NCDOT says finances have stabilized but remain precarious, hoping the weather holds
Few people are hoping for a snow-free winter in North Carolina as much as the leaders of the N.C. Department of Transportation.
NCDOT’s finances have stabilized since last spring, when unexpected expenses forced the department to begin cutting back on everything from fixing bridges to mowing grass. A big chunk of those added costs was related to repairs and cleanup after storms, mainly Hurricane Florence in the fall of 2018 but also lesser events, such as thunderstorms that washed out roads in the Triangle last June.
The last time the Triangle received any significant snowfall was in December 2018. That storm dumped several inches of snow and ice in nearly every county in North Carolina, forcing the state to respond with brine and plows to keep highways open, said Bobby Lewis, NCDOT’s chief operating officer.
“That particular three-day event, as short lived as it seemed, it cost us about $45 million,” Lewis said in an interview Friday. “My hope is that if it’s going to be cold, let it be cold. But no precipitation.”
The precariousness of its finances means NCDOT has not rescinded the cost-cutting measures it put in place last year, Lewis said. Those are allowing the department to spend about 15 percent less on operations and maintenance than called for under the most recent budget approved by the General Assembly.
One area where NCDOT is starting to resume spending money is for engineering work done to prepare for construction. In late August, the department suspended pre-construction engineering on about 900 projects statewide, forcing many engineering firms with NCDOT contracts to find other work or make cutbacks of their own.
Since then, Lewis said, NCDOT has been able to restart engineering work on about 220 projects, including the conversion of Capital Boulevard into a freeway between Interstate 540 and Durant Road and the repaving of 4 miles of Interstate 40 in Cary. The department hopes to restore engineering work on about 240 more projects by the end of May. The goal, Lewis said, is keep construction of each project on the schedule set in the department’s 10-year building plan.
Storm and disaster cleanup
NCDOT has spent close to $400 million on storm-related cleanup and repairs in the last 16 months, compared to a long-term average of about $66 million a year, Lewis said.
The federal government should reimburse the state for much of that money. But that can take a while. NCDOT has asked the Federal Emergency Management Agency for about $85.5 million to cover the cost of cleaning up debris and fixing secondary roads damaged by Hurricane Matthew in 2016. As of Dec. 31, the state was still waiting for $19.5 million, according to Emily McGraw, NCDOT’s state maintenance engineer.
NCDOT is also awaiting FEMA reimbursement for more than $88.5 million in cleanup and repair costs from Hurricane Florence in 2018, according to McGraw.
Those payments, when they come, will help get NCDOT back on track financially, Lewis said.
The General Assembly has taken steps to help make NCDOT less vulnerable to big storms such as hurricanes and nor’easters. It passed a bill in November that provided $200 million for disaster relief and new construction but also directs NCDOT to create an emergency reserve fund to draw on in areas where the president has issued a disaster declaration. The bill provided the first $64 million, but NCDOT must begin each year with $125 million in the fund, using money from the department’s operations and maintenance budget.
Lewis said that $64 million can’t be used for past disasters, such as Florence, and that the department has until July 1 to transfer money into the fund to bring it up to $125 million. But having that money set aside should help after future storms, he said.
Map Act effects
The Map Act has been another source of unexpected costs for NCDOT — a law passed in the 1980s that allowed the department to reserve property for future highways without actually buying it. After years of legal challenges, the N.C. Supreme Court declared the law unconstitutional and ordered the state to begin compensating landowners.
Since the ruling in 2016, the state has paid about $558 million to property owners affected by the Map Act, including the cost of acquiring their land, homes and other buildings. About 635 property owners had filed lawsuits, so settling those cases also involves paying damages and interest as well as attorneys’ fees, according to figures provided to the General Assembly this month.
A little more than 200 of those lawsuits remain unresolved, and NCDOT estimates it will cost another $179 million to settle them. That figure may change depending on the outcome of a case before the N.C. Supreme Court that could alter how damages in Map Act cases are calculated.
Lewis and other NCDOT officials stress that despite the financial setbacks, NCDOT will still spend about $5 billion this year on roads and bridges, airports, railroads, ferries and mass transit. State and federal gas taxes, DMV fees, highway use taxes and other sources of income have remained steady, and the department continues to issue bonds to fund major construction projects.
“So it’s still a decent amount of work that’s still going on,” Lewis said.
Lewis says he expects NCDOT’s finances to be back to normal by September or October, when some or all of the cutbacks will be lifted. That’s if the weather holds.
“This is all assuming, because it’s razor thin, we’re not having any major hurricanes or 100-county snow and ice events, things like that,” he said. “Because that’s the unbudgeted stuff we don’t have the allocation for right now.”
This story was originally published January 25, 2020 at 6:00 AM.
