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Report faults NCDOT overspending amid layoff threats, stopped road projects

Natural disasters and legal expenses related to an overturned state law aren’t the only reasons the N.C. Department of Transportation is short on funds, according to a review from an outside consultant hired by the agency.

An eight-page report from the firm McKinsey titled “Shaping the NCDOT of the future” was posted on NCDOT’s website in the last month. The funding shortfall has prompted DOT leaders to consider hundreds of layoffs of temporary employees and suspend work on numerous road projects.

Legislators are considering extra allocations, and the NC Chamber has started a lobbying push on behalf of the DOT contractors that will likely be harmed by the suspended projects.

The memo related to the McKinsey report notes that an unusually high amount of disaster-related needs prompted DOT to spend $296 million in fiscal year 2019, well above the budgeted $50 million.

But the report also cites a $262 million variance from the budget that “appears to stem from a general lack of a culture of cash, largely in divisions.” The multi-county divisions that oversee road projects all overspent their budget allocations, and nearly all of them overspent by at least $20 million.

The report says DOT leadership has “limited control” over budget decisions at the division level. “Finance leadership are not part of monthly highway division staff meetings where project decisions are made, and division leadership is not a part of monthly finance meetings, limiting coordination and communication,” the report says.

Last month, the NC Chamber launched a campaign called “NC Can’t Afford To Stop,” calling for a solution to the DOT budget problems. The campaign’s website says “this potential funding crisis affects a multitude of North Carolina businesses and creates a ripple effect throughout our state’s economy. ... Initial steps will likely require a cash infusion to the NCDOT to keep current projects on track and reopen those that were suspended.”

But some Senate Republicans appear skeptical that giving DOT more money is the right approach. Sen. Andy Wells, R-Catawba, wrote in a blog post that DOT leaders should have been aware of the looming Map Act expenses. “DOT knew about the lawsuit but spent the $1.8 billion anyway — and, now, here come the demands, ‘Give DOT more cash.’ Let’s drain the Raleigh Swamp, too.”

The state’s Map Act had allowed NCDOT to reserve property for future roads without buying it. But the law was struck down in court, and landowners want compensation.

Senate leader Phil Berger voiced similar concerns to those of Wells to WRAL News on Thursday. “The question is, among some members, why has this all of the sudden come up as a crisis, and what could they have done to manage through it?” he told the TV station. “We’re looking into it, but my suspicion is that they probably could have managed it better. ... I think there’s going to be an effort to try to address the problems that we have currently that are creating some real issues for small businesses as far as layoffs and that sort of thing.”

House leaders seem more sympathetic to DOT woes, and Rep. John Torbett, R-Gaston and a transportation committee chairman, issued a series of tweets Thursday that appeared to address Wells’ comments. “There is no DOT swamp to drain or negative sound bite to use referencing this serious concern,” Torbett wrote.

“The People’s money meant for their roads went to pay litigation, damages, and awards due to Map Act action created by the NCGA years ago and is now leading to private co. layoffs. We need NCDOT to be able to access emergency storm funds in Rainy Day Fund when needed and NCGA to pay past and future Map Act bill. We need to plug this critical funding hole, get it behind us and improve the highway system folks have been promised and are waiting for.”

Torbett told The News & Observer last month that he’s planning legislation to give NCDOT an additional $612 million, but so far, no bill has emerged publicly.

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