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Joint | July 29, 2015 | Press Room | Press Conference: Sen. Ron Rabon

Full MP3 Audio File

Good afternoon, and thank you all for being here. I'm joined today by a number of my Senate colleagues, and we're here to talk about one of the most important issues that will come before this body before we adjourn. A long-term plan to make North Carolina's transportation, to meet transportation needs in North Carolina. Earlier this year the House decided, and the Governor signed a Bill, Senate Bill 20 to stabilize the gas tax and to provide some immediate certainty about funding transportation needs in our State. We're faced with growing population, aging roads, deficient bridges and a host of well documented transportation needs. The fact is we need a comprehensive plan to continue addressing these challenges. Governor McCrory has been active across the state in highlighting the need to invest in our transportation infrastructure. We thank him for working to call attention to this issue and we share the Governor's goal, and that goal of our House of colleagues of finding ways to shrink the gap between the projects needed and the projects funded. We believe there's a better way to achieve this goal that have been laid out in the proposal to borrow $1.4 billion to spend on a few piecemeal projects. There's been a lot of discussion about the bond proposal, but that idea is problematic in many ways. First, it puts tax payers on the hook for $2.2 billion over the next 20 years, $850 million of which is interest. That's the net loss folks, $850 million. And how is that debt likely to be paid back? Through the highway Trust Fund. That means paying interest on the governor's bond significantly reduces the funds available for building roads and going forward. In fact, 80 projects that have scored high enough to be included in the Department of Transportation or the Board of Transportation's 10 year plan, presently approve, would be adversely impacted by this bond package. 46 of those projects would be removed entirely from the plan and 34 projects would be delayed. In fact, consider this, construction of the last leg of I-540 in Wake County would be removed. Widening of the I-26 connector in Asheville would be removed. The construction of a new segment of a Shelby bypass would be delayed by for a year and there are many, many more. We're concerned by what the debt is funding. An example of that was the bond would have us borrow $15 million to pave unpaved roads. 76 of those roads are dead-ends and less than one mile long. One of my favorites is the first project on the list and that is highway 158 down east. Well folks, highway 158 as you well know, is not a major certifier. In fact there's not enough volume on it today to even feel these capacities as a two lane road, and to four lane that road or widen that road into four lane, the capacity that would be needed to meet a four-lane road on US 158 will not be in that until the year 2070. I just can't see going ahead with project like that. Finally, I think it's wrong to insert politics back into transportation. The folks standing with me work very hard for the last five years, to get the politics out. Transportation, we passed the STI along with the house, signed by the governor, and I think that and I said many times that the strategic transportation investment, may go down as one of the best bills or laws that we passed in our short term legacy. One of the problem unfortunately is the vast majority of the projects in this bond package, a project that came along and that with these folks, we together took out statutes. Many of these things were put in in the late 80s, the 90s, and the 2000, and now they're right back in. That describe right in the

