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“Sharp decline in revenue has resulted in the N.C. Department of Transportation falling below the statutorily mandated cash floor of $293 million. According to state law, once the department falls below the cash floor, the department can no longer enter into new contracts that spend money on transportation projects.

“Never in the history of NCDOT has there been such an immediate and sustained decline in revenues,” said Eric Boyette, transportation secretary, said in a media release May 4. “We need revenue to begin putting people back to work across North Carolina.”

Boyette got a partial response from the General Assembly and Governor Roy Cooper the same day.

On May 4, Cooper signed two pieces of legislation that changed some policies and also allocated about $1.6 billion in federal coronavirus relief funds.

The allocation bill sent $300 million to NCDOT’s General Maintenance Reserve in the Highway Fund “if federal guidance is revised to allow the use of funds for revenue replacement. This allocation reverts if federal guidance is not updated before 6/15/20,” reports a General Assembly prepared summary of the allocation legislation.

The NCDOT is fully funded through the Motor Fuels Tax, Highway Use Tax and Division of Motor Vehicles fees. The drop in revenue from these sources due to COVID-19 will result in more than $300 million in lost revenue for this fiscal year, which ends June 30. An additional shortfall of more than $370 million is projected for FY21.

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.

NCDOT has taken the following actions, states the media release:

Laid off nearly half of all temporary employees and embedded consultants; suspended most programs; hiring freeze (except for positions impacting public safety); canceled contract for passenger ferry; developing department-wide plan to furlough employees (plan not yet completed); evaluating programs and areas for cuts.

“At this time, NCDOT does not know when the cash reserves will be above the cash floor,” continues the media release. “The department 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 FY20 and FY21.”

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