How Charlotte can salvage its transit sales tax
Charlotte’s transit vision keeps running into a political reality: The state legislature, which controls whether or not the city can put a new, one-penny sales tax on the ballot, has shown about as much interest as a vegan at a Brazilian steakhouse.
The disagreement is simple, and fundamental: The city of Charlotte wants to invest in light rail, buses, sidewalks, bike lanes and greenways. By 2040, it wants half of all trips to be taken in something other than a car.
Republican House Speaker Tim Moore has a near-opposite vision. In Charlotte this month, he criticized Charlotte’s plans, saying the city should focus on building roads instead of trying to change people’s behaviors and get them out of their cars.
That difference of opinion could doom Charlotte’s plans to raise the Mecklenburg County sales tax by a penny to fund the $13.5 billion transit plan. Most of the money would go to light rail.
Last year, Transit Time explored how the city could move forward with a smaller transit plan by relying on the property tax — which City Council could vote to raise on their own — instead of the sales tax.
Today, let’s examine how the city could still convince the GOP to let it raise the sales tax by a penny. To do that, Charlotte would need to craft an alternative plan that still meets most of its transit goals — while satisfying Moore and other Republican leaders who want a car-first strategy.
How about this: Lend the state money from Charlotte’s local sales tax to build roads now, and then spend on transit in the 2030s.
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The biggest highway project in the Charlotte region — and the state — is a proposed widening of Interstate 77 from uptown to the South Carolina state line. The DOT plans to widen the highway with two express toll lanes in each direction. The projected cost is $2.1 billion.
The state has said that if it expands the highway on its own, it wouldn’t open until the 2040s. If it partners with a private developer, the I-77 toll lanes could open roughly a decade earlier, though likely with higher tolls.
Use penny sales tax to expand the highway immediately
A penny sales tax would likely generate an estimated $290 million in 2024. Assuming it grows by 3.5% annually, the tax would generate about $360 million a year by 2030.
If Charlotte allocated $270 million a year from its new tax for seven years, it would have raised $1.9 billion to pay for the highway widening by 2030. The DOT has said it could contribute $650 million to the project in 2029, meaning the city and state could likely raise more than enough money to pay for the project — and open the lanes on the same timetable as the state’s public-private partnership plan.
- The DOT would then pay the city of Charlotte the rest of the cost back over a 15- or 20-year period, starting in 2030.
- The North Carolina Turnpike Authority would manage the toll lanes and set prices. The price of the tolls would be set at a level 1) to ensure users of the toll lanes would be able to travel at least 45 mph; 2) to cover the operational expenses of managing the lanes; 3) The tolls would not be set to maximize revenue, as is the case with the I-77 managed lanes in north Mecklenburg.
- If there are any operational profits from the tolls, the city of Charlotte would receive a portion of that money and place it in a special fund designated for pedestrian and bike safety programs, such as sidewalk and bike lane construction. The agreement could be structured in such a way that the city would receive most of the profits initially, with the state receiving a greater share as it pays back the city the $2 billion or so it owes.
- While spending money on highways is not part of the city’s transit-centric vision, express toll lanes do align with many council members’ views that driving should cost more money. (Even if tolls are a regressive tax and hurt low-income drivers the most.)
Under this idea, the majority of sales tax money this decade would go to the I-77 toll lanes. But the city of Charlotte could still conceivably raise roughly $370 million this decade to advance either the Red Line commuter train to Lake Norman or the Silver Line light rail from Matthews to the airport. That money would pay for engineering work and some land acquisition.
Starting in 2031 — when the toll lanes are open and the city is finished paying for its share — construction on Charlotte’s rail lines could begin in earnest. That year, the one-cent tax would likely raise about $370 million the city could start to spend on construction costs. And the city would be able to draw on the roughly $2 billion the state would owe the city.
From there, the city could allocate sales tax money between large-scale rail projects and easier-to-build, smaller projects like greenways, bike lanes and sidewalks.
The Silver Line might be built in phases, depending on how much money is available (which the city’s current plan already envisions).
Depending on how much highway investment Republicans want, the city could also lend the state money to expedite improvements to Independence Boulevard.
Andrew Dunn, who writes the newsletter, proposed something similar this week, suggesting Charlotte offer sales-tax money to expand I-77 with free lanes instead of toll lanes.
Republican City Council member Tariq Bokhari said a plan that would spend money on I-77 first is a step in the right direction. He said Charlotte’s current “transit-first” model is “dead in the water.”
Bokhari said he’s working with Mayor Vi Lyles and City Manager Marcus Jones on a new plan that focuses on roads, as well as ways to accommodate self-driving cars. Bokhari, who works in financial technology, has long championed futuristic solutions to the city’s current problems.
Republican City Council member Ed Driggs said it’s worth exploring using city money to widen I-77 faster. He said he will discuss the idea with state transportation officials.