face what we've been trying to do for the last 5 years. Over 300 projects ranked higher in the current STIP program than the governor's bond. But they aren't funded, or they won't be funded because the bond adds an extra layer, if you will, to completing planned projects. Now, you might ask why do these projects have completed environmental documents which is the layer of what made them ready. What made them ready is they are political projects, they were put in as political problem over the past couple of decades, and now they're being brought back to life. Again, supporting hundreds of projects that we have, we think should go forward and we're going to continue to push for that, there's just a myriad of reasons that we want to but the big thing is we want to use our tax dollars wisely. We don't want to borrow money, we can afford to go forward without, look at that charts and you can see the difference is here, I'll be glad to go over those in a few minute. But I'm going to allow Senator [xx], Senator [xx] to speak for a minute or two on some of his ideas and have a few word, what he'd like to say and then after that, Senator Lee has a few comments and then we'll take a few questions and we'll take a peek at the charts, if you will. OK, thank you. Senator Meyer[sp?]. Thank you Senator Rabin. Thank you all for taking the time to be here. What I wanted to discuss is the Senate's position on STI, and how we got the STI and how it's going to help the state move forward and already has helped the state move forward in transportation project. Senator Rabin said earlier that our main goal was to take politics out of the budget and process for the transportation projects and out, so and we did that. With the bill that we passed, I'm very proud of that and I think that we made a lot of strides and we don't want to move backwards, we want to move forward. So, the senate of course believes the best way to achieve those goals is to continue to step forward on the STI plan and not backwards and to build on a strong framework that we've already put in place. We need to continue to work under that framework and not change it. Where the governor's plan would change the STI formula in the way projects are currently in the schedule of work. The open and transparency of the process is very important, for the STI law establishes that and it's far superior to anything else in other states. North Carolina has set the standard for picking transportation projects, and we're happy to do that. Our senate budget fully complies with all laws, sending more money, spending more money on our transportation needs year after year without borrowing any money at all. The governor's bond package would borrow money and Senator Rabin eluded to it earlier, we would be spending $852 million in interest alone. That's money that could come out of projects that can be done currently, we just feel it's more appropriately to fund projects with dollars that we have and not borrow money, and spend additional money on interest payments. We did this in large part raising money for the STI and increasing the transportation budget by indexing the DMV fees based on inflation and ending, which I think very, very important, ending the highway fund transfers. But that's something that the Senate thinks is that really needs to be done. We need to end the transfers. We have the ability to end the transfers. We just need to have the political will and not only the Senate but in the House and also the Governor executive branch to end those transfers. We have made those promises for a long time not only in the Republican party but in the Democratic party prior to us becoming the majority that we would in those transfers. We have an opportunity to do that, and we need to not only commit to doing that but we need to make that happen. It's a promise that we need to keep. These are real dollars that could be spent on real needs, and with this years budget surplus, we finally have an opportunity to make good on decade-old commitments. Our plan is to invest additional 130 million more per year in the STI program on an average over the next 10 years, that would mean DOT can add 70 new projects and accelerate a number of others. Again, all while working within the law and without incurring, and I continue to say this, without incurring new debt to the state. And I also want to reiterate what Senator Rabin

said earlier, just like to remember that at 26 corridor, the project in Ashville would fall off the 10-year funding plan under the bond proposal. The project would actually be under our plan. The project would actually be accelerated along with many other projects. With those few statements on STI, I'd like to recognize Senator Lee at this point to talk about some other things. Senator Lee. Thank you very much. Thank you for being here. I really want to talk a little bit about the Senate plan with regard to maintenance. The Senate plan has over $200 million in new recurring funds for maintenance, port modernization and some other needs. I want to first talk about maintenance of our roads and bridges. There's over a $139 million there for structurally deficient bridges, and I know everyone's heard that there are thousands of structurally deficient bridges in North Carolina. This budget allows us in the next two years to take 400 of those bridges off that list. There's over $70 million pavement preservation and when I say that word pavement presentation, preservation that's two words, folks usually kind of gloss over, but let me tell you why it is so important, if we have pavement preservation where we're supposed to, we're looking at $20 to $66, 000 for a 12 foot wide one lane piece of road, if you let that go too far, you've got a rehabilitation project. That's $75 to $175 million. And if you let that go, we're looking at $200, 000 per month. So you're not doing maintenance, you're replacing the roads. So pavement preservation is incredibly important. We're going to invest $76 million for improving conditions for the safety of our secondary roads. As many of you know, these secondary roads are more expensive to maintain than the primary roads and we really need to pay attention to them. Then something near and dear to my heart, the ports, we've got over a $70 million investment into the ports in the biennium. The ports support over 76,000 direct and indirect jobs. It has over a $14 billion effect to the economy of North Carolina. It's very important that we continue to support them and while they fund themselves through their operations, we need to make the investments to modernize, and be able to keep pace with our competitor ports. What this investment just in this biennium will do and hopefully we'll continue to recur, is going to allow them to replace [xx] about 645 feet of dock which is in high demand for some of our largest customers. It's something that's needed to be done for quite dome time. It's been on the capital improvement list for a very, very long time over at the ports. It's also going to allow us to hopefully improve and eventually replace our crane fleet, we are the industry leader, industry leader for the efficiency of our docks. We can get the product off the ship, on the trucks and on the road faster than just about anyone. And time is money in this industry. It's important that we keep up that particular rating and attractiveness to all of our customers. The ports are crucial to our economy, but a lot of times we don't think about that with our road network. There is a recent study that said for every $1 billion of transportation investment, it's going to generate over 14,000 jobs, have over $10 billion impact on our gross state product and also have over $10 billion of additional wages. It's clear that this transportation investment that's being proposed by the Senate, puts North Carolina on the absolute right track for what we need to be doing. Thank you very much. And just to summarize before Senator Rabin comes back up. I think what we are trying to say to the people of North Carolina and to the governors, that we share your goal in connecting North Carolina, and we believe that transportation is the way to build business in North Carolina and that's why this so important. We just have a different way to get there, and over the past five years, in the legislature, we've endeavored to try to get the State out of debt. And so at this point, we're just very cautious about going back down that road again, and we believe that the best way to move forward is to stop what should have stopped many decades ago which is the transfers from the highway trust fund. I hear that over and over from mu district when are you going to stop transferring money from the highway trust fund to pay for other needs? And the best time to do that is when you have a surplus like we've seen this year, and so I think over the next 10 years by stopping the transfers, we'll see more than $2 billion infuse into our transportation program and I think that's what really makes sense for North Carolina, and that's why we are moving in this direction. Senator Rabin. Thank you Senator Daniel.

