Choose your transportation tax hikes

An advisory committee is sifting through options for state and local taxes, fees and tolls to generate $10 billion in new road and transit money over the next decade.

Gov. Mike Easley and legislative leaders asked the 21st Century Transportation Committee, chaired by Brad Wilson of Raleigh, to recommend ways North Carolina can close a widening gap between shrinking revenues and growing needs for transportation.

Here are some ideas Wilson's committee might recommend to the 2009 General Assembly:

1. Collect a mileage tax. Check car odometers and charge one-quarter or one-half cent for each mile driven — $25 or $50 for every 10,000 miles. Good for $165 million to $330 million in yearly revenues. Trucks would pay more.

So far, this is a crude proposal that could end up charging North Carolinians for miles they drive in other states. The proposal suggests collecting this fee when odometers are checked at everyone's annual automobile inspection. Already, North Carolina is moving toward collecting other fees and taxes at the same time cars are registered each year (inspection fee, car registration and, starting in 2010, county vehicle property taxes.)

Meanwhile, the University of Iowa is enlisting Triangle drivers to road-test a more sophisticated version of a mileage tax, which would use GPS technology to have drivers pay for each mile they drive in each state. This high-tech approach opens new options for local as well as state and national mileage taxes, and for setting different tax rates for different weights and types of vehicles. Any implementation, though, is probably at least a decade away.

2. Increase the Highway Use Tax on car sales. Raise it from the current 3 percent of the car price to 4 percent over two years, a $200 million revenue boost.

This is under consideration because neighboring states collect higher -- some of them, much higher -- taxes on car sales. But at a time when the car business is at a standstill, maybe a tough sell.

3. Let gas taxes rise as a percent of pump prices. If the tax were allowed to rise above the current cap of 29.9 cents a gallon, the state would collect an additional $430 million this year.

The taxes on gas and car sales supply 80 percent of our transportation budget, but collections of both taxes are declining. As Americans switch to more fuel -efficient cars -- and as we look ahead to more options, like the Chevy Volt, that use little or no gas at all -- the gas tax is becoming obselete.

4. Raise the car registration fee from $28 to $58 over three years, for an extra $195 million a year.

5. Issue bonds worth $2 billion to $3 billion to speed construction on congested, high-traffic roads.

6. Let cities or counties collect a 1 percent local sales tax for roads and transit.

7. Allow license, registration and other fees to rise with the inflation index.

8. Collect tolls on Interstate 95 and other interstates to pay for widening them.

9. Collect tolls on existing urban loops to pay for their completion and expansion.

10. Get cities to take over 5,000 miles of secondary roads inside city limits, and give them money to maintain them. City officials, with their own fiscal difficulties, are campaigning against the idea.

source: 21st Century Transportation Committee