RALEIGH, N.C. — State officials are scrambling to maintain the cash balance requirement needed to sign new transportation project contracts. Already, vendors statewide have been notified that there’s likely to be a months-long gap in contracts – a situation that’s caused some to issue furloughs this week.
Gov. Roy Cooper, speaking at an economic development event Tuesday, reiterated N.C. Department of Transportation’s belief that it’s a temporary situation.
“I know they are working to get up to speed,” he says of NCDOT. “We need to make sure the money is there before we move forward.”
In an interview Tuesday, NCDOT COO Bobby Lewis outlined the state’s efforts to boost its coffers to keep meeting the cash balance requirement – at 7.5 percent of revenues (or about $282 million).
Regardless of the state’s efforts, however, it’s likely that the state will hit that number in the next few months.
“It doesn’t mean we’re out of cash, but when we approach that floor and hit that floor, we can’t enter into any contract commitments,” he says.
In addition to a hold on new task orders, the state is also cutting back on other Highway Fund activities – primarily in operations and maintenance. Those activities include route filling of pot holes, dead animal removal from highways and other activities – all of which will be greatly reduced for the entire fiscal year as NCDOT works to save money.
“There’s certain things that we have to do, a stop sign gets hit at night, we have to make sure we’re being safe because it’s always safety first, so we would replace that stop sign,” he clarifies.
The department is in the process of evaluating its temporary employees and its contractors – more than a thousand positions.
“We’re screening them this week,” Lewis says. “We’re looking at those as we speak.” And it’s being “very selective” in its hiring process – implementing a hiring freeze of sorts on all nonessential positions.
“From a cash balance standpoint, we’re being very cautious,” he says. “We’re working very efficiently in such a way that, as our cash balance climbs back up, we’re able to go right back to work.”
But the looming storm season presents another obstacle. Should another hurricane hit or a devastating ice storm, NCDOT might not have the resources to issue response task orders.
“We want to try to get as much cash built up, knowing something like that could happen,” he says. “Certainly it is nerve-wracking for myself because I don’t know with some of our cuts if we can make it up over a couple of months. That is a concern of mine.”
Should a storm hit, “We’d certainly have to call up our partners at the General Assembly.”
It’s a “dynamic situation,” Lewis says.
But it doesn’t mean all contracts will halt. The state will likely advertise about $2.5 billion worth of work in the next 12 months due to other financing pools, such as federal financing and discretionary grants.
In addition to the unexpected stream of hurricanes, Cooper passed some of the buck to his predecessor, former Gov. Pat McCrory.
“One of the problems with the previous administration was that the money was there, but they were not getting projects off the ground,” Cooper says. “We’ve been successful in getting the projects off the ground.”
But perhaps too successful.
The project acceleration caused some companies to make additional investments in the Triangle – not expecting an imminent downturn.
“We do have companies currently working onsite with NCDOT impacted by this issue and we are working individually with each of them to ensure they will have other work,” Snow writes.