NC lawmakers cut half a billion in transportation spending, increase NCDOT oversight
Lawmakers have agreed to cut hundreds of millions of dollars from the state’s transportation budget for the coming year and overhaul the way decisions about transportation spending are made in the future.
House Bill 77, now on its way to Gov. Roy Cooper, responds to the sharp drop in revenue caused by the coronavirus pandemic and the downturn in the economy. It cuts spending for many aspects of transportation, including highway construction and support for mass transit, airports and railroads.
At the same time, the bill provides new layers of oversight for spending by the N.C. Department of Transportation and reorganizes the department’s governing board. Those changes are designed to prevent financial problems like the ones that have plagued NCDOT over the past year and made it especially vulnerable to the coronavirus crisis.
House Bill 77 passed the Senate unanimously and received fewer than 20 dissenting votes in the House. Cooper has not said whether he’ll sign the bill, and a spokeswoman said only that he would “review” it.
The bill cuts about a half billion dollars in transportation spending. The largest share, $425 million, will come from the Highway Trust Fund, reducing the amount available to build and improve roads to about $1 billion for the year. Johanna Reese, NCDOT’s deputy secretary for intergovernmental affairs, said in an interview Thursday that it’s too early to say which construction projects will be delayed as a result.
The bill provides an additional $107 million for road maintenance and resurfacing at the same time it eliminates state support for mass transit, cutting all $51.2 million that had been allocated to programs that help transit agencies in urban and rural areas. Reese said those cuts generated the most controversy in the General Assembly.
“I would say most votes against the bill were based on that cut to public transit, because a lot of constituencies were vocal about those cuts,” Reese told members of the Board of Transportation on Thursday.
GoRaleigh was counting on about $3 million from the state to help keep its buses on the road, said city transit administrator David Eatman. The state money accounts for about 10% of GoRaleigh’s operating budget, Eatman said.
But GoRaleigh should be able to avoid cuts in service because it received $23.5 million from the Coronavirus Aid, Relief, and Economic Security or CARES Act approved by Congress in late March.
The CARES Act money is meant to cover added expenses during the pandemic and make up for the loss of revenue. GoRaleigh, like other transit agencies in the Triangle, stopped collecting fares this spring, to reduce the risk of spreading the virus, and doesn’t know when it will begin charging customers again, Eatman said.
Other cuts in House Bill 77 include:
▪ $17.8 million, or about 11.5% of aid to local governments to build and repair streets, sidewalks and greenways.
▪ All $41.4 million in the Division Mobility/Modernization Fund, which the General Assembly created two years ago to speed up smaller-scale road projects statewide.
▪ $8.9 million, or about 12% of funding for commercial airports, which have been hurt by the sharp decline in air travel.
▪ $4.9 million, or about 10% of funding for general aviation airports.
▪ $11 million, or about 50% of funding for freight rail and rail crossing improvements.
▪ $3.5 million through the elimination of 41 vacant positions within NCDOT, including six auditors. Board of Transportation chairman Mike Fox said Thursday the elimination of auditing positions surprised him, given the rap that NCDOT hasn’t kept on top of its finances.
“That seemed an odd fix to that criticism,” Fox told fellow board members.
Hopes for more money quickly dashed
Fox said going into the legislative session that he hoped lawmakers might provide more money to NCDOT to make up for the loss in gas tax and other revenue this spring and the hundreds of millions the department has spent in recent years on storm repairs and to settle lawsuits related to the Map Act.
Since the Supreme Court ruled in 2016 that the Map Act was unconstitutional, NCDOT has spent more than $600 million settling lawsuits from landowners who were not previously compensated when their property was preserved for future highways under the law.
Fox said it became clear, though, that the loss in state tax revenue because of reduced consumer spending this spring meant there would be no help for NCDOT.
“I quickly realized, and I think everyone has realized, that there’s not going to be really any new money anywhere for anybody,” he said.
NCDOT officials have blamed the Map Act and the costs of cleaning up after storms such as Hurricanes Matthew and Florence for an unplanned drop in their cash reserves over the last two years. When the coronavirus pandemic decimated tax revenue from the sale of gas and vehicles this spring, NCDOT’s account balance dropped below the minimum required by law.
But an audit completed in May found that NCDOT spent $742 million more than it expected to in the year that ended last June 30 because of poor budgeting and oversight within the department. A report released by the Office of the State Auditor on May 5 said NCDOT planned to spend $5.94 billion that year, but exceeded that amount by 12.5%.
The audit added fuel to efforts to reform how the state manages NCDOT’s money. House Bill 77 establishes a new oversight manager within the Office of State Budget and Management to review the department’s spending plans. It also requires the state treasurer’s office to monitor NCDOT borrowing through bonds.
It also requires NCDOT to begin producing monthly reports for the public and legislators that detail revenue and spending, including projections for the coming 18 months.
Changes for the Board of Transportation
The bill also expands the mission of the Board of Transportation to include ensuring that NCDOT remains solvent.
The change concerns Terry Lansdell, executive director of BikeWalkNC, an advocacy group that would would like to see NCDOT do more for pedestrians and cyclists. Lansdell said he’s concerned the board will focus less on transportation policy and more on highway spending.
“It’s really changed to a fiscal entity at this point,” he said in an interview. “And their main goal appears to be reviewing and approving new spending plans.”
House Bill 77 also gives lawmakers more own influence over NCDOT policy and spending by changing the makeup of the Board of Transportation. Instead of 19 members all appointed by the governor, the new board would have 20 members, including six appointed by either the Speaker of the House or the leader of the Senate.
The current board may have met for the last time Thursday; their terms expire July 30 under the bill, and the new board, yet to be appointed, would officially begin the next day.
Fox, an attorney in Greensboro who has led the board for three years, said he wouldn’t have made the changes to the board spelled out in the bill. He said he thinks NCDOT’s financial problems were largely the result of factors beyond the board’s control, including the weather, the Map Act and the coronavirus pandemic.
“But when you end up in situations like this sometimes, as part of negotiation in which you don’t have all the leverage, you end up making some compromise,” he said. “And that’s what was done here.”