We will take a few questions, you can direct them to individuals, whatever, if you have questions for me. Yes Sir. [xx] the moment before us, how has the, how are the ports being maintained and unkepts? Are there receipts dates or is this a change [xx]. Well, the ports have partnered with the State in the past, so when they purchased to do crane, some years ago they did partner with the General Assembly. Those to their operations are really funded through there are receipts and revenues. What do you want to change, why is it better to change? Well, in this particular instance, we've got to make an investment in the ports. What we are saying is increase competition to our North and to our South, [xx] is literally about to fall in the water, and this is prime real estate on the river that our largest customers are really interested in. And at the ports, the mission isn't to see how much money the ports can make, the mission is economic development in the State of North Carolina. So, to really get the most bank for [xx], we're talking about all this direct and indirect jobs had referenced earlier, the economic impact in North Carolina, this investment pays dividends for quite some time and at a very high rate. Let me add to that also, that you all may or may not know, North Carolina or our ports are the only ports on the east coast that do not have a revenue stream from the General Assembly and so this changes that. Yes sir. Governor's bond proposal is 1.2 billion. Can you explain why you're not showing 1.2 billion in revenue from the bond [xx] on your charts? That chart right there shows only that in 600 or so million dollars in bonds. Senator [xx] shows the numbers men you want to cry, that's why we brought him. What this chart is showing is, this is a construction spending in that year. Cumulative construction net of what would have been spent in construction that year to begin with, that's what coming out. So, actually what you will see is because of debt [xx] and I think it's in 26th, 27th all because you're basically shifting money across. You're borrowing 1.2 and then you're paying the interest on it, is the point where you will break even. You would have by then the exact same amount spent on transportation when you're taking your interest payments from there on now. The fact that you've now paying interest in that 20 year period means that you cumulatively would have spent below zero less on transportation than you would have had you'd not have done the one package at all. So, each one of these gives net of current spending. So in the first year, you're looking at beginning current spending because the bonds have not been let out, so it will be spent at the current rates. The Senate plan by cutting it all from beginning the same year, spending more additional money than this you'd see cumulatively impacting as you bring the annual rates on, you'll still stay below what you spent in the previous year in the Senate plans. So your blue line is supposed to be cumulative impact of adding the previous years spending to the net? Yes, net of the original spend, net of the current expenses. So when you hit 1.5 billion on your blue line there, that's 1.5 billion over those first five years? That's not the 0.5 billion in that year? Yes, that will be 1.5 billion over what we would have spent have we made no changes in either policy in that time period. And then I guess for the red line to go below the zero mark, you have to assume that the interest is going to be paid [xx]. We are assuming that the payments for the bond are coming out of the highway funds. Is that typically how your repay bonds? It's my understudy that has been our historical for transportation loans, funds for transportation will come out transportation funding. [xx] Any other question? Yes sir. Is there any idea how, because one of the biggest parts of the Governor's transportation zone proposals was that these projects are travel-ready. How much money would the State be spending under your plan to finish these environmental impact statements and to get the project already before construction spending the next year. Well, quiet honestly many of these projects would never be funded under the STIP. Some of them have been sitting back there for years and years and years and some of the environmental documents have expired but would be renewed. But many of these are so far down that you would be as old as I am before they would come up on the STI. As I mentioned with 158, that project is not going to be have enough traffic on it for four-lane until 2070. My grandchildren, I hope will see that, but we certainly don't need to be

