Approved! Dedication of Transportation-related State Sales Taxes for Transportation Purposes

The Governor has signed the North Carolina state budget into law. This year’s budget incorporates a vitally important, game changing transportation policy and revenue provision based on Senate bill 793, introduced earlier this session.

The provision will dedicate 2% of overall sales tax revenue to transportation commencing with fiscal year 2023, which has already begun as of July 1. In the next two fiscal years the percentage will continuously build by 2% before capping out and staying at 6% by the end of FY 2025.

The transportation-related sales tax provision is expected to raise $600 million annually once it reaches 6%, representing around $6 billion in new revenue for transportation statewide over a decade. The resources would be primarily dedicated to capital infrastructure (i.e., the state “Highway Trust Fund”) starting in fiscal year 2024, although a portion of the new resources — including 100% of the new funding this fiscal year — will go to operations and maintenance via the state “Highway Fund”.

The regional business community has been pushing for the dedication of transportation dollars for transportation purposes for multiple years. RTA innovative paradigms chair Troy Dover with Summit Design and Engineering Services and RTA legislative and policy chair Julia Wright with Dominion Energy highlighted this issue and opportunity at our spring RTA Regional Leadership Team meeting. The approved budget provision achieves RTA’s objectives in a sustainable and simple way — by allocating overall state sales tax revenues that are roughly equivalent to sales tax receipts associated with automotive-related purchases to transportation.

Last month I said that legislative approval of the sales tax dedication initiative would fuel momentum to modernize funding for transportation. With the successful passage and signing of the needed legislation, momentum and attention is indeed building on the opportunity for transportation funding modernization. Our focus now moves to specific potential methods to do just that including a vehicle registration-based access user fee.

Kudos to the NC Chamber-led Destination 2030 Coalition — and all statewide members of the Coalition — for the excellent leadership and partnership on this year’s legislative session. RTA is happy to be be a longtime member of the Coalition and we will continue to work with other partners across the state to  ensure sustainability in transportation funding.

Lets Get Moving,

Joe Milazzo II, PE
RTA Executive Director

RTA is the voice of the regional business community on transportation



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