The North Carolina Department of Transportation (NCDOT) overspent its own budget by $742 million in state fiscal year (SFY) 2019 according to an audit released this week by the North Carolina state auditor’s office.
The coronavirus act signed into law on Monday, May 4 allocated $300 million to the NDDOT, but that won’t cover half of the deficit, and there are still questions about that allocation being allowed. The General Assembly has already provided the NCDOT with $220 million from the state general fund.
Since much of the money to finance the NDDOT comes from a gas tax, and with a statewide stay-at-home order in place travel and consequently gas sales are way down, it’s a particularly bad time for the NCDOT to be facing a large deficit.
The audit covers what happened in state fiscal year 2019, not the unprecedented events in the spring of 2020.
The audit states that the NCDOT planned to spend approximately $5.94 billion in SFY 2019, “but exceeded that amount by $742 million (12.5%) and was in danger of falling below the statutory cash floor. The Department exceeded its Spending Plan because the (1) Spending Plan was not based on cost estimates of the specific projects and operations the Department scheduled for the fiscal year, (2) Chief Engineer’s Office did not monitor highway division compliance with the Spending Plan, and (3) the Chief Engineer’s Office did not enforce highway division compliance with the Spending