When North Carolina Governor Beverly Perdue, a Democrat serving her first term in office, presented her budget to the legislature last summer, counties were alarmed at the details of her plan. Gov. Perdue’s proposed budget would have shifted more than $100 million of unfunded liabilities to counties, according to estimates provided by the North Carolina Association of County Commissioners (NCACC) last March.
Gov. Perdue’s budget proposal had no chance at becoming law, but as state officials continue to cope with budgetary constraints, some county leaders are wary of what may lie ahead. North Carolina, unlike the federal government, is required to submit and pass a balanced budget. As a consequence, when revenues plummet during recessions, state policymakers are forced to either raise taxes or make cuts, and sometimes do both. Counties and municipalities within North Carolina are forced to do the same. The GOP-led state legislature, thus far, has chosen to exclusively concentrate on scaling back state spending.
Even so, county leaders across the state, including Macon County officials, have reservations about state legislators passing the buck onto counties in the future. Macon County Commissioner Ronnie Beale voiced his concerns to board members at last Tuesday’s meeting in regards to the state’s secondary roads program. Beale, who was elected Vice President of the North Carolina Association of County Commissioners (NCACC) last August, fears that state leaders could implement policies that will force counties to pick up the tab of traditional state programs. Unlike the state’s tax structure, the majority of county revenues derive from local property taxes. “We don’t have many options but to increase property taxes if we have to take on more [financial] responsibilities,” said Macon County Manager Jack Horton.
Horton and Beale share similar concerns. “I am just concerned that if these new legislative districts are passed, 14 counties will be electing half of the legislature,” said Beale at the Dec. 16 board meeting. Electoral gerrymandering, Beale worries, could adversely impact the representation of North Carolina’s rural communities, areas that depend on state money to support their transportation infrastructure. At this point, the secondary roads program, which supports more than 500 miles of secondary roads in Macon County, has not suffered any funding cuts; excluding the fact that the state’s gasoline tax revenues have taken a hit in the aftermath of 2007-2008 recession, as Tar Heels have cut back on their driving to compensate for lost earnings.
“We still have some projects we are going to be completing next year,” said N.C. Department of Transportation Maintenance Supervisor Jimmy Ashe. “Our budget took a hit as gas tax revenues fell over the past few years, so we are having to prioritize our resources very carefully,” said Ashe. He added that he had heard of the rumors floating around about the state making changes to the financing of North Carolina’s road systems, but he does not believe it will happen. “I can’t see that happening,” Ashe said. “There is simply no way counties could take on that role.”
Ashe later said that Macon County’s salt stockpiles for winter weather incidents is costly on its own. One ton of salt cost $150 and they have more than 12,000 tons stockpiled away for this winter in Franklin, while Nantahala has an additional 10,000 tons of salt in preparation for inclement weather. Ashe’s example sheds some light about the high price of building and maintaining North Carolina’s transportation system.
During last week’s commissioners meeting, newly-appointed Chairman Kevin Corbin told Beale that N.C. House Speaker Thom Tillis assured him, personally, that the state would not pass on secondary road funding responsibilities to counties without providing the necessary monies to do so. Speaker Tillis, during his tour across WNC two weeks ago, told Macon County Commissioner Ron Haven the same thing. “I don’t know how these rumors get started, but there is nothing in the works in regards to shifting road costs to counties,” said Speaker Tillis during the business roundtable discussion held at Southwestern Community College’s Macon Campus on Dec.8. “We would not make a change to the system unless we had a way to pay for it,” he said.
Beale, despite Speaker Tillis’ assurances, is still skeptical about the solvency of the state’s secondary roads program and other state administered programs, such as mental health initiatives. Beale’s skepticism emanates from the fact that the state has passed programs down to counties in the past. Most notably, the state’s private well inspection program, which served two million people in North Carolina, was eliminated from the state budget entirely this past year. “We’ve seen this before,” said Beale. “When the state shunned the wells inspection program they only gave counties six months of funding, and after that counties we’re on their own. We just can’t afford something like that happening to us again, especially with our roads. That’s why we are very cautious about our secondary roads program,” stated Beale.
North Carolina has the second largest number of state maintained roads in the United States, and is known as the “Good Roads State.” In total, North Carolina operates more than 100,000 miles of public street and highway systems, and 77 percent of the mileage is operated by the state, 19 percent by cities, and 4 percent by federal and other state agencies, according to the UNC School of Government. As opposed to counties, cities share full responsibility in terms of funding public streets within city limits, and share responsibility with the state in maintaining certain roads inside city limits.
The state took over the funding of county roads following the Great Depression, after many counties found themselves bankrupt. If legislators waive on that specific responsibility, “it would put tremendous pressure on our and many other county budgets,” said Macon County Manager Jack Horton. The State of North Carolina constructs and maintains approximately 68,000 miles of secondary roads throughout the state, and presently, counties do not have to pay a dime of construction or maintenance costs for those roads.
Horton explained that the state has taken up the issue of shifiting road maintenance costs to counties in the past, but due to county lobbying efforts in opposition of the change, the idea never made it anywhere. The legislature also thought about passing additional costs onto county jail systems. According to Horton, State lawmakers were not adequately reimbursing counties for housing state inmates, another example of unfair cost shifting to local governments as state legislators attempt to get the state’s fiscal house in order. “We talk with our representatives quite often about things like this, so they understand our position,” said Horton.
However, even the mere thought of such changes makes county leaders tremble. The NCACC is still uneasy about the state pushing the issue of secondary road funding when the legislature reconvenes in 2012. Moreover, the state will have to tackle some tough issues next year. Namely, the $139 million Medicaid shortfall. “They said they found some monies,” stated Commissioner Beale when asked about the state’s Medicaid shortfall. Commissioner Beale traveled to Raleigh last week to meet with representatives of the NCACC. “I don’t know the exact details, but from what I heard the Medicaid shortfall is not as large as originally reported,” said Beale. If the initial reports are true it will be encouraging news for state leaders already having to confront unfunded liabilities in the National Guard Pension Fund and the State’s Retiree Health-Care pension fund.
Commissioner Beale met with representatives of the NCACC last Wednesday, Dec. 19, where the organization discussed pertinent state legislative issues and established their goals for next year. The NCACC, an organization that advocates on behalf of all 100 North Carolina counties, has lobbied extremely hard on convincing state legislators to protect the financing of the state’s road system, which is financed primarily via gasoline tax revenues. The organization’s primary goal in 2011 was to prevent Raleigh from passing down road maintenance costs to counties. So far, their lobbying efforts have paid off.