility to do something like that to have some sort of enabling legislation which says really start looking back exactly these incentive deals and see what the taxpayers of God from money to give away women talking with Rick Henderson. He is editor-in-chief of Carolina Journal about Ted. This issue of incentives thank you stay with his mentor Carolina Journal radio to come in just a moment government plays a key role in your life affecting your paycheck the way you educate your kids the way you do business. How can you tell if government is doing a good job making the right choices.

Spending tax dollars wisely. Carolina Journal.com tackles those questions every day. The John Locke foundation publishes Carolina Journal imprint each month and on the web each day at Carolina. Journal.com you'll find exclusive investigative reports on topics. No one else is covering what else a rundown of the best news stories, editorials and opinion columns in North Carolina. John Hood's daily Journal news stories and important public events@carolinajournal.tv and the voices of the newsmakers themselves at Carolina Journal radio and print on the air and on the web.

You can find the information you need@carolinajournal.com welcome back to Carolina Journal radio I Mitch coconut North Carolina government is made plenty of promises to its workers and retirees. Our next guest devotes much of his time to focusing on the price of those promises will fall well is the elected state treasurer of North Carolina walk back to the program.

Thank you for having me and hello to your listeners. This is a big issue is that the price of all of these promises that over the years to government is made to workers for government and the retirees who left service wise is something to focus on. Well it is something to focus on because it's not emotional is not political words is mathematical is not just made this focusing on this. This is one Buffett and Bill Gates who over seven years ago, said the following. The single biggest threat to public education is how states account and fund unfunded healthcare and pension obligations to public service workers so these issues are happening not because on the state treasurer, but because this is mathematically where we are and just very generally, your listeners don't wake up thing about life expectancies, unfunded liabilities AAA bond ratings, but all of these things matter when the state is trying to be solvent and trying to fulfill their obligations of healthcare and pension to public service workers.

Yes, some people are going to hear the topic in the eyes will glaze over something that's that policy walks or people like the state treasurer need to focus on why do they need to know that this is something important that has to be addressed will we always categorize. This is why should you care and the reason you should care is that your listeners you get up in the morning thinking about how we can best educate our kids how how we gonna protect ourselves from crime, however, pave our roads and all the other core functions of our state government. I can certify to use the state treasurer that all those things that your listeners wake up thinking about are be negatively impacted over the next 20 years. Based on the tremendous and rising cost of healthcare and pension obligations coming out the state budget, and this is something that's that's going on and what were trying to do is were trying to bring this to the attention of obviously the policymakers and the in your listeners, but also to let them know that were not there at the treasurer's office just around the public purse. There were there were there to try to find and fix these problems and fixing it means putting on and on a path to where the this is sustainable in the last thing the schoolteacher or highway patrolman should be worried about when they leave their house everyday is how safe and secure my pension and healthcare benefit is were trying to make sure that were good stewards of the public purse. We are chatting with Dale Falwell he is the state treasurer of North Carolina so people who might be following this issue will save money not really heard that there's any problem with that, the pension system or the healthcare system Our budget in North Carolina wasn't pretty good shape. Are they wrong, they are correct. North Carolina has one of 14 states that has a AAA bond rating right now and the reason we have AAA bond rating is that because the conservative policies.

The general assembly, the state budget has been running surpluses for the last several years, we have one of the strongest Rainy Day trust funds in United States one of the strongest unemployment trust funds United States so that we could weather the next recession. But these unfunded liabilities total nearly $50 billion are brought a report here Mitch from 39 years ago from former treasurer Harlan Bowles who said that these unfunded liabilities those little understood will eventually equal surpass and then dwarf the amount of debt.

