Tolls, Taxes and Earmarks - Paying for the Toll Road to No Where

The toll road to No Where is now estimated to cost $930 million dollars. An earmark called “gap funding” means North Carolina tax payers will have to pay $35 million a year for 40 years to subsidize the cost, because even the most optimistic estimates say tolls can’t pay the entire construction cost. And guess what: North Carolina tax payers are also guaranteeing that enough drivers will pay tolls between $2.20 and $4.40 each time they take a ride on the two lane back country. That means taxpayers will pay even more if toll collections don’t meet the rosy expectations.

Federal Funding Nixed

This summer (2010) the federal government said it will not loan the money the Turnpike Authority needed to help finance the Garden Parkway because it didn’t believe the project was worth it. This was a big setback for the Turnpike Authority. Federal money and $505 million in state taxpayer gap funding were needed to make up the shortfall in toll revenues.

Turnpike Authority Needs State Guarantees

Now there are plans to try to borrow the money from “secondary sources.” That means Wall Street bankers, pension funds, and all the other people who make money from lending money. And because toll roads are risky business, these lenders will want the state of North Carolina to guarantee that they will get their money back. The bankrupt toll road in South Carolina shows what can happen when drivers won’t pay tolls to travel the Garden Parkway. Greenville’s nine year old Southern Connector toll road went bankrupt when less than 7,500 cars were willing to pay $2.50 for the 16 mile ride. So Wall Street will demand that North Carolina’s taxpayers guarantee the notes, just like asking a parent to co-sign the note on the sixteen-year old’s first car. If the kid can’t make the payments, then mom and dad will have to fork out the coin.

Borrowing the $505 million gap funding and guaranteeing another $630 million in debt is a big problem for us North Carolina taxpayers. The State can’t borrow hardly any more money without putting the State’s excellent credit rating at risk. North Carolina already owes $6 billion, and with the economy like it is the state can’t take on more than $ 9 million for each of the next five years. If North Carolina ever loses its top credit rating, it is the taxpayers who will have to pay the price of higher interest rates and decreased state services – like fewer school teachers and more broken down bridges.