Bad math makes a bad tax
By Greg Piner, reprinted by permission from Town Dock of Oriental
As best as I can piece it together, a group of influential state senators from the Charlotte area, came to the conclusion that if they have to pay tolls to take the express lanes on I-77 around Charlotte, then everyone in Eastern North Carolina should have to pay a toll to ride a ferry.
This seemed to be the case in 2023, when Senator Vickie Sawyer (R-Iredell) last led the effort to levy a ferry toll.
I don’t believe they did much of an economic impact study to come to this conclusion. I just think they were mad. Indeed, the State Auditor is preparing a review of the Ferry Division, to be delivered January 2027–after the tolls are set to begin.
Regardless of their motive, it is now the law of the land that: “The Board of Transportation in consultation with the Ferry Division shall establish tolls on all ferry routes.”
All of the revenue from the tolls will go to the Ferry Capital Special Fund, solely to help fund the purchase of new ferries. I have heard that the goal is to raise $5 million of gross revenue each year. Five million.
Three of the seven vehicle transport ferries are already toll ferries. The remaining four vehicle ferries are to begin tolling in January 2027.
The state of North Carolina has some very efficient ways to raise revenue.
Tolling ferries is not one of them.
Tolling ferries is very inefficient
Collecting tolls is labor intensive and has a huge overhead. A reasonable estimate is that for every dollar you spend on a ferry toll, fifty cents goes to the cost of taking your money.
That’s not just true for North Carolina, it’s that way all across the country.
The entire North Carolina Ferry System transports around one million vehicles each year. Currently the three ferry routes in North Carolina that are tolled generate about $2 million of gross revenue each year.
The overhead to generate that revenue is about $1 million – half of the revenue generated. The four remaining ferry routes will require millions of dollars to provide the infrastructure necessary to begin tolling vehicles.
That $5 million number is deceptive. Taking in the tolls will cost the Ferry System about $2.5 million to implement and maintain. The result: only $2.5 million is actually raised.
Tolling ferries is a very, very bad way to raise revenue.
An efficient way to raise revenue
You might not like to pay it, but the gas tax is efficient. For every dollar you pay in gasoline tax, (the average driver pays around $350 a year) 95 cents goes straight to the Department of Transportation to do the things they do.
One of the things they do is fund the North Carolina Ferry Division. On the Neuse and Pamlico Rivers, the ferry routes are our highways. We take them to our jobs, to school, to business appointments, doctors’ visits, to visit family, to run errands. Now those ferry routes – our highways – are about to become toll roads.
The gasoline tax provides the DOT about $2.4 billion each year. The current gasoline tax is 41 cents per gallon. There are roughly 7 million people all over the state just pumping away. Every time a gallon of gas goes into their tanks, 41 cents goes to the State gas tax fund.
When you get all those people pumping all that gas you can generate a lot of revenue. How much revenue? One cent of gas tax generates $53 million per year.
The 72-cent solution
What if someone told you that if the state of North Carolina raised your gasoline tax from an average of $350 each year to $350.72 each year, then $5 million of revenue could be put in the North Carolina Ferry System Fund every year, and ferry tolls could be completely eliminated on all the ferries in North Carolina?
That would allow the Ferry System to focus on what they are trained to do: safely transport as many vehicles as possible every day across the rivers and sounds of North Carolina.
That is what generates real revenue, revenue for small businesses, restaurants, hotels, and the thousands of local citizens that take a ferry to go to work.
A simple one-tenth of a cent gas tax will generate far more revenue than a ferry toll ever could.
Greg Piner of Oriental is retired from a career in civil service at Cherry Point Marine Corps base.
Before we debate the necessity of new and increased ferry tolls, help me first understand why such a serious budget shortfall exists. Why’s there not enough money in NC’s Highway Trust and General Funds to finance replacement of aged-out vessels and afford preventive maintenance of the current fleet? Nobody in State Gov’t saw this day coming? Highway Use Tax on vehicle title transfers; Alternate Highway Use Tax assessed on ride-share and taxi services, on lease and rental vehicles; vehicle property tax; a 41 cents per gallon gasoline tax… I’m a taxpayer in the dark relying on Google to help me figure this out. I’m no accountant and I have zero insight into how tax expenditure decisions are made in Raleigh so let me know if any of these “facts” are inaccurate. Sadly, I find myself in an unenviable position here; I’m relying on the government to help me understand all this.
Greg is Spot On. Wish our elected officials would read this.
Thank you Greg for your study of the system and i agree with the gas tax way of expanding the ferry service income!
Great math. Let’s do that.
Great article. The Charlotteland Democrats want to screw the ferry riders and the state Republican legislators want the rich or riders employers to use the Charlotteland toll interstates. No one else can afford it. I lived in Charlotte 9 years and south of it 22 years. A former Charlotte mayor went to jail for bribery and a city councilwoman is about to be sentenced for $millions in COVID funds theft. Have you seen the video of Irene Zarutska getting slaughtered on the light rail? Warning ⛔️ It is brutal. Those tolls are super expensive and just a way for influencers and divas to avoid Charlotteland’s horrendous traffic. Yes a ferry is a road that funding will not let become a bridge. How does FL have so many bridges? These ferry tolls will eventually rise too high and prevent us from visiting.
Entertaining and informative article, and ingenious solution! So good it requires higher thinking and good manners.