The state has outstanding right now we have about $5 billion of that nearly $50 billion of unfunded liabilities and the pension is one of the best funded night states. It's about 90% funded South Carolina's pension plans 50% funded one of the Kentucky systems is 32% funded but is that the pension is about a $14 billion unfunded next to it and the reason is is that it has not achieved its assumed rate of return on average for 21 years, but then you go to the hillside and her unfunded healthcare liability is one of the exit right behind Illinois are state health plan. Unlike the pension plan is only for percent funded and our liability in relation to the size of our state puts us right behind Illinois same Illinois that your listeners have been hearing about it being such a dire situation. So we've got these situations that are unsustainable going forward. What we have to do now to get us on the right path. Well, what we have to do is it's it's it's a military term but is called IRI and a lot of people heard that word all their life, but very few know what it means. I means I hear what you've told me understand what you're trying to say and I'm trying and I will do something about that. So on the pension side.

What were trying to do is make sure money is not leaving the plan unnecessarily when don't say this in a inelegant way, but the stock market doesn't care with the treasurer's needs are for the pension plan or any of your listeners, but the at the end of the day we what we do is focus on money not leaving. The plan was not supposed to numb one's Wall Street fees, which were on a four year run rate right now to cut over $400 million just in Wall Street fees. Secondly, were making sure were not sending pension checks to people whose the actual pensioners. Deceased was somebody who is currently on trial for cashing his deceased mother's pension check for six teen years, and other kinds of things.

Felony forfeiture law for people who commit crime from public-service duty and the like on the healthcare side will work doing is much like the Wall Street ciders were not take advantage of our largeness. It's unexplainable that the largest purchaser of healthcare North Carolina Kate purchase healthcare better and more efficiently than anyone else can and depersonalize this the reason that your listeners should care about this is that for the beginning teacher beginning trooper North Carolina in order to access the family premium network. One week out of the work month. That is unacceptable is the largest purchaser of this product in the state. You also mentioned that we have a little bit more time to talk about it that as well. So in addition to these unfunded liabilities. North Carolina has a lot of debt you been focusing on that as well. Here we have the debt affordability committee which I am the chair of and the debt affordability of study was something that was put in law about 15 years ago and no pun intended. It was meant to be a governor in the verb sense so that the treasurer could communicate directly with the governor who produces a budget in the general assembly who also produces a budget to let them know what are that ceilings are and how much ability do we have to borrow that and so we have the connect and see bonds the build and see initiative so will one to make sure that we manage our debt so that we can afford the interest on the debt in a condition to the healthcare pension obligations while they are certainly very important issues for us to keep up with and one person who's keeping his eye on that ball and as always use our state treasurer Dale Falwell.

Thanks much for doing some program. Thank you for having a more a Carolina Journal radio in just a moment.

If you have freedom we got great news to share with you now. You can find the latest news, views, and research from conservative groups across North Carolina all in one place North Carolina conservative.com. It's one-stop shopping for North Carolina's freedom movement and North Carolina conservative.com. You'll find links to John Locke foundation blogs on the days news Carolina Journal.com reporting and quick takes Carolina Journal radio interviews TV interviews featuring CJ reporters and Locke foundation analysts, opinion pieces and reports on higher education from the James G. Martin Center for academic renewal, commentary and polling data from the scimitar's Institute and news and views from the North Carolina family policy Council. That's right, all in one place North Carolina conservative.com that's North Carolina spelled out conservative.com North Carolina conservative.com. Try it today. North Carolina is changing not just day-to-day but outward to our minute to minute and 2nd to 2nd, how can you keep up with the changes, especially the ones that affect you, your family, your home, your job, make the John Locke foundation and Carolina Journal part of your social media diet on Facebook like the John Locke foundation like Carolina Journal. Follow us on Twitter at John Locke in C and at Carolina. Journal news, insights and analysis you'll find nowhere else. Thanks to the experts at the John Locke foundation and thanks to the first-class investigative reporting of Carolina Journal.

Don't wait for the morning newspaper wait for the evening news. It's happening now it's happening here the John Locke foundation and Carolina Journal have you covered with up to the second information like us on Facebook the John Locke foundation and Carolina Journal. Follow us on Twitter at John Locke NC and at Carolina. Journal did you know you can now advance freedom and free markets just by shopping with Amazon it's true online shopping is now a great way to support the John Locke foundation just shot using the Amazon smile program and designate the work foundation to receive a portion of your purchase amount that's right you shop and Amazon donates money to ask the John Locke foundation. So here's how it works a lot of time to smile.amazon.com Amazon smile.

