AGENDA #5
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TO: |
Roger L. Stancil, Town Manager |
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FROM: |
Kay Johnson, Finance Director |
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SUBJECT: |
Powell Bill Distribution Method |
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DATE: |
May 23, 2007 |
The purpose of this budget working paper is to explain how Powell Bill funds are distributed by the State and how they may be used.
Annually, State street-aid (Powell Bill) allocations are made to incorporated municipalities which establish their eligibility and qualify as provided by G.S. 136-41.1 through 136-41.3. The general statutes require that a sum be allocated to all qualifying municipalities equal to the amount produced during the fiscal year by 1-3/4 cents on each taxed gallon of motor fuel. The total amount is allocated in two increments: seventy-five percent (75%) on the basis of relative population and twenty-five percent (25%) on the basis of relative non-State System local street mileage. Each municipality is required to furnish its own certification of street mileage as of July 1 each year. The most recent annual estimate of population is furnished to the Department of Transportation by the State planning officer each September. Also reported on the certified statement of mileage are municipal election, ad valorem tax and city collections from other sources of income.
Actual Powell Bill revenues can differ from the State formula calculations based on population and road miles, because total collections and distributions can be less than estimated. That is, if the total revenues available for distribution are less than anticipated by the State, each unit’s share is decreased proportionally. For example, in 05-06 the State received lower revenues from the highway use tax on the purchase of new cars in the Highway Trust Fund. In addition, the decision to replenish a $500,000 adjustment reserve in the Highway Fund led to lowered revenues available statewide and for the Town. Funds are also affected by the relative growth rate of the municipal governments within the State.
Since a portion of the motor fuel tax is based on a flat rate, Powell Bill revenues do not necessarily increase proportionally as fuel prices increase.
Powell Bill funds must be expended only for the purpose of maintaining, repairing, constructing, reconstructing or widening of any local street, including bridges, drainage, curb and gutter, and other necessary appurtenances within the corporate limits of the municipality, or for the planning, construction, and maintenance of bikeways located within the rights-of-way of public streets and highways, or for the planning, construction, and maintenance of sidewalks (HB 1661 ratified 7/6/94) along public streets and highways. Funds may also be spent for traffic control devices and regulatory signs and for the payment of principal and interest on municipal street bonds.