The average North Carolina resident pays about $250 each year to the state’s gas tax, but what about electric vehicle drivers who don’t need to fill their tank?

At a meeting hosted by the Wilmington Chamber of Commerce and NC Go, N.C. Department of Transportation officials discussed the Cape Fear Memorial Bridge replacement project and the future of the state’s gas tax, a major revenue stream for the NCDOT, among other transportation issues affecting the region.

Chad Kimes, NCDOT division engineer for the southeastern region, stated the department must find new ways of acquiring capital because of inflation and vehicle advancements. Costs for infrastructure projects are about double what they were five years ago, Kimes said.

Costs have increased for “material and labor especially, anything in the metal business, but labor has just gone up tremendously,” Kimes said. “So, it's a tough balancing act right now.”

The NCDOT is getting a capital injection through Senate Bill 793 passed in the 2021-22 session that gives the department a larger percentage of the state's sales tax, increasing from 2% to 6%. That totals about $600 million in additional funding over three years, Kimes said.

However, money remains tight within the organization due to recent decreases in gas tax revenue. Kimes said this decrease comes from the adoption of fuel-efficient, hybrid and electric vehicles. NCDOT and NC Go officials referenced the disruption of this shift throughout the presentation and offered multiple solutions, including mileage-based user fees and regional sales tax allocation to replace the dwindling revenue.

North Carolina has the second-largest highway system in the country, behind Texas, said Tony Lathrop, who chairs the N.C. Board of Transportation's Funding/Appropriation Strategies (FAST) Committee.

“We need more money,” he said to an audience of business leaders and community members at Wednesday’s meeting.

The region needs to expand transportation infrastructure projects due to a rising state population, one that is projected to grow from 8 million to 12 million by 2030, Lathrop said. The state’s growth plus rising costs have put pressure on NCDOT’s revenue stream. NCDOT does not get any revenue from electric vehicle charging stations, he said.

There are about 80,000 electric or hybrid vehicles on North Carolina roads, Lathrop said, and with the average taxpayer driving a combustion engine vehicle paying $250 each year in gas taxes, NCDOT is losing money.

The state has put fees in place to offset the lack of gas taxes being paid by those not driving combustion engine vehicles. Electric vehicle owners must pay a $180 annual registration fee which goes toward NCDOT revenue and there is a new fee tacked on to transactions with rideshare companies like Uber and Lyft, Lathrop said.

“The whole transportation system has to change as the vehicles change,” said Marc Finlayson, chairman of NC Go’s board of directors.

Other officials acknowledged the industry is moving toward an entirely electric automotive industry, and some states like Oregon and Utah have already implemented pay-per-mile fees, although privacy concerns could stop a wide adoption of this policy in North Carolina.

The NC First Commission through NCDOT was tasked with coming up with alternative revenue streams. The group submitted its final report to the Secretary of Transportation in 2021.

Besides the milage-based fees, proposed solutions include highway use fees, DMV fees, fees on e-commerce deliveries and public-private partnerships. There is also a possibility of using a share of local sales taxes as a revenue stream. Local sales taxes could also be used to supplement the Cape Fear Memorial Bridge replacement cost, one audience member proposed.

While this option is possible, it would need to be approved by the state, which has proved difficult in other parts of the country, said Landon Zimmer, a member of the N.C. Board of Transportation. It is a legislative issue, he said, and the Wilmington Urban Area Metropolitan Planning Organization, which he sits on, has voted to pursue all options to fund the project.  

The Cape Fear Memorial Bridge federal grant application result is expected to come back in the coming weeks. Wilmington Chamber of Commerce President and CEO Natalie English said she expects a plan to replace the bridge to be announced within a year.