Since Republicans took total control of North Carolina in 2012, not much of the news coming our way from Raleigh has been good news.
The memories of those powerless days when Democrats controlled all in Raleigh have not been forgotten — especially the memory of a powerful politician from Dare County, Marc Basnight.
Basnight, the leader of the state Senate, pretty much got what he wanted and he wanted to improve the plight of Dare and Hyde counties and other areas of rural eastern North Carolina.
Some observers say that the Republicans are exacting revenge by undoing Basnight’s legacy.
That assessment may or may not be on the mark. But one thing is very clear — the power in the capital has shifted, and rural North Carolina certainly appears to be getting the short end of the stick.
Funding to some projects — viewed as Basnight “pet projects” — has been reduced or totally cut off. Just look at the North Carolina Center for the Advancement of Teaching, which the General Assembly has tried to close down several times and may still, or the state-owned Jennette’s Pier in Nags Head, which the General Assembly wants to sell.
There are other examples, but today’s blog is about two particular changes brought to us courtesy of our lawmakers in Raleigh — the new transportation planning law, which may be the most diabolical piece of legislation they have passed, and the law that slaps a sales tax on the bills of Cape Hatteras Electric Cooperative members.
STRATEGIC MOBILITY FORMULA
The Island Free Press published a story on Monday, June 30, that was only lightly read and got no comments from readers, but it was one of the most significant articles that we have published in a long time.
It wasn’t scintillating reading and it was overtaken and overshadowed by the threat and then arrival of Hurricane Arthur that week.
But you need to go back and read this article on the Local News Page under the headline, “DOT’s new plan for funding projects makes it hard for rural areas to compete.”
The “makes it hard” wording is an understatement. It has not escaped savvy onlookers that the new “plan” makes it next to impossible for rural areas to compete.
The article was painstakingly reported by Catherine Kozak. Both she and I have done our fair share of reporting on transportation planning over the years. It tends to be not only dull, but sometimes very complicated. However, neither one of us, even with our experience, could make heads or tails of the new law when we first started looking at it.
How, we thought, is the general public supposed to understand the plan and intelligently comment on it?
You might conclude that the members of the General Assembly who passed the law didn’t really care if the law was incomprehensible and probably prefer it that way.
The new law, the Strategic Transportation Investments Act, was passed by the legislature in 2013, and creates a new way to allocate funding for projects — everything from roads to bridges and bike trails to ferries — by how they score on complicated formulas.
The state says, with a straight face, that the new process, called the Mobility Formula, will ?maximize North Carolina?s existing transportation funding to enhance the state?s infrastructure and support economic growth, job creation and high quality of life.?
That might be true if you live in DOT’s Division Five, which includes the state capital and other populous cities. But out here in Division One, which includes both Dare and Hyde counties, we can just basically forget about new road projects.
This is how Kozak begins her article:
“Citizens who want to understand what projects the state Department of Transportation is proposing to fund or not fund under its new Strategic Mobility Formula might need to first hone their mastery of puzzles and mazes.
What residents of northeastern North Carolina may miss in NCDOT?s unfathomable document posted online for review is that most ? if not all – of the proposed transportation projects in Highway Division One that includes Dare, Hyde, and Currituck counties, rank low in priority ? including the Mid-Currituck Bridge, the Alligator River bridge and widening US. 64 – and that the division?s guaranteed dollars are a sliver of its prior funding.
In fact, as the plan looks now, few major projects in the Northeast are likely to be built any time in the near future. Nearly 50 percent of total state transportation funds are slated for Division Five, which includes Wake County. “
Other tidbits from the article:
- Priorities in the Mobility Formula focus mostly on factors such as year-round traffic congestion and population density.
- Every mode of transportation, from rail to bicycle to ferry to road to bridge, is parsed by rankings, criteria, values, regions, divisions, modes, U.S. highways, state highways, strategic military interests, toll routes, municipal and rural planning organizations, statewide impacts and shared resources.
- In previous budgets, according to DOT, Division One received $85 million to $120 million per year. Under the new prioritizing system, the division is guaranteed only $27 million.
- Some projects that scored high in the division, such as the proposed Mid-Currituck Bridge, did not qualify in the bigger picture. ?It wasn?t competitive statewide,? said a District One planning engineer. ?Until the law is revised, that project is not meeting the statewide criteria.?
- No projects in Division One qualified to be in the statewide category, which is 100 percent data-driven and includes interstate highways, routes in the national highway system, toll roads and highways that are vital to national defense.
