Companies factor chance for tolls in considering NC operations
Posted March 27, 2012
Raleigh, N.C. — The state could put the brakes on job recruitment in eastern North Carolina if it puts tolls on Interstate 95, business leaders from counties bordering the highway say.
“It would put us at a competitive disadvantage,” said Allen Purser, president of the Roanoke Valley Chamber of Commerce in Halifax County. New and existing companies would have to factor in tolls for delivery trucks and workers when comparing the cost of operating in eastern North Carolina verses other areas of the state or country, he said.
“I’ve got companies sitting here now saying, ‘If this comes, we’re just going to move,’” Purser said.
The 182-mile stretch of I-95 in North Carolina was built starting in the 1950s and continuing into the early 1980s. Most business and government leaders agree the mainly four-lane highway is in need of widening, updated interchanges and other improvements.
Where people differ is how to pay for the work.
The state has gotten permission from the federal government to study the placement of tolls on an existing highway. That's unusual because states are typically only allowed to put tolls on newly constructed roads, not highways that have been around for decades.
Initial plans call for nine automated toll areas at roughly 20-mile intervals, but traffic engineers say that could change depending on the outcome of environmental, economic and other studies. The earliest the new system could could into effect would be 2019, according to plans published by the N.C. DOT.
While tolls would raise revenue without tapping the cash-strapped state treasury, business leaders warn there would be other costs.
“Any time your expenses increase, you’ve got to either eat the cost or pass it along to your customers,” said Lige Daughtridge, CEO of Daughtridge Sales Company in Rocky Mount and chairman of the Rocky Mount Area Chamber of Commerce.
Edgecombe, Halifax, Northampton and Nash counties all have unemployment rates above the state average of 10.5 percent.
Many of the jobs those counties do have are at distribution centers for well-known companies like Food Lion, QVC, Lowe's and Walmart as well as other lesser known but no less important suppliers to restaurants and large retail chains. The "Trade, Transportation and Utilities" sector of the state economy that includes trucking firms and distribution centers created 2,681 jobs in 2009, the latest year for which the N.C. Commerce Department has published data.
Daughtridge’s company, for example, distributes industrial pressure gauges, thermometers and related equipment. It would see costs increase both from suppliers and when shipping items to customers, Daughtridge said.
Those cost increases drove 77 percent of the business leaders who responded to a Rocky Mount chamber survey to oppose tolling I-95. Only 22 percent backed the idea, Daughtridge said. The chamber hasn’t taken a position on the project.
Negative impact of tolls blunted by benefits
While many see tolling as an economic drag, Daughtridge acknowledges that tolling could help fund a project that would boost Rocky Mount’s economy. The extra money would allow transportation planners to move forward with a new interchange in Rocky Mount that Daughtridge says is needed open up land for new development.
Without extra funding, Daughtridge said, that new interchange would have to wait 60 years.
“It’s a separate issue. But it’s a fact you’ve got to have money to build the interchange,” he said.
Balancing competing concerns would be the aim of an economic impact study that NCDOT hopes to begin sometime this summer, said Kristine O’Connor, a project planning engineer with the agency.
“We will be taking into account what the public’s concerns are,” O’Connor said. “It’s not just going to be DOT in a vacuum making a decision. It’s going to be a study that involves lots of different stakeholders.”
One consultant who helps businesses find new locations for factories and negotiate incentives say he would be surprised if that study showed businesses would be deterred by tolls.
"My gut instinct is that for a sizable project, tolling isn't going to make a big economic impact," said Mark Williams, president of Strategic Development Group in Columbia, S.C. "Further, if you don't have good roads, that may be more of an issue."
Williams acknowledged that costs from tolling would be factored into a project's bottom line. However, he said his clients would be much more concerned if they thought a rickety bridge or traffic-clogged artery would make transportation to and from their location difficult.
Exact costs from tolling are hard to come by. However, with estimated tolls for a tractor-trailer to cross the state at roughly $60, companies that rely on big dozens of big trucks per day to ship and receive goods could be looking at substantially higher costs.
“Certainly, as a company, we are following the debate,” said Karen Cobb, a spokeswoman for the Lowe's home improvement chain. The company has more than 600 employees at its Garysburg distribution center in Northampton County, she said, and it is concerned about their ability to get to and from work.
Cobb would not say how many trucks come in and out of the facility. But she did say the tolls under discussion could increase costs by millions of dollars, money that would eventually be passed on to consumers.
Legislation would take tolls off the table
Some state and federal lawmakers do not want leaders at companies like Lowe's to think any further about the tolls. U.S. Rep. Renee Ellmers, a Dunn Republican, has submitted a bill that would prohibit federal regulators from approving North Carolina’s toll project.
In the state General Assembly, Rep. Michael Wray, a Gaston Democrat, said he is drafting a bill that would stop NCDOT from moving forward with the project. He says the area’s ability to attract new businesses is a key part of his concern.
“We’ve got some projects in eastern North Carolina that are looking at North Carolina hard, and they’re watching this,” Wray said.
Like many toll opponents, Wray questions why the state’s gas tax can’t support the work needed on I-95. And he questioned why other state highways like I-40 and I-85 aren’t being considered for tolls.
“I think we need to look at other alternatives,” Wray said.
Although Wray, a Democrat, might usually have trouble moving legislation through the Republican-controlled House, his stance could have powerful allies.
A spokesman for House Speaker Thom Tillis said the chamber’s top Republican opposes the idea of putting tolls on existing roads, including I-95.
“He is open to potential tolling projects on new roads, but not existing roads,” said Tillis spokesman Jordan Shaw.
Gov. Bev Perdue, a Democrat, has not taken a stand on the project, saying she is waiting until the economic impact analysis and other studies are completed.
“Tolling is not always the best option – and it should never be implemented without first researching the impact on our citizens, our businesses and the land we live upon,” said Perdue spokeswoman Chris Mackey.