Saturday, July 20, 2024

Still hovering near cash floor, NCDOT behind on major projects

Major projects, including the planned Eastwood and Military Cutoff Road interchange, are delayed while NCDOT continues to struggle with a low cash balance. (Port City Daily/File photo)
Major projects, including the planned Eastwood and Military Cutoff Road interchange, are delayed while NCDOT continues to struggle with a low cash balance. (Port City Daily/File photo)

SOUTHEASTERN, N.C. — The North Carolina Department of Transportation’s (NCDOT) money problems are still sticking around, with the department still hovering below its state-mandated cash floor.

While funds are below the cash floor, NCDOT can’t legally award any new projects.

Related: Public could get double-billed for Shallotte road project due to NCDOT cash problems

That means major projects, routine resurfacing, storm-damaged roadways from Florence, and maintaining overgrowth on medians and right-of-ways are all paused while the department attempts to regain its financial footing.

“Everybody sees how sad our roadways are starting to look with the reduced mowing,” Chad Kimes, Division 3 Engineer said at a virtual meeting Monday. 

Money issues, then Covid

The department’s pre-existing financial trouble was compounded by Covid-19’s downturn on the economy, spurring furloughs for all employees that began late May.

Though the department overall has found itself in deep financial trouble, Division 3 has managed to keep things afloat, covering New Hanover, Brunswick, Pender, Sampson, and Duplin County. Kimes said Division 3 is actually 5% under budget this fiscal year. Still, Kimes’ department is still impacted by the department’s overall shortfalls. The division is down to 50 consultants, down 100 from the previous year, Kimes said. 

With the pandemic, traffic volumes were down 40 to 50% in March and April statewide.

Because the department relies heavily on taxes associated with travel, it has encumbered a $300 million revenue shortfall this fiscal year and is budgeting for a $370 million shortfall this upcoming fiscal year.

In mid-April, NCDOT slipped below its statutorily-mandated cash floor of $292 million, representing 7.5% of total revenues. Once this happens, the department isn’t allowed to enter into new contracts until the cash balance is replenished above the floor. In a cash report the department released last week (mandated by the legislature in November 2019 after cashflow issues came to a head), the department’s cash balance was $293 million, just barely above the cash floor as of June 25.

In a virtual presentation hosted by Senator Harper Peterson Monday, Kimes said the department is still below the cash floor (the department can’t legally count federal funds as cash per statute, so it’s possible this explains the slight difference). As of a July 2 cash report, NCDOT’s cash balance dipped to $214 million, well below the floor.

Kimes said though the balance is getting closer to the floor, the total cash balance needs to remain consistently above it to resume business as usual. 

New bill

In May, State Auditor Beth Wood found NCDOT overspent by $742 million, or 12.5% of its total budget, last fiscal year. Wood identified a lack of oversight and accountability, which required the legislature to bail the department out in November.

Storm spending that has yet to be reimbursed is one factor that dug NCDOT into its financial hole. FEMA still owes NCDOT $26 million for Hurricane Matthew in 2016, $93 million for Florence in 2018, and $3.3 million for Dorian in 2019. The Federal Highway Administration owes NCDOT $6 million for Florence and $3 million for Dorian.

Perhaps an even bigger expenditure that will not be reimbursed is the department’s settlement spending on Map Act cases. A June 2016 N.C. Supreme Court case ruled NCDOT’s practice of indefinitely taking private land for unfunded projects was unconstitutional. Since NCDOT started reporting its cashflow weekly beginning in Nov. 22, 2019, it has paid out more than $42 million in settlements. As of August 2019, it had more than $311 million in liabilities related to the lawsuits.

A new bill with bipartisan support aims to address NCDOT’s budget issues. At the same time, it includes major cuts to public transportation, pedestrian, and bicycle funds by 80% each.

House Bill 77 would reorganize NCDOT’s board and give it more power. It will also give NCDOT access to more bond spending, providing needed flexibility while cash is tight. Having passed both chambers, legislators anticipate Governor Roy Cooper’s signature and support on the bill.

In the meantime, high-priority projects, including the Hampstead Bypass, the Military Cutoff/ Eastwood Road interchange, and improvements planned on College Road are all falling behind.

“Some of these projects will slip,” Kimes said.

NCDOT is still below its staturoily-mandated cash floor, a status that bars the department from entering into new construction contracts. (Port City Daily screenshot/Johanna F. Still)
NCDOT is still below its staturoily-mandated cash floor, a status that bars the department from entering into new construction contracts. (Port City Daily screenshot/Johanna F. Still)

Send tips and comments to Johanna Ferebee Still at johanna@localvoicemedia.com

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