- Ferries also must be prioritized and funded out of the Division’s funds. Replacement ferries, which cost about $12 million, used to be paid for by funds voted on separately from the state transportation plan.
Urban areas choked by traffic congestion need and deserve relief, but lawmakers cannot achieve that totally by sacrificing the needs of rural areas of the state.
There must be some semblance of fairness or parity.
And the new Strategic Transportation Investments Act does not achieve that. Or should I say it does not seem to achieve that based on what we can understand about its convoluted and ridiculous formulas, rankings, priorities, and on and on.
You can weigh in on part of this new process — the distribution of local input points — through July 23. Go to http://www.ncdot.gov/strategictransportationinvestments/PublicMeetings.html.
SALES TAX ON CHEC BILLS
Thanks also to the General Assembly, Cape Hatteras Electric Cooperative members will begin paying 7 percent sales tax on their power bills this month.
Lawmakers passed legislation in 2013 that took away the cooperative’s long-standing exemption from state sales tax.
Despite the best efforts of lawmakers that represent Dare County — Republican Sen. Bill Cook and Democratic Rep. Paul Tine — the legislature refused to repeal the bill. The best Cook and Tine could work out was a “compromise” that will allow the 7 percent to be “phased in .”
Beginning July 1, CHEC members will pay a 3.5 percent sales tax on bills. On July 1, 2015, the rate will become 7 percent.
The exemption from sales tax for CHEC dates back almost 70 years.
CHEC was incorporated on March 30, 1945 as a public agency and an electric membership corporation under North Carolina law to provide electricity on a non-profit basis to Hatteras Island consumers.
During the 1930s and ’40s, many member-owned cooperatives were formed to bring electricity to rural areas that investor-owned, or for-profit, companies were not interested in serving because of the low-density populations that were spread out over large areas. Providing electricity to these areas was and still is expensive.
However, as some of these rural areas grew, investor-owned utilities became more interested and started trying to cherry-pick the most profitable parts of an electric cooperative’s territory.
Territorial disputes arose, and in 1965, the state asked cooperatives and investor-owned utilities to work out a compromise.
The compromise between the two groups involved the assignment of territories to each and the loss of the tax-favored public agency status for all EMCs except for the ones that served Hatteras and Ocracoke islands.
Eventually, Ocracoke’s electric membership cooperative became part of Tideland Electric Membership Cooperative, so Hatteras became the only EMC with a sales tax exemption.
In 2000, the state Department of Revenue decided that CHEC should be paying sales and franchise taxes.
CHEC filed a lawsuit against the Department of Revenue but paid the taxes under protest. In 2009, CHEC won its case in Dare County Superior Court. The Department of Revenue appealed and the appeals court upheld the position of the lower court.
After a 10-year battle, DOT had to refund more than $3.6 million in sales tax and $3.7 million in franchise tax, plus interest, to CHEC members.
Through the 10 years of legal wrangling and in the two years afterward, no attempt was made to change the law that exempted CHEC from paying the taxes.
However, when the 2013 legislature convened, a bill was introduced to change the law and the bill passed.
Now excuse me if I am cynical, but I don’t believe that some lawmakers were smart enough to comb through the budget and revenues and figure out that the state could pick up a quick $1 million or so by changing CHEC’s tax-exempt status.
It’s much more likely that some person or persons put the bug in the ear of some lawmaker or lawmakers — perhaps someone disgruntled about the outcome of the lawsuit or just unhappy that CHEC was being treated differently.
In the courts and in the General Assembly, CHEC argued the good reasons it should be exempted:
- CHEMC serves only Hatteras Island where there is no room for adding additional customers (a national park, the sound and the ocean surround CHEMC service territory).
- CHEMC gets no benefit from the service territory protection law that benefits all other electric co-ops because no other electric utility will service Hatteras Island.
- CHEMC has higher distribution costs because of the geographic realities of Hatteras Island. CHEMC?s key transmission delivery point is on the north side of Bonner Bridge and runs 15 miles before reaching the first community on the island.
- CHEMC experiences higher costs to serve members because of the harsh environment on Hatteras Island, including the exposure to storms and flooding.
Those were good reasons when electric membership cooperatives were first given tax-exempt status 70 years ago, were good reasons when CHEC had to take its case to court, and they are still good reasons today.
And I hardly think the estimated $1 million in income will even begin to solve all of the budget problems that the state finds itself in after slashing taxes for so many last year.
