N.C. Department of Transportation Secretary Lyndo Tippett continues to maintain a slush fund of $5 million for House Speaker Jim Black and Senate President Pro Tem Marc Basnight in the wake of a controversy that erupted when the practice was exposed in March.

A spreadsheet maintained in the office of DOT Chief Engineer W. S. Varnedoe, and obtained Thursday by Carolina Journal, shows that projects submitted by Black and Basnight are still being charged against their respective $5 million accounts. Carolina Journal first reported the accounts in March.

The state budget appropriates $15 million annually for a “contingency fund” with the stipulation that the secretary of transportation shall approve all projects, but Tippett controls only $5 million of this fund. While records show that Tippett does approve the projects submitted by Black and Basnight, his approval appears to be a rubber stamp. The DOT Board of Directors’ approval also appears to be a rubber stamp. DOT has other discretionary funds, including the Small Construction Fund and Spot Safety Fund, but legislative leaders have no control over those.

More than 50 requests have been approved since CJ first exposed the practice. Examples of recently approved projects include:

* In April the board approved $87,500 to pave Sharpe Road in Mecklenburg County. The request came from Black, and the amount was charged to his account.

* In May the board approved $15,000 to improve Buffalo City Road in Dare County. The request came from Basnight, and it was charged to his account.

* In June the board approved $320,000 for improvements to Main Street in Raeford. Basnight and Black split the cost, and their accounts were charged accordingly. The project had already received substantial funding from other DOT sources.

* In July the board approved a request of about $185,000 from Black to widen and pave four dirt driveways and a parking lot at the Central Children’s Home orphanage in Oxford. The request originated with N.C. Reps. Michael Wray and Jim Crawford. The spreadsheet shows that the money was charged to Black’s column.

“Speaker Black has approved Representative Michael Wray’s request of $184,623 for the grading and paving of Central Children’s Home entryway and parking facility in Oxford. Please find the enclosed letter for details,” reads a June 6 memo in Black’s office from Patrick Clancy to Tippett. Also in July the board approved $120,000 to place overhead utilities underground along two streets in Manteo. The request came from Basnight, and it was charged to his account.

“Lyndo told us that we can get $250,000 each from Basnight/Garrou and Black/Womble,” Winston-Salem DOT board member Nancy W. Dunn wrote to DOT Deputy Secretary Dan Devane. Sen. Linda Garrou and Rep. Larry Womble are from Winston-Salem. At the September board meeting the DOT approved $250,000 for road improvements at the Piedmont Triad Research Park, and the amount was charged to Basnight. Records show that Black has not yet agreed to participate.

In June, State Rep. John Rhodes, R-Mecklenburg, offered an amendment to the state budget that would have removed legislative leaders’ control over any portion of the DOT Contingency Fund. Co-Speaker Richard Morgan didn’t like it and said on the House floor, “So that we might not spend a great deal of time on an amendment that’s not worth hearing, I’d like to move that this amendment do lie upon the table.” Morgan then got the votes to effectively kill the amendment.

When informed last week that DOT has continued to operate discretionary accounts, Rhodes told CJ, “The reason they tabled my amendment was that they wanted to continue their secretive schemes to direct the flow of money that is the responsibility of the executive branch. I hope Gov. Easley will do the right thing and put and end to this scandal immediately.”

CJ has been unable to determine whether Gov. Mike Easley is aware that DOT is still maintaining accounts for legislative leaders. His office has not responded to questions submitted last week.

The same week last March that CJ reported the slush funds, The News & Observer of Raleigh uncovered a separate $14 million amount controlled by legislative leaders. The money, labeled “reserves,” was parked in accounts at the State Budget Office, the Department of Health and Human Resources, and the Department of Cultural Resources. Basnight, Black, and Morgan ordered the agencies to distribute the money to specific projects and political allies.

The practice led to a critical report by State Auditor Les Merritt. Merritt’s report indicated that laws may have been broken in the funding of 11 specific projects, and that the separation-of-powers principle in the N.C. Constitution may have been violated. He asked Attorney General Roy Cooper to make those determinations.

Merritt told CJ last week that his office was aware of the DOT discretionary accounts as well as a separate $1 million account directed by Morgan. He said that his office did not review them because of time constraints, but that he may review them in the future.

Last week Cooper released a letter to Merritt that accompanied a legal opinion authored by Chief Deputy Grayson Kelley. “It is clear that the manner in which state money was directed is problematic for its secrecy, its lack of accountability, and its end-run around the legislative process,” he wrote.

Cooper made several suggestions to clean up the process. Kelley’s opinion concluded that the separation-of-powers principal was not violated because the agency heads did not have to actually follow orders from legislative leaders. He also concluded that he could not prove a general statute prohibiting the funding of projects that had previously been considered and rejected had been violated, because some legislators may have known the projects would be funded through reserves.

Cooper and Kelley did not address the DOT discretionary funds controlled by legislative leaders.

Don Carrington is executive editor of Carolina Journal.