The N.C. Department of Transportation will begin to emerge from its financial troubles early next year without an additional infusion of cash from the General Assembly, according to Secretary of Transportation Jim Trogdon.
Trogdon says that by May NCDOT will be able to resume pre-construction engineering work on about half of the 900 projects the department put on hold late this summer to save money. In an interview, Trogdon also said despite the delays, he thinks all 900 projects will eventually be done on the timetable set in the state’s 10-year construction plan.
“I want to have those stay on their scheduled delivery for construction,” he said.
But the suspension of pre-construction planning continues to hurt engineering firms that the department will need when work resumes, some of which have furloughed or laid off employees. To help those firms get through the coming months, the General Assembly may yet provide a special appropriation or loan to resume more of the 900 projects sooner, according to Jim Smith, executive director of the American Council of Engineering Companies of North Carolina.
“The leadership of both houses as well as many legislators agree that there is a critical need and something must be done,” Smith wrote in a message to the group’s members. “What form that takes remains to be seen.”
NCDOT leaders have blamed the department’s budget crisis on two forces: the weather and the costs of settling lawsuits related to the Map Act, a 30-year-old law that was found unconstitutional.
NCDOT has paid $366 million to landowners who were deprived of the full use of their property by the law, which allowed the state to reserve land for highways without buying it. NCDOT officials have said the total cost to settle the Map Act suits could top $1 billion, including the cost of acquiring the property, damages and legal fees.
Meanwhile, NCDOT says storms, including two major hurricanes, have cost NCDOT an average of $222 million a year for cleanup and repairs since 2016, compared to an average of $66 million a year over the previous decade. Hurricane Florence last fall and other snow and rain storms since then quickly depleted the department’s operations and maintenance budget in the most recent fiscal year.
Trogdon says he’d like to see the General Assembly create a mechanism for dealing with weather-related costs. Options include creating a reserve fund for weather cleanup and repairs or making special appropriations at the end of each year, he said, adding that he doesn’t have a preference.
“We just want to work with the House and the Senate to find a workable solution,” he said. “If we continue to see storms at this intensity and frequency, the old system just doesn’t work anymore.”
Trogdon answers criticism
Some in state government have criticized NCDOT’s handling of its finances. In September, a report commissioned by the Office of State Budget and Management concluded that NCDOT’s 14 geographic divisions had all overspent their budget allocations in the fiscal year ending June 30, most by at least $20 million, in part because of a lack of central oversight.
In addition, Senate President Phil Berger and State Treasurer Dale Folwell have both publicly questioned why NCDOT did not better anticipate the Map Act expenses and continued to accelerate spending on road projects to reduce a surplus of cash that had topped $2 billion. Folwell was especially critical, calling on Gov. Roy Cooper to replace Trogdon and have NCDOT’s finances taken over by the Office of State Budget and Management.
“The NCDOT didn’t know it was speeding,” Folwell said last week. “When it was told that it was speeding, it didn’t slow down and, eventually, it didn’t slow down enough.”
Trogdon answered that criticism in a letter to legislative leaders on Monday. He said NCDOT was responding to the wishes of the General Assembly as it worked to put its cash to work and that the department repeatedly explained its progress to legislators and others in recent years. By streamlining the planning process, he said, NCDOT was able to accelerate construction of major projects, including the widening of Interstate 40 south of Raleigh and the overhaul and widening of the last four-lane section of the Raleigh Beltline, both of which are underway.
In the letter, Trogdon said NCDOT needs to work with legislators “to develop improved strategies for storm-related payments,” but doesn’t ask for a special appropriation this fall, as some legislators have proposed. Rep. John Torbett, a Republican who heads the House Transportation and Transportation Appropriations committees, introduced House Bill 967, which would provide NCDOT with $661 million for Map Act and storm-related expenses.
But that bill has failed to advance beyond the House Appropriations Committee, and members of both the House and Senate have talked about proposing alternatives when the General Assembly reconvenes next week. In a statement Wednesday, NCDOT would say only that it has been meeting with legislators regularly to “discuss the department’s cash balance issues.”
“We appreciate the interest by the General Assembly in developing possible solutions to the situation, and we will continue to partner with legislators moving forward,” the statement said.
Trogdon disclosed the planned resumption of pre-construction engineering work at a meeting of the American Council of Engineering Companies of North Carolina in Raleigh last week. Suzanne Young, whose Three Oaks Engineering of Durham counts NCDOT as it biggest client, said Trogdon told a ballroom full of engineers that 444 projects would be started between January and May, setting off speculation about which projects and exactly when.
“For some people, if it’s January or if it’s May, that really matters for their ability to keep staff and avoid layoffs,” Young said in an interview. “That’s five months of payroll if it’s the latter.”
Three Oaks Engineering has 29 employees in North Carolina, and Young said she’s avoided layoffs by putting half of those people on reduced hours and by picking up small jobs for municipalities and private developers. She described the situation with NCDOT as “transportation consulting purgatory,” and says everyone in her industry is eager to get back to work on highway projects.
“NCDOT has been great to us, so much work. They are by far our largest client,” Young said. “This is the first time we’ve been in any kind of position like this.”