Because of a dramatic decline in revenue, the North Carolina Department of Transportation has had to halt signing new contracts for projects, among other measures.
NCDOT has fallen below the statutorily mandated cash floor of $293 million, which according to state law means that the department can no longer enter into new contracts that spend money on transportation projects.
The department is fully funded by the Motor Fuels Tax, Highway Use Tax and Division of Motor Vehicles fees. The drop in revenue from these sources because of COVID-19 will result in more than $300 million in lost revenue for the fiscal year ending June 30, officials said. A shortfall of more than $370 million is projected for next fiscal year.
“Never in the history of NCDOT has there been such an immediate and sustained decline in revenues,” Transportation Secretary Eric Boyette said in a statement. “We need revenue to begin putting people back to work across North Carolina.”
The North Carolina general statutes restrict the department’s ability to enter into agreements that obligate additional funds for transportation projects until cash on hand is above the statutory cash floor, as certified on the last day of the month.
During this time, NCDOT said it can continue active projects, maintain existing infrastructure with existing supplies and staff, pay incoming invoices from private sector companies as long as funds exist, continue operating DMV functions, respond to emergency situations with existing staff and materials, and hire new employees for critical, safety-related positions or DMV functions.NCDOT cannot negotiate right of way purchases on projects not underway, purchase additional equipment, supplies or services for transportation projects unless obligated to make such a purchase in an existing contract or award new construction, engineering or repair contracts.
Actions the department has taken include laying off nearly half of all temporary employees and embedded consultants, a hiring freeze except for positions that affect public safety, and developing a department-wide plan to furlough employees.
Additionally, most programs have been suspended, the passenger ferry contract has been canceled and programs and areas are being evaluated for cuts.
The department said it was uncertain when cash reserves will be above the cash floor but it must continue meeting existing obligations and pay invoices for work completed or currently underway. For the department to begin reinstating suspended projects and programs, NCDOT would need revenue replacement to compensate for COVID-19 losses for this fiscal year and next.