RALEIGH — Legislators on the Senate Transportation Committee held a second hearing regarding the results of a state auditor’s report of the North Carolina Department of Transportation which revealed $742 million in overspending.
Testifying before the committee were Michael S. Fox, chairman of the North Carolina Board of Transportation and Eric Boyette, secretary of the NCDOT. State Auditor Beth Wood had testified before the committee the week prior.
The overspending combined with slashed revenues due to COVID-19 have led to 30-hour furloughs for NCDOT executive and senior leadership and 20-hour furloughs for regular employees.
“When I look at the number — $742 million — I’m in shock,” said Sen. Warren Daniel (R-Burke). Daniel went on to say that “Seven million dollars is a scandal. This is a federal government type of number.”
Much of the audit report centered on lack of oversight, including failure to budget using actual cost estimates for projects. The audit also noted a failure by the chief financial officer and the chief engineer to monitor and enforce its spending plan for the 14 highway divisions overseen by the NCDOT.
The current NCDOT CFO is Evan Rodewald and the chief engineer is Tim Little. Both men were moved into their positions by former NCDOT Secretary James Trogdon. Rodewald was made CFO in 2018 and Little as chief engineer in 2017.
At one point during the discussion on oversight, Boyette admitted to the committee that NCDOT has no performance auditors and that only 14 of 21 internal auditor positions in the department are currently filled.
According to Wood’s audit, the CFO was “hesitant to plan for more disaster spending,” because they didn’t know when or if there would be one, and when disasters did occur, the NCDOT failed to adjust its other expenses and “continued to overspend.”
Chairman of the NCDOT board Michael S. Fox told lawmakers on the committee that the department had “tried to slow down spending in 2018 and continued to do so in 2019.” Fox said that even before the audit was published, “we had taken steps” to improve and that the department is “committed to taking additional steps to meet concerns.”
The committee met again to hear from State Treasurer Dale Folwell and state budget director Charles Perusse.
Much of the discussion centered on NCDOT officials who were aware of the overspending and failed to stop it. Additional conversations were had about potentially bailing out the DOT using $300 million in federal funds, but that money would only be available if changes are made in federal regulations governing spending of such funds.
“The subject before you is worth getting mad about,” said State Treasurer Dale Folwell during the meeting. He said that he wants to see OSBM take over NCDOT’s financial management.
OSBM director Perusse said he’s already moved staff to help NCDOT. “We’ve put a concerted issue into understanding this and helping with a solution.”
Moving financial management away from NCDOT would be like “putting a Band-Aid on the problem,” according to Perusse.
Recommendations made by Perusse to control NCDOT’s overspending includes giving OSBM the power to allot funds to NCDOT based on certified operating expenditures. He also recommended removal of the mention of “allotments” in state statutes on highway appropriations (G.S. 143C-6-11(h)).
Perusse said he wants to go in the opposite direction from Folwell’s recommendation with gradual and systemic changes. He said that kind of path “quite frankly has a better chance for success going forward.”
“Gradual and systemic changes are how the DOT got into debt in the first place,” Folwell told North State Journal when asked about Perusse’s comment.