It's the same Amazon you know same products same prices is much better. Amazon donates .5% of the price of your eligible purchases to pass the John Locke foundation to try it. Be sure to designate the Locke foundation is a nonprofit, you want to support. It's that easy. So now not only will you enjoy what you buy will also support freedom. Don't forget log on to smile.amazon.com today by something nice and help defend freedom. Support the John Locke foundation. Welcome back Carolina Journal radio language coca some North Carolina lawmakers want to expand the state's Medicaid program, but critics say that expansion would divert money from the people who need it most. Republican State Sen. Joyce chronic explained within the last 15 years are Medicaid enrollees that population has grown by a million.

At the same time we have had a 28% decrease in providers who service that population.

So we moved more access to care and that's a priority for us on the Senate side health policy reform should be measured by a patient access to quality, affordable healthcare traffic cosponsors the care expansion act. The first thing that the healthcare act would do is provide $41 million to fund 2000 slots of the intellectual developmental disability population Medicaid program list.

Many of these families have been waiting to average wait time has been seven years, so that is crucial that we get the services to these people who needed. Currently there are about 12,000 that are being served in North Carolina. There's another 12,000 on that waiting on the IDG Medicaid program for this if you don't know. It offers personal care services and other in-home assistance to individuals with severe intellectual developmental need and are unable to care for themselves. They have an array of disabilities including spinal cord injuries, traumatic brain injuries in a number of other diagnoses. It frees up their family to provide for them for their loved ones that funding more slots on the IDD waitlist will be changing the last of thousands of families across North Carolina understand that expanding Medicaid is the top agenda for meaning, but let's give some thought to what that actually means.

Medicaid expansion means taxpayer-funded health insurance for able-bodied childless adult that is most of that expansion population to us this IDD population. These folks that have been waiting for a number of years you have severe needs should always be ahead of able-bodied working adults. They deserve to be at the head of the list where here to make sure that they're taking care of, and until all of the truly needy on that IDD list are taken care of. We should not even be considering expanding Medicaid because it will states that have expanded we have already seen how it has caused services to be lost to this truly needy population that's State Sen. Joyce, chronic Republican from Forsyth County. She's explaining a key piece of the proposed health care expansion act will return with more Carolina Journal radio in a moment where doubling down on freedom at Carolina Journal radio were proud to bring you stories that impact your life and your wallet. And now get twice as much freedom when you also listen to our podcast headlock available on iTunes and@johnlocke.org/podcast headlock is a little bit different. It's a no holds barred discussion that challenges his softheaded ideas from the left and the right, like Carolina Journal radio headlock is smart and timely but with headlock you'll hear more about the culture wars get some more humor as well. We guarantee great information and a good time double down with us. Listen to Carolina Journal radio each week and listen to headlock to remember, you can listen to headlock@johnlocke.org/podcast or subscriber download each week iTunes Carolina Journal radio and headlock just what you need to stay informed and stay entertained both brought to you in the name of freedom by the John Locke foundation will go back Carolina Journal radio I Mitch coca members of the University of North Carolina's board of governors continued to ask questions about rising tuition and fee costs member Tom Goolsby broached the topic during a recent meeting. My concern is, of course, folks, graduating with law degrees, on average, about $110,000 in debt. Folks with medical degrees leaving school with debts of about $200,000. Overall we've increased.

I believe in the light over 10 years now on the board. The cost of tuition and fees double student that is crushing. Students not only in North Carolina but across the United States that I think about 1.5 trillion, the only thing that's more weight on graduates is mortgages student.

That is something that were all concerned about and we watched it double in the last 10 years as our tuition and fees of double I hope that we will continue to work hard to keep tuition costs in check. Our university system is supposed to be as free as possible and I do have concerns about the debt that students, as I know all of you do, Goolsby raised additional questions about growing levels of student debt. I would also ask us to think as we go forward in student debt becomes more and more of a problem for people, particularly our millennial's as they leave school.