spending money on that today. Question, yes Sir. I'm sorry coming back to the chat there. How do you, if the blue line is cumulative, how does the red line go negative even if you figure $850 million dollars and interest? That is the 850, it's here. Yeah, but it's 850 balanced against 1.2 billion, how does it go negative? Look into [xx] in 20 years period. Senator Hise could you get behind the microphone? I would say look into sum of the entire period of the bond, what the bond would be doing, would be taking almost too big with the amount with the interest which will be over $2 billion dollars of total spent over 20 years and using it to have 1.2 billion in spent in the first four years. That's what's coming in, and so as you move out by 2020, you would see the interest payment and others cumulate to the point. When you look at total spent over that year, you would have spent at that point exactly the same had you have done nothing, and for every point thereon in the future, you'd have spent less and that should terminate the amount of interest you anticipate to pay for the bond. The other [xx] and as you can see this is Senate maintenance, this is proposed maintenance, the dotted lines, and then this is money that the bond would spend and you see where we would be. This is these are projects that SDI approved the Senate budget [xx] stand above the lines the whole way providing assurance to taxpayers and to the industry that we have a long curve plan. When you look at this once, we hit the [xx] it falls below the line and even in the next 25 years is not [xx] .It's pretty competitive chart, when you look at it [xx]. And one thing that we haven't mentioned and you haven't quizzed us on, is if we have these many projects to be let at one time and that has been a drive for prices all the projects up, simple supply and demand economics because it drives the prices of the projects up because there's a limited number of companies. Of course, in doing this were they able to work [xx] higher particularly so it does not make sense till your luck runs out, it's over. Senator Hise is a lot better graphman, you can quiz him on that. Any other question? One more. Yes Sir. You had mentioned during your remarks that Governor McCrory splits politically favored projects in the nix[sp?], politically favored by whom? I beg your pardon? Politically favored by whom? By Governor McCRory, by you? They're not politically favored by us, we took up [xx]. These are politically favored, the reason the environmental studies have been done, they were put in statute, OK? These are projects that were put in statute back in 89, in the 90s up to 2004. I can show you if you would like a chart that has all 24 or 27 on his projects, and the ones that I have highlighted in orange were in statute in 1989. I don't think you have this sheet, and the ones that I highlighted in green just going through and doing my research were put in statute in 2004. Now the STI took all of these out of statute, that was the idea of the STI. We took all of everything that was in statute out, and we said we're going to build on this state based on data and not on these political things that were put in previously. And they are environmentally or shovel ready because it will put in statute, but they weren't good enough to be built, sort of boils down to. OK. One more question Senator Hise, I still think he wants to explain the chart. Someone would ask him about the chart please. OK, one more question. [xx] I was just going to ask, does the departure of Tony Tata and whatever is happening with transportation right now factored

in any way, to any of this? Absolutely not, it came as a shock. We knew nothing about it and it had already scheduled the, and started work on this presentation now. Stars aligned that's all. Thank you. OK, thank you all and we certainly appreciate your coming, and I hope you got some good information now. If you need any more, please let us know. Cole has some data that he will share with you electronically or hard copies if you would like it. And we appreciate it, thank you very much. And Jason be careful going home. Yes sir. Thank you.