With Rail Project's Future in Doubt, N.C. Officials Seek to Re-Examine Rental Tax

RALEIGH, N.C. -- After the Triangle Transit Authority received a low rating from the Federal Transit Administration in December, many area officials are seeking to re-examine and possibly redirect the local funding source – a 5% rental car tax – for the 12-station, 28-mile public transportation project that would serve Wake, Orange and Durham counties.

The tax has collected an average of $7 million a year since it was implemented Jan. 1, 1998, according to Carter Worthy, chair of the TTA board of trustees.

That money, she says, has been gone towards the capital budget for the rail project including planning, real estate and design. But some believe the funding plans were unrealistic to begin with.

"They said, 'We're bringing all of this money back to North Carolina,' but nobody said anything about the operational costs," said Wake County Commissioner Phil Jeffreys.

And those costs are part of what earned the project a low rating in the first place.

The FTA rates transit proposals based on cost effectiveness, operating efficiencies, environmental benefits, mobility improvements and land use.

Right now, the TTA project is not deemed as cost effective, with predictions of low ridership. It will be re-evaluated Sept. 30.

If the project doesn’t get the FTA’s approval, then it wouldn’t receive the federal funding needed to support 60% of the transit’s budget. The rental car tax accounts for part of the 20% in local funding, with an additional 20% coming from the state if the project moves forward.

Worthy said that, in general, there are tremendous funding gaps for local transportation, and repealing an existing revenue stream is "unthinkable."

But Jeffreys feels that the money could still be used for transportation by directing it to construction of the southern loop of the 540 bypass, which stretches around the region.

In regard to keeping with transportation, Worthy agrees.

"If this project were to get sidetracked, then some other solution would have to rise up to address that same demand that we’ve got for more mobility in our region," she said.

Though the TTA is working toward preserving the project – and its funding – termination of the plan is a possibility. In that case, the rental tax, and money coming from it, would have to find another public project to fund.

In order to redirect the tax, the matter would have to go before the state's General Assembly.

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