RALEIGH — North Carolina State Treasurer Dale R. Folwell, is calling for Governor Roy Cooper to replace Department of Transportation secretary, James Trogdon, for overspending by the department under his watch. In a Thursday press release Folwell said the increases in spending, which the DOT has attributed to natural disasters, “are acts of man, not God.”
Trogdon was appointed secretary of NCDOT by Cooper in January 2017 and confirmed by the state senate a few months later in March.
The NCDOT spent almost $7 billion during the 2019 fiscal year, which is $2 billion beyond the department’s designated revenue. That spending has resulted in the NCDOT nearing its limit for cash reserves.
Current state law requires NCDOT to maintain a cash balance between $282 million and $1 billion. The increase in spending over the past year reduced NCDOT cash reserves close to the minimum required by the General Assembly.
Folwell called the spending a “lack of managerial control” and asked for the Office of State Budget and Management to take over managing the NCDOT’s finances.
“The lack of oversight at NCDOT is outrageous,” Folwell said. “We endorse sustainable and predictable funding for transportation projects in North Carolina. Taxpayers, road builders, legislators and rank-in-file NCDOT employees deserve a single source of truth and facts going forward without fear of retribution.”
The spending by NCDOT targeted by Folwell includes $1.1 billion in “short-term” loans from the Highway Trust Fund for the Highway Fund between April 2018 and April 2019. Outside counsel doing due diligence on Build NC Bonds discovered that the $1.1 billion in inter-fund loans had not been approved by the treasurer.
The NCDOT defended the Secretary in an emailed statement.
“Secretary Trogdon is focused on continuing to deliver critical projects in every region of the state and implementing improvements to our internal processes to continue to improve what we do for the people of this state while operating within our cash window,” said the NCDOT in a statement to NSJ.
The Governor’s office didn’t respond to Folwell’s allegations but instead criticized Folwell.
“A financial lecture from the nation’s least effective state Treasurer, who boasts among the worst fiduciary return on investment and raised the cost of healthcare for state employees during his tenure, is not credible,” the governor’s office said in a statement.
The governor’s office added that the “NCDOT is continuing to complete projects across the state while working within the guidelines set by the legislature in statute and navigating unprecedented costs from historic storms and flooding and the MAP Act Settlements.”
We didn’t do these things, we discovered them,” Folwell said in response to the governor’s office. “As keepers of the public purse, we have a responsibility to try to fix them. We do that by following the law and attacking problems, not people.”
The NCDOT has received $900 million in bonds this year from the State and Local Government Finance Division of the Treasurer’s office. That $900 million is composed of $300 million in Build NC bonds dispersed in March and $600 million in GARVEE Bonds in June.
According to a McKinsey & Company report commissioned by the Office of State Budget and Management posted to the NCDOT website, the department’s increased spending was caused by inadequate cash management, excessive spending on preliminary engineering, and unreimbursed disaster recovery costs.
“The NCDOT didn’t know it was speeding; when it was told that it was speeding, it didn’t slow down and, eventually, it didn’t slow down enough,” Treasurer Folwell said. “There were absolutely no consequences and the General Assembly nor taxpayers should be blamed.”
Folwell also said the NCDOT’s fiscal mismanagement and overspending is a threat to the state’s “AAA” bond rating.
“We should not spend additional taxpayers’ money or put more transportation debt on the backs of North Carolina’s citizens until Governor Cooper fixes this mess.”