Who pays for the "good roads" state? The impacts of existing and new transportation revenue mechanisms on North Carolina drivers

Current transportation funding mechanisms (most notably the gas tax) are inadequate to fund the United States' transportation infrastructure needs through the Highway Trust Fund (HTF) due to a combination of inflation and increased fuel efficiency. As a result, many policymakers and transportation policy experts have recommended a transition from the current gas tax system to a fee on vehicle miles traveled (VMT). Previous studies of a VMT tax, including those conducted by several congressionally-chartered commissions, indicate that this transition will result in a more stable funding source for transportation infrastructure that acts as a true user fee on all vehicles, including those powered by alternative fuels. However, concerns have arisen regarding the distributional impacts of a VMT tax, particularly the concern that it will exert a disproportionately negative impact on low-income drivers and rural drivers. Data from the 2009 National Household Travel Survey was examined to determine the impact of a potential transition on rural and low-income drivers in North Carolina. Analysis of the data from the 2009 NHTS suggests that, for North Carolina drivers, a revenue-neutral VMT fee would not be significantly more regressive than the current gas tax. Rather, the average gas tax paid by North Carolina drivers per vehicle decreases under a revenue neutral VMT fee. Assuming that VMT will continue to decrease as individuals drive less due to rising gas prices, the average tax paid under a VMT fee will continue to decrease even further relative to the current gas tax. While rural and urban low-income drivers pay less in taxes than non-low income drivers, these individuals and households pay a higher percentage of their incomes in fuel taxes. This would not significantly change under a VMT fee, as the total tax paid would only decrease by less than a dollar for most groups. Policymakers should press for a transition to a VMT fee due to its relative stability compared to the gas tax as well as its adherence to the "user pays" principle. This study does not, however, examine the impacts of higher revenue levels (increasing the gas tax or the VMT fee). The burdens of either a higher gas tax or increased VMT fee rates can be alleviated by adjusting the Earned Income Tax Credit to account for VMT as well as supporting funding for public transportation in both urban and rural areas.Master of City and Regional Plannin