News

Top DOT engineer paints grim picture of agency's finances

By Lightning Reports, Published: May 20, 2020

New highway projects are frozen, routine maintenance such as mowing, patching and ditch-clearing is delayed and NCDOT employees across the state are being sent home as the agency faces a serious cash shortage.

Brian Burch, the top DOT official for the 10-county Division 14, painted a bleak picture of the agency’s financial straits and a less than sunny outlook on the prospects for a quick recovery.

“I would not expect things to change within DOT anytime soon unless we get some type relief from the General Assembly or some type of federal stimulus that goes directly to the state government,” Burch told the Henderson County Transportation Advisory Committee during a Zoom-streamed meeting on Wednesday. “If the slowdown from the pandemic continues into July you can expect our revenues will continue to decrease. Right now, we’re expecting possibly up to $400 million in lost revenue in fiscal year 2021, starting in July, so it could continue for a while.”
Origins of the agency’s cash crisis go back to January 2019, when it was spending more than it was taking in, for two reasons.
“One was the storm events that we were experiencing across the state and had for a couple of years and the other was the accelerated construction program,” Burch said. “Based on those two, we started overspending what we were taking in. Last August, we started applying the brakes,” imposing a hiring freeze and suspending development of new projects. In recent weeks, the agency’s cash balance dropped below the legislatively mandated minimum of $293 million.
“When the department goes below that cash floor, we can no longer enter into any contracts, or supplemental agreements on projects that are already under way. At the end of April we dropped below that cash floor balance. So while we were already in somewhat a financial crisis, the pandemic kind of accelerated that and made it even worse. With the slowdown in the economy and people driving less, we are essentially losing $100 million a month in expected revenue.”
While engineering and design on new projects are frozen, projects currently under way, including the $160 million I-26 widening in Henderson County, continue. “Projects that are in development or in right of way or expected to be let — those have all been suspended with the exception of projects that are expected to be funded through the N.C. Build bonds,” Burch said.
Those include three projects in Henderson County that have drawn wide interest —the N.C. 191 widening, North Highland Lake Road widening in Flat Rock and White Street improvement and extension. But there’s a catch there, too.
“Those bonds are expected to be sold in May or in June” by the North Carolina treasurer, Burch said. “We do not know and some people do not expect that that bond sale will occur. If that bond sale does not occur, those three projects will be delayed even further. Right of way would not start on N.C.191, right of way would not start on White Street and the expected letting of North Highland Lake Road would not occur. … Right now there’s no confidence within the (transportation) department on when that will happen of if it will happen.”
Motorists can expect potholes to be neglected and roadsides to become shaggy, too. The department is delaying work such as patching, mowing, grading unpaved roads, cleaning out ditches.
“All of those activities are going to be slowed down,” he said. Roadside mowing, which routinely starts in early May, is delayed until June. Funding for maintenance is the same as it was in 1993. “We were already behind and we’re going to get further behind.”
Top administrators — the NCDOT secretary and 17 direct-reports — started furloughs this week. Burch, the only senior manager in Division 14, furloughs for 25 hours through June 26 starting next week. Other DOT workers must take 20 unpaid hours over the same period. Prospects of a turnaround hinge on increased driving and car sales, both of which generate tax revenue for road building.

“I’ve had discussions with the chief engineer and with the chief operating officer and honestly the only resolution they can see would be coming from the federal government,” he said when asked the situation might improve.
With a freeze on work because of the cash balance, the department would be unable to respond to a hurricane or other natural disaster.
“If we were to have a major hurricane hit the coast or even come through the mountains, right now we can’t enter into those contracts so it would really hinder our ability to address any kind of damage that we get from a hurricane,” he said.
Burch, who is widely respected among local government leaders for his responsiveness and willingness to work through problems that come up in major road projects, told the TAC that he has always tried to find a way to say yes.
“But I’m going to have to get used to saying no probably for the next several months,” he said. “Right now I don’t have a lot of options.”