News: CJ Exclusives

State transportation department running low on reserves

Editor’s note: This story has been updated to clarify a statement about state law requirements for NCDOT’s cash balance. 

The N.C. Department of Transportation is running out of gas. 

NCDOT depleted its budget in 2019, a new report shows, leaving top members of the N.C. General Assembly to question how, and why, the department failed to pump the brakes on this year’s spending. 

The financial review, commissioned by the Office of State Budget and Management, set out to untangle inefficiencies and improve operations in the state’s $5 billion transportation machine. State law requires that the NCDOT keep a minimum of 7.5% of its revenues in the bank. That’s about $282 million, the report says. NCDOT over the past decade has maintained about $1.2 billion in cash reserves. But the department’s account is shrinking, in September riding at roughly $432 million. That’s the difference of less than two weeks in costs, the report says. 

In August, the department announced hundreds of pending layoffs. 

Bad weather and underestimated project costs have drained NCDOT’s accounts, said Transportation Secretary Jim Trogdon in a recent statement. Lawsuits over the state’s repealed Map Act, a controversial law that allowed the NCDOT to take private land that was mapped for future roads, have also forced the agency to pay hundreds of millions in settlements and court costs. 

“While we have many points of pride as an agency, our state faces new challenges every day that we must ensure we are using our resources to address,” Trogdon said.

That’s not a good excuse, Senate leader Phil Berger, R-Rockingham, said in an Oct. 11 interview with WRAL. 

“We’ve known for years that the Map Act was something that we were going to have to have money for, so they’ve known about that. We also, for at least a year, have known the issues dealing with the extra money that was utilized to pay for damage during the hurricanes,” Berger said.

NCDOT isn’t to blame for most of its money issues, Rep. John Torbett, R-Gaston, told Carolina Journal. Torbett, who is working on legislation that would put extra cash in the department’s coffers, said it’s not fair to the department to blame it for the Map Act, an invention of state lawmakers in 1987

The law was designed to keep down costs the state. But there was a catch. The NCDOT wasn’t required to pay landowners until the road projects were under way.

Now, the law has been repealed, and the department must pay substantial settlements — to the tune of about $311 million — out of pocket, Torbett said. 

“If you added that to the cash balance they had today, it would be way above the floor,” he said. “We would not be having the conversation we’re having.” 

Due to bureaucratic red tape, NCDOT also reached into its stores for $300 million to fix roads and cover other hurricane-related repairs, Torbett said. 

The department was a little slow to “put the brakes on,” Torbett said, when it came to standard road repairs. 

“I know they are trying to burn through the people’s money to fix the people’s roads at a much faster clip than they ever have before,” he said. North Carolina has too many roads that need work, he said, but fixing them requires speed, responsibility, and a solvent transportation department. 

Senate leaders, are — like Torbett — looking at possible solutions, said Bill D’Elia, a spokesman for Berger. 

“But a key question we need to address is how did this crisis arise in the first place, and what can be done to make sure that DOT doesn’t get in this same situation again?” D’Elia said. “Obviously, nobody could have predicted in advance the impact of the hurricanes our state has been hit with over the past few years, but it does seem that better budgeting and project management over at DOT may have helped prevent this cash flow situation from spiraling out of control, forcing the layoffs and work stoppages that we are seeing now.”