Transit plan’s ‘road money’ would free up cash for other city priorities
Charlotte's city manager says the new $103 million a year could take pressure off the city's general fund; 'salaries for police officers, for firefighters'
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Money from an increased transit sales tax might replace — not supplement — existing spending on roads, fueling more spending on non-transportation projects
Charlotte officials have recently indicated that money from the proposed transit plan that would go for roads would free up money for other city priorities, which could include affordable housing, employee salaries and police.
by Steve Harrison
WFAE
When the North Carolina lottery began in 2005, the idea was that all money would go to public education. The public believed the lottery dollars would supplement money already spent on K-12 schools.
But over the last two decades, critics say the lottery money has, in part, replaced money that was previously going to education.
In other words, it was something of a shell game, not a net spending boost.
Is the same thing about to happen with the “road money” that’s a key part of Charlotte’s transit plan?
Charlotte City Manager Marcus Jones has repeatedly suggested in his recent public comments that the proposed 1 percentage point increase in Mecklenburg’s sales tax — which would be used to fund new trains, buses and roads — could help free up millions of dollars for other city priorities.
During a budget presentation last week, Jones said the sales tax increase is important, in part, because it will relieve pressure on the general fund and the property tax rate. In other words, new revenue from the sales tax could replace some money the city spends today on roads and sidewalks, allowing Charlotte to shift that money to other things — possibly affordable housing, employee salaries and the police and fire departments.
“What’s important about the sales tax for transportation … is that (money) can go directly into our debt service bucket. It gives us more capacity to take some of the property tax and put it back in the general fund budget, and that pays salaries for police officers, for firefighters.”
He added: “While it’s all about mobility, it provides some relief on the general fund and the property tax.”
In other words, if the sales tax passes, the city wouldn’t necessarily continue spending today’s road money — plus the estimated $103 million in new road money each year. (That $103 million is equal to about 11% of the city’s general fund budget.)
To be clear, the plan will clearly raise billions for trains and buses that would otherwise not be available, and the city has never made an explicit promise that every dollar from raising the tax from 7.25% to 8.25% would be a net gain and not replace a dollar that’s already being spent today.
But that’s been implied in the messaging. Leaders have said the tax is needed because Charlotte is a fast-growing city whose current transportation spending is not enough to stave off gridlock.
Old plan didn’t call for general fund relief
Charlotte’s original transportation plan was never discussed as a way to relieve the general fund and the property tax rate.
As recently as early 2024, the plan called for roughly 80% to 90% of the sales tax revenue to be spent to build and operate rail transit. The remaining money would be spent on buses, along with roads and sidewalks and bike lanes.
But Republican lawmakers in Raleigh balked at spending so much money on trains. Former House Speaker Tim Moore in 2023 and 2024 called for a “roads first” plan. GOP Senate leader Phil Berger agreed.
In the spring of 2024, Charlotte, Mecklenburg County and the leader of most Mecklenburg towns agreed on a new funding formula: At least 40% of sales tax money for roads, and no more than 40% for rail transit. The remaining 20% could be spent on buses.
That was meant to please the GOP, and it worked. Earlier this year, Berger and new House speaker Destin Hall praised Charlotte’s new proposal. (Two bills authorizing a sales tax vote haven’t moved forward in the General Assembly, however.)
The idea of a new pot of road money also helped secure the support of the tax from the Charlotte Executive Leadership Council (CELC), a group of business leaders led by Atrium Health CEO Gene Woods. The CELC could help influence GOP lawmakers in Raleigh.
While Republicans and business leaders may have believed Charlotte was looking to inject a net additional $100 million annually into roads, Jones’ recent comments indicated that might not be the case.
Under the proposed plan, Mecklenburg’s six towns — Huntersville, Davidson, Cornelius, Pineville, Matthews and Mint Hill — would also receive money earmarked for roads. They, too, have suggested that the sales tax money for roads could provide options for new spending on other priorities.
The town manager of Cornelius told Cornelius commissioners last year that local money freed up by the sales tax could be spent on “parks, public safety, you name it.” Initial estimates put the town’s windfall at $5.75 million a year.
A Huntersville commissioner said last year that the road money “frees up some of our money to be able to do other valuable things for our town.”
The flexibility could cut a couple of different ways politically. On one hand, if there is a referendum on raising the sales tax, the promise of spending on other priorities like public safety or housing could attract votes from people who aren’t interested in their tax money going toward transit. On the other hand, it could provide another reason for Republican legislators to oppose the plan if they worry that a higher sales tax is a backdoor vehicle for increasing government spending on projects that aren’t roads.
Jones has not outlined any detailed scenarios for how much of the new sales tax money for roads could replace existing road money.
Asked about its plans, the city said in a statement to Transit Time that “there is no intention to zero out the current transportation funding.”
It added: “The city does not have estimates of current funds that would be impacted. Any change of funding to other projects or funds would be part of a policy discussion with Council at the appropriate time and would be at Council’s discretion as part of the larger city budget discussions.”
The idea of requiring 40% of the tax money to be spent on roads was created, in part, by Charlotte attorney Larry Shaheen and Ned Curran, who used to be one of the city’s most prominent real estate developers.
Shaheen declined to comment about Jones’ statement on the road money. Curran could not be reached on Wednesday.
Existing roads/transportation money
Charlotte already draws its transportation funding from a variety of buckets. Voters approved a $238 million transportation bond in 2024, covering the next two years. Before that, they approved a $146 million transportation bond in 2022.
That’s roughly $384 million over a four-year period, in addition to ongoing funds the city spends from its annual property tax revenue on things like fixing potholes and adding stop signs.
By comparison, the sales tax is expected to generate $103 million for Charlotte in its first year, in 2026. It’s then projected to increase by about 4% a year, meaning it would generate about $430 million over a four-year period.
Part of the city’s financial strain comes from the City Council’s push to spend more on things like affordable housing. Last year, voters approved a record $100 million housing bond. As recently as 2016, the housing bond was only $15 million.
Jones’ proposed budget also calls on raising the base pay for hourly workers to at least $24 an hour.
Steve Harrison is a reporter with WFAE, Charlotte’s NPR news source. Reach him at sharrison@wfae.org.
Related Transit Time article:
“Transit plan could be a windfall for Mecklenburg’s towns” (Sept. 5, 2024)
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I did not watch budget adjustment hearings. Any discussion re city managers comments on transportation funding?