We've seen super dad in the last 10 years on average 13 years on average. Go from about 20,000 to about $40,000 for students across the United States and I think it's time that we consider our universities cosigning the loans with the students. I don't know if many of you had a chance to share shared with several of you recent editorial I heard about Tooker Carlson on this issue and I thought that he made a very good point.

There a lot of very successful business people in this room done quite well in business and you know that in business.

Many times will most of the time when doing the contracts with people their joint ventures and you both take the risks. Right now it's just our students take the risk if they get a degree that's worthless or if they get accepted to a programmer they don't have the skills for and flunk out there still stuck with that debt. If they do get a job. It's worthwhile and unable to pay it back.

That's great. The University system wins the students with but I think it's time for us to seriously consider our university cosigning the debt with the students, which would hold us accountable so that the people we let into our system. We really have a vested interest in seeing that they succeed I think it's past time for us to consider doing that I hope as we move forward that we make such a decision. I think it's proper. I think it puts us in the same shoes as the students who many have overwhelming that it would help us keep costs down and focus on what's really important. As we've already already recognized which is student graduation rates and student success puts us in their shoes and holds us just as accountable as they are board member Temple Sloan responded to Goolsby's concerns. Nobody could agree with you more than this war.

Nobody could agree with everything you said more than five and the governor Goolsby open till two years ago the budget and finance committee did not review graduate school or out-of-state tuition and not only down to we challenge in-state undergraduate to actuation. We review and challenge graduate school in-state graduate school and all out-of-state graduate tuitions as well. So your comments are oral or very well attended and very well accepted like in addition to tuition or member Steve Long asked Board Chairman Harry Smith and others to focus on rising student fees.

This chairman upset you several times that parents are knee include our feet up we merge and I think you look here.

The campus security fee is one of the fees here because you not are the history and present Ross was here the campuses needed money to increase hours for law enforcement officers and I believe absolutely we should be competitive with our law enforcement officers because all of us were really really appreciate all of they do, especially for us other people in the campuses but I would hope that the committee would look at transitioning that fee to tuition and because there are some things that I think should not be fees and we've got a call into this trend where well hey if we need the money less. Let's put it negative fee and I think we need to put our operating costs more in tuition fees so I would hope that the committee would some point look at factors we really ought to spit a lot, they don't see the philosophically what goes into a fee as opposed tuition board member Tom Fetzer piped into the loans point the budget committee was reviewing all the increase request from the campuses. There was not a single request from any of the campuses for an increase in security which was interesting to me do all the campuses feel like they have sufficient security on campus is secure student safety.

Lots of a request for increasing athletic fees and other fees to the parents. As you said fees and tuition are indistinguishable, they write one check and while were doing a lot of holding the line on tuition. August year ago.

This board, I think merely unanimously passed resolution to assess the institutions to reduce tuitions and fees if at all practical.

So fees continue to go up even with a 3% Over 10 years. It gets to be a pretty big number for parents so we gotta admonish and encourage the institutions to look at these and tuition holistically.

That's one number to a parent and it needs to come down board members David Powers and Steve Long debated the merits of dropping fees in return for higher tuition rates in certain university programs, particularly as it relates to the special fees. The program oriented fees.

Things like the engineering for you North Carolina State or the business school fee at UNC Chapel Hill. I think differentiated tuition for programs like this, as opposed to a fee is a much better way want to give school more flexibility in how they can expend the money.

I know there's been a lot of resistance to differentiated tuition but I think it's it's time for us to really take a look at that, particularly when it rouses program specific fees I think is really something will study consider finding a way to make a switch agree with Mr. Powers on that unit. There is a tooth on our character to go overboard because you don't want teaching degree to get a very low tuition engineering degree got very hot tuition sleep go to a report about, but I do agree with you some of the specialized programs. My response that for my is one not.

Why can't a teaching degree be a lot less expensive than engineering degree those you know any look at this from an investment standpoint and for me is great lesson of the thing I I was willing to champion the business school for you. Chapel Hill goes arresting the students been 4000 more dollars in their tenure and to make $23,000 a year on average more for the rest of their working career is pretty good lesson for young person to learn about economics so I don't really have a problem with an engineering degree or business degree or potentially higher earning degree, been more expensive than a teaching degree, as is the husband of the teacher and the son of the teacher. I know now thankless that profession can be under financial rewards are not very strong. I don't have a big problem with that, quite frankly, that interchange between David Powers and Steve Long made a part of the UNC board of governors latest debate about University tuition and fees overture with North Carolina journal radio and about a commitment to truth and transparency in government. That is the mission of Carolina journal and we are proud to deliver and now proud to tell you the North Carolina press Association has honored to members of our team with awards reporting and writing, that's right, we really do deliver award-winning journalism we shine the light on government spending, reveal the truth about boondoggles and dig deep into programs paid for with your tax money. We keep you in the know in a way other media outlets don't in our reach and influence are growing all of our outlets. We reach more than 1 million N. Carolinians each month so make sure you're one of them.

Our monthly print edition arrives in your mailbox every month. Our online daily news site Carolina journal.com has fresh stories, opinion pieces, and more. The award-winning Carolina journal team I reporters make government accountable to you. Call 1866 JL FINFO for your free subscription, welcome back to Carolina journal radio I'm Donna Martinez, North Carolina.

Each year has millions less than it needs to maintain our roads and bridges so the question of course is what we do about that. While there are people who are looking at that issue.

One of them is Joe Colletti who is a John Locke foundation Senior fellow and recently Joe testified before a North Carolina Board of transportation committee to help guide officials to sound tax principles when they're making their decisions about transportation funding. Joe joins us now to talk about those principles. Joe welcome back to be first of all, people might be shocked, actually, to hear that. Oh my gosh meet each year were not adequately maintaining our roads and bridges. So what gives you the state spends $5 billion on transportation from the money comes from a number of sources, but half of that money goes to construction and about $1.4 billion a year goes to maintain our existing roads and bridges. Those that are that the state owns, but from what we seen and there's about a $2 billion need. So you end up short, a fair number of times and that's part of wire where the board of transportation is looking at how to reform our road funding so that we can meet these needs and the new construction needs that state does that mean that our roads and bridges are unsafe. No, actually, North Carolina does really well on most of the national rankings of bridge safety Road safety Road condition and part of that is that a few years ago we started prioritizing what gets built in the construction that happens took a lot of those decisions away from political decisions and put them into engineers hands and so we have a ranking system and were taking care of those highest needs earlier and so the condition of our roads and bridges is actually in good shape but trying to get ahead of that inmate and actually keep them from from falling into bad shape is where the maintenance comes, you know, as I drive around Joe. One thing that that time I see is a lot of people who are now driving a hybrid some people driving electric vehicles as well. See how the big question about the way we fund our roads. First of all, and does that mean that through advances in technology may be changing. Coomer consumer behavior are we taking in less money is at the heart of the issue here. The improving fuel economy of cars is it is a significant part of what's going on that and it's not just hybrids and an electric vehicles which are still a small portion of the of the fleet of vehicles on the road but cars in general have gotten better, are are much more fuel-efficient than they were. You can get 30 miles per gallon on a car that used to get 24 on on trucks that used to get 24 that used to get 18 there up to 24 and even at heavy duty vehicles are are doubling their fuel efficiency sales. We are filling up with less gas and gas taxes. Part of the net in a significant portion of the of our funding mechanism is the biggest portion is actually the gas tax and in there were some reform on that site as well. In 2015 there is the gas taxes post fall by about seven cents and instead, the legislature converted what was the ceiling into a floor and it there's some allowance for her to adjust with inflation. But the gas taxes as is a fraction of what it was years ago what it was inflation-adjusted terms about dollar 20 and it's about $0.37 to state officials, transportation officials have interesting set of challenges ahead as they try to make sure that everything continues to be safe and that the maintenance occurs. The building occurs, etc. so you'd been invited to speak before a board of transportation committee about this to give him a little bit of guidance and you set out. Essentially, some core principles that that you believe are vital for them to follow the first one was identify core needs help us understand that's goes to the engineering question before of what is it that we need in the state and and they've been the new construction plan helps identify those new needs but there should be looked back at what we already have because North Carolina has more state maintained roads than just about any other state in the country and we probably have more roads and more overdeveloped roads than we need, and so really looking ahead at what is it that we really need. Do we need four-lane roads connecting laces that have almost no traffic on them versus do we need toll roads in places where there is heavy traffic and where you can pay for those things, like looking at temp growth areas and then also looking at maybe congestion, pockets, etc. and that wasn't being done before. Right. That was that's what the engineering plan. The reform provided more of that.

But now looking back at the existing roads that we have an especially in the maintenance I should we beat me maintaining all the roads that we have to the level that were maintaining them or should should we allow some degradation to it to happen naturally so you also talked with the committee about how were going to pay for whatever it is that they determine is a legitimate need for roads and bridges, etc. and you use an interesting phrase which really piqued my interest. She said make the user pay wasn't made by Vince is essentially how we do roads already which is a great thing with with how we've been able to maintain the roads that were that we have so far that when you buy a car, unlike if you're using public transportation. Your user, the fair that you pay on the bus is the only part that you pay everything else comes out of taxes. But if you're using your own vehicle you paid for the car so you pay for the physically equivalent of the bus itself. You have the title you have the property tax you have all of the pieces of that already.

And then you pay the gas tax and so the debts that we should keep that essential framework and now the question is that gas tax. The variable part of all of that is it the right way to fund it. And part of that is that with fuel efficiency improvements. Probably not. It's we should take a look at what's the weight of the vehicle and how far you driving so that you're getting to the gas tax was originally intended to be, how much, where are you putting on the road while driving it's it's much more personalized individualized to your individual impact on the road system versus some sort of an aggregate exactly and so and so, if the if fuel efficiency is improving that much. Then we have to figure out is, is there a better way to get that weight and mileage equivalent in and charge people based on okay so based on that idea alone.

Joe I bet this can be pushback on that idea because that could mean that some people if they're having a greater impact than they are now paying they would be paying more. The biggest impact is likely going to be on those hybrids and electric vehicles really right now, which right now don't pay right if you have a hybrid you're paying a fraction of the gas that you that somebody with an equivalent size vehicle misusing. If you have an electric you're paying no gas tax, but if you're if you're driving a heavy if you're driving a large pickup. If you're driving a van if you're driving in a large commercial vehicle you're probably already there's some equivalent that you're already paying in the gas tax because it's not as fuel-efficient, even if it's more fuel-efficient than it was. So there still to be that quick part is already in embedded in the gas tax that they're paying just a question of how do you calculate that and how do we make sure that that's right. And Joe. Lastly, you recommended this subsidize the person, not the system. What did you mean about that is like public transit where you pay your fair which doesn't cover the whole cost we should take a look at. Should we be subsidizing individuals in their use of the vehicle. Should we allow them to use the money to purchase a vehicle and take care of that with a subsidy or use Buber or something like that to meet their individual needs. Instead of having a system of buses that are half-full or a fraction or fractional use. It's a very interesting idea, particularly with the a massive them. Growth in the ridesharing industry. Joe Colletti is senior fellow with the John Locke foundation. It's a really interesting piece you can read it@johnlocke.org just think that's all the time we have for the program this week.

Thank you for listening on behalf of my cohost Mitch. Okay I'm Donna Martinez hope you'll join us next week for more Carolina journal radio Carolina journal radio is a program of the John lung foundation to learn more about the John Locke foundation, including donations that support programs like Carolina journal radio send email to development John Locke.or call 1866 jail left info 166-553-4636 Carolina journal radio is the John lung foundation, Carolina spring, maintaining an Carolina broadcasting system, Inc. all opinions expressed on this program are so clearly written plan for this nation. More information about the show. Other programs and services of the foundation timeline toll-free at 868 JL would like to thank our wonderful radio affiliates across Carolina and our sponsors. Carolina journal radio. Thank you for listening.

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