RALEIGH — A budget shortfall for the North Carolina Department of Transportation has led the department to make cuts to future construction contracts by $2 billion.
During a recent meeting, N.C. DOT officials said that revenues have dropped this year. One reason being cited was a stiff drop in gas tax revenues due to far fewer motorists being on the roads as a result of the COVID-19 outbreak.
“Our latest estimate is that we will have a budget shortfall of at least $300 million for the rest of the fiscal year [which ends June 30], and the impact is forecast to be worse in fiscal year 2020-21. The numbers are constantly changing, so they are not set in stone,” the N.C. DOT told North State Journal in response to a records request.
Construction companies across the state are now struggling for ways to fill the gap in their own revenue streams and are racing to compete for the remaining N.C. DOT projects.
“We are currently evaluating many steps within the department to contend with the situation. One is a delay of major projects that were in our 12-month letting list [to be awarded thru the end of March 2021],” said the N.C. DOT in their response.
The revenue drop means the N.C. DOT will need to slash the number of tentative construction projects for the next fiscal year to 38, down from 131. In scaling back that list, the N.C. DOT told North State Journal that they anticipate reducing the budget for those projects “from about $2.6 billion to $671 million” and that the project schedule “will have to undergo major changes.”
The N.C. DOT indicated they did not have a specific list of the impacted projects at this time but that the department will provide a new list to the public soon.
As of Friday, April 16, the N.C. DOT had an ending cash balance on hand of $323,976,870. That total is down $23,198,337 over the previous week’s ending balance.
Issues with the N.C. DOT’s budget arose last October when it was announced the department had overspent its budget by $2 billion. Additionally, outside counsel conducting due diligence on Build NC Bonds revealed that $1.1 billion in N.C. DOT inter-fund loans had not been approved by the treasurer.
The overspending resulted in the N.C. DOT nearly hitting its limit for cash reserves and almost running afoul of the state law requiring them to maintain a cash balance between $282 million and $1 billion.
At the time, N.C. State Treasurer Dale Folwell called the overspending a “lack of managerial control” and called for the governor to remove Secretary Jim Trogdon, who has since left the position. Folwell also called for the Office of State Budget and Management to take over managing the N.C. DOT’s finances.