U.S. withholds N.C. transit funds

The Federal Transit Administration doesn't like the way the state oversees local transit

The Federal Transit Administration has frozen $25 million in grants for mostly rural public transportation services across North Carolina, citing deficiencies in how the state Department of Transportation oversees local transit programs.

The federal agency says DOT's lapses have cost local transit programs in unspecified lost or delayed funds from Washington.

The state DOT transit division is headed by Roberto Canales, a deputy secretary who also directs DOT's campaign to reinvent itself as an efficient, accountable agency. He said Wednesday that North Carolina programs have not suffered financially yet.

Heavy turnover on the DOT transit staff and a departmentwide reorganization have hampered the state's ability to keep up with new federal regulations, he said.

"They're changing the way they want us to do it, so we're going to modify the way we're doing it based on their guidance," Canales said. "Just because the FTA chose to use the terminology 'deficiency' doesn't necessarily reflect that what we were doing in the past was incorrect."

Yvette G. Taylor, the FTA's southeast regional administrator, said in a Nov. 4 letter to Canales that an audit found DOT deficient in 12 out of 21 areas of state responsibility. Her criticism centered on DOT's failure to submit an overall management plan describing how North Carolina allocates federal funds to local agencies and makes sure the money is spent properly.

"NCDOT will not be permitted to draw down FTA funds from any of the [fiscal year] 2008 grants until" Taylor's office approves the management plan, the FTA audit report said.

Taylor told Canales to fix shortcomings in how DOT manages grant money, helps local agencies with their planning and meets the state's needs for inter-city and charter bus service.

She said DOT has not done enough to make sure local agencies meet guidelines for vehicle maintenance, drug and alcohol testing for drivers and services for disabled residents, as well as equal-opportunity rules for hiring and purchasing.

Local agencies rely on DOT to distribute federal funds for a variety of transportation programs that help elderly, disabled, low-income and other mostly rural residents.

After they've been told they qualify, the local agencies spend the money and then seek reimbursement from Raleigh. In January, DOT will be asked to reimburse local transit agencies for money they spent in the last three months of 2008.

Canales said the state has grant money left over from previous years that can be distributed to local agencies. He hopes by January to regain FTA permission to tap $25 million in new grants that were tentatively approved in September.

FTA officials were not available for comment.

David King, general manager of Triangle Transit, said no Triangle Transit money has been affected by the FTA action. King ran DOT's transit program until 2006. He was surprised to hear that DOT received such low marks from the federal agency, which audits transit programs every three years.

"These triennial reviews are telegraphed in advance," King said. "We're getting ready for ours next year. It's not like they're surprise audits or anything."

Canales has held a variety of highway engineering and management jobs since he joined DOT in 1984. He became deputy secretary for transit in 2006. Last year he took charge of an effort to reorganize DOT and restore its standing with critics in the state legislature.

He says the FTA criticism will not undercut his role as front man for accountability and efficiency at DOT.

"It doesn't affect my credibility," Canales said.

Bruce Dillard, DOT's new inspector general, said he had not read the FTA's audit report. He said he was waiting to see Canales' response.

Nancy Dunn of Winston-Salem, chairwoman of the Board of Transportation's transit committee, said she would ask for a report on the FTA's audit before the board meets on Dec. 11.

"Clearly, anything where DOT hasn't acted in accord with the rules is not a good thing," Dunn said. "I would hope that it's simply a delay in the grant money. And the FTA will give the department the opportunity to correct whatever deficiencies there are -- and be the better for it."