Politics & Government

Businesses will press legislators to ease NCDOT financial crisis, resume projects

Dozens of NCDOT road projects in Raleigh and Charlotte - and hundreds across NC - are being delayed by budget woes.
Dozens of NCDOT road projects in Raleigh and Charlotte - and hundreds across NC - are being delayed by budget woes. Ethan Hyman

A growing coalition of businesses and trade groups has begun to press the General Assembly to provide an infusion of cash to the N.C. Department of Transportation so it can resume planning work for hundreds of construction projects across the state.

In late August, NCDOT suspended pre-construction engineering work on about 900 projects to save money. NCDOT officials say they’ve been hit by unusually high bills for cleanup and repairs after storms, including Hurricanes Florence and Michael last fall, and to settle lawsuits related to the Map Act, a 30-year-old law the state Supreme Court found unconstitutional.

Among the first to feel the effect of NCDOT’s cutbacks are local and national firms that do engineering work for the state. The suspended contracts are worth tens of millions of dollars, maybe more, said Jim Smith, executive director of the American Council of Engineering Companies of North Carolina. If NCDOT can’t resume the work in the next two to three months, Smith estimates those firms will have to lay off 1,000 or more people.

Smith’s group is part of the coalition, led by the N.C. Chamber, that calls itself “North Carolina Can’t Afford to Stop.” As of Wednesday, the coalition had 65 members, including the Raleigh-Durham Airport Authority and several local chambers of commerce.

“We’re working hard to convince the legislature that there’s an immediate need to get folks back to work,” Smith said.

It’s not clear yet how the General Assembly can help, said Ray Starling, the general counsel for the N.C. Chamber. Options could include a new appropriation, some sort of loan, or a transfer from another account, such as the “rainy day fund” or from the budget surplus that Republican legislative leaders have proposed refunding to taxpayers.

“We’re just beginning the search for solutions, so at this point, there are a lot of options on the table,” Starling said. “But finding one in this environment that will satisfy DOT and the governor’s office and both chambers of the General Assembly might be difficult. We recognize that we’re going to be threading a needle.”

Starling said it’s also not clear yet who in the General Assembly will lead the effort to help NCDOT. While no one has stepped forward yet, he said the coalition has heard only sympathy from legislators.

“Nobody wants to be where we are right now,” he said. “The initial conversations that members of the coalition have had seem to be around ‘How do we help?’ not ‘I’m not interested in being helpful here’ or ‘We need to do this later.’”

Rep. John Torbett, a Republican from Gaston County who heads the House Transportation and Transportation Appropriations committees, said he plans to introduce a bill in the next two weeks that would provide an additional $612 million to NCDOT — $301 from the rainy day fund and $311 as a general appropriation.

“We definitely see an issue that needs to be corrected,” Torbett said Wednesday, “and I’m hoping all my colleagues will affirm that.”

Gov. Roy Cooper has not proposed giving NCDOT more money, but a spokesman issued a statement Tuesday that said “he is ready to work with the General Assembly toward a solution.”

From surplus to cuts

The financial crisis at NCDOT follows two years in which the department stepped up the pace of construction to help spend down a surplus. In the fiscal year that ended June 30, 2017, NCDOT’s cash balance topped $2 billion, and the department set a goal of drawing that down to $750 million.

But as the balance declined sharply over the last two years, some in the construction industry began to ask if NCDOT had a plan for easing up without bringing work to a crawl, Smith said.

“When you’re spending cash down at an accelerated rate, eventually you’re going to hit the goal,” he said. “I don’t think anyone anticipated the extent that the floor would be reached or what the effect would be.”

In May, Smith sent an email to his group’s members saying Transportation Secretary Jim Trogdon and others at NCDOT had told him the department expected to maintain the current pace of pre-construction engineering work. The message changed during the summer, Smith said. That’s when NCDOT’s chief operating officer, Bobby Lewis, said weather-related expenses had neared $300 million for the year and spending related to the Map Act was climbing and could top $1 billion.

The Map Act was a state law that allowed NCDOT to preserve land for future roads without buying it. After years of legal challenges, the state Supreme Court ruled the policy an illegal taking of private property without compensation. Now NCDOT finds itself not only buying the property but also paying legal fees and additional compensation for the lost use of the property over the years.

The North Carolina Can’t Afford to Stop coalition has not settled on how much money it will seek from the legislature to let NCDOT resume pre-construction engineering work, though Starling said he expects it will be at least $500 million.

NCDOT spokesman Steve Abbott said NCDOT has not talked about the issue with the chamber-led coalition and that the department can’t say what it would take to jump-start the pre-construction work.

“There is no specific figure on what would be needed to resume work on the suspended projects,” Abbott wrote in an email, “because the hundreds of millions of dollars in unexpected cost for weather incidents and Map Act settlements have made this a department-wide issue, and not affected just one area of the department.”

Among the other cutbacks NCDOT has made this year is the suspension of nonessential travel, training and purchases and the shelving of work that involved hundreds of temporary and contract workers.

The coalition includes a number of companies that would benefit directly from more spending on roads and bridges. While NCDOT has not halted projects already under construction or expected to get started in the coming year, those companies could eventually see a drop-off in work if pre-construction engineering remains suspended.

But Starling said the coalition includes general business groups as well, because failing to improve the state’s transportation system would hurt its overall business climate.

“At the end of the day, what this means is that highway construction projects that were on track to be finished will now be delayed,” he said, “and that has a real impact on not only those involved in construction but on businesses across the board.”

Abbott, the NCDOT spokesman, said the department still plans to spend more than $300 million on pre-construction engineering this year, mostly for projects paid for with federal money or bonds issued by the state. And he said the 900 or so projects affected by the delay in engineering work may still get started on time, because there’s room in their schedules.

“The suspension of pre-engineering work does not automatically mean any of the project construction schedules will be delayed,” he said.

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Richard Stradling covers transportation for The News & Observer. Planes, trains and automobiles, plus ferries, bicycles, scooters and just plain walking. Also, #census2020. He’s been a reporter or editor for 32 years, including the last 20 at The N&O. 919-829-4739, rstradling@newsobserver.com.
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