Students and faculty at North Carolina Central University in Durham are learning to live with leaks from its buildings’ old steam heating system. Moisture seeping into the walls and leakage from the roofs has spawned outbreaks of mold in several of NCCU’s classrooms and dormitories.

Because the state’s Repairs and Renovation Reserve has been drastically underfunded for at least three years, the university is patching with operating funds — or in some instances, is closing buildings.
In Raleigh, even the State Capitol building proved no match for neglect. Plaster in its dome, soaked by rainwater that leaked inside, cracked and fell into interior walkways. Now, contractors are busy repairing the damage.

The same can’t be said, though, for the rest of the state’s deteriorating buildings and grounds. The State Construction Office estimated that nearly $1.3 billion is needed for repairs and renovations on its properties.
Critics of North Carolina’s political leadership say the problem stems from a misplacement of priorities rather than from a lack of money.

“It’s pretty obvious as you look at the plant that the money has not been allocated for basic repairs,” said state Sen. Richard Stevens, a Cary Republican who was Wake County manager from 1984 through 2000. “Instead of funding repairs, [legislators] raised taxes and added programs.”

The recent trend began in 1999 when the state was hit with a natural disaster in the form of Hurricane Floyd. Then, Gov. Mike Easley took office in 2001 and was almost immediately faced with a budget deficit.

Repair funds redirected

In 2000, $60 million of the $150 million allocated for the state’s Repairs and Renovations Reserve was redirected to hurricane relief. In 2001, when the state first realized its recent budget problems, Easley reverted to the General Fund $39.5 million of the $100 million from the reserve. The next year, the General Assembly earmarked $125 million for the reserve, but $116.4 million was reverted to help balance the general budget. Of the remaining $8.6 million that was spent on repairs in 2002, $7 million paid for security upgrades at state administrative buildings in Raleigh and $1.6 million paid for an air-conditioning system at the Museum of the Albemarle in Elizabeth City. The museum has yet to open.

The legislature allocated no money for repairs and renovations in fiscal 2003. As of mid-June, House and Senate budgets contained $50 million for the 2004 reserve, but whether the money would survive in the final budget was still in question.

According to the Office of State Budget and Management, the last year the Repairs and Renovations Reserve was fully funded was 1998-99, when lawmakers appropriated $145 million.

Allocations for the reserve are supposed to equal 3 percent of the replacement value of the state’s buildings ($14.7 billion as of August 2000), but only if a credit balance exists at the end of the fiscal year. The university system receives 46 percent of the money, and the state’s other buildings get 54 percent. Agencies submit their prioritized lists of capital needs to OSBM, which then recommends to the Joint Legislative Commission on Governmental Operations the projects that should be funded.

Many agencies, knowing the state’s budget would likely eliminate reserve funding, didn’t submit requests for repairs for the coming year. But the State Construction Office still keeps an extensive list of repair needs for its properties across the state.

If money is provided this year, funding from the Repairs and Renovations Reserve is expected to be used to complete work on the Museum of the Albemarle. According to The Daily Advance of Elizabeth City, the state has already spent $7 million on the project. The museum needs an additional $5 million for the completion of interior work before it can open. Rep. Bill Owens, an Elizabeth City Democrat, told The Daily Advance that he thought funding for the museum would be in the budget.

Little in direct appropriations

Besides the Repairs and Renovations Reserve, the legislature funds capital projects (defined as repairs, renovations, new construction and infrastructure) through appropriations in the budget. However, repairs and renovations to existing properties rarely get funded in that way.

That doesn’t mean lawmakers were reluctant to engage in capital spending. Almost $1.3 billion was appropriated over the last 10 years for capital projects. In addition, the state is obligated to pay off $3.1 billion in higher-education bonds that were approved by voters in 2000. Overall in the last 10 years the state has committed to $6.64 billion in general obligation bonds for mostly new capital projects.

In recent years appropriations for capital projects reflected the legislature’s budget struggle. Since 2000 only $48 million was earmarked for those items, and that amount included only matching funds so the state could receive federal money for environmental and crime-control projects.

Woeful conditions

Stevens bemoaned the faltering heating, ventilation, and air-conditioning systems in many aging state buildings, especially at NCCU. Repair requests for those systems in the state’s universities alone exceed $135 million.

“That’s just basic maintenance,” Stevens said. If air-circulation problems aren’t addressed the state can expect more mold to accumulate in its buildings, he said.

The backlog of maintenance in other areas of state government are no less significant. The Department of Health and Human Services says it needs $238 million in repairs and renovations for its facilities throughout the state. The state budget office requested $98 million for DHHS from the 2001-03 biennial budget for repairs, which wasn’t provided through the reserve.

The budget office also said the Department of Justice and Public Safety needs about $106 million almost immediately for property repairs. Nearly all of that ($100 million) is needed for prisons and juvenile delinquency facilities.

State Auditor Ralph Campbell went a step further, reporting in an audit in May that the state should build three new juvenile prisons because its five existing ones are safety and security hazards.

While repairs and renovations are obvious necessities, state agencies are asking for more money for new-construction projects. OSBM said more than $1.6 billion is needed to meet those needs. For example, among DHHS’s requests are the planned replacement of Dorothea Dix and Umstead mental hospitals, at a cost of $40 million. The Department of Environment and Natural Resources said it needs $7 million to detoxify the Warren County landfill.

Not all requests for new projects appear to be as urgent. The Department of Agriculture wants $14.6 million for a multipurpose exhibit building at the North
Carolina State University Fairgrounds. The Department of Commerce wants to add a conference center at the Wanchese Seafood Industrial Park on Roanoke Island at a cost of $250,000.

Misplaced priorities?

Some lawmakers blame state leaders for funding inefficient programs, unaccountable nonprofit organizations, and unfilled state job positions. Those programs, they say, were funded at the expense of the state’s existing properties. “That’s like a family saying we want to have all the fine things,” said Sen. Fred Smith, R-Johnston, “but we can’t repair our house.”
“We’re going to fund over 5,000 empty positions,” Smith said. “Nobody’s in those jobs.”

Smith questioned the state’s $750 million in annual payments to nonprofit organizations, many of which have little or no government oversight. He also doubted the need, as did Campbell in a recent audit, for both the Smart Start and More at Four prekindergarten education programs. Both men said the programs have too much overlap and are inefficient.

Smart Start’s budget was $193 million last year, while More at Four started with $36 million. Many of the dollars from both are directed to the same local centers that administer the two programs.

“If it feels good and sounds good, we do it without looking at the cost-benefit ratio and the timing,” Smith said. “Just like families, government has to do the right thing.”

Smith said the government’s priorities should be to care for people who can’t care for themselves, and to provide for the education, safety, and health of its citizens.

“All that can be done in an effective and efficient way that will allow us to maintain our buildings,” he said.

The bright side?

Stevens said that as Wake County manager he placed “a lot of emphasis on repairs and renovations of building. We always tried to do the basics,” he said. “You can lose a building over not maintaining a roof.”

Stevens is serving his first term in the Senate, and is embarrassed by the condition of the Legislative Office Building, where he works. He tries to be optimistic, though.

“We did get new duct tape on the carpet, I’m told,” he said.

Chesser is an associate editor at Carolina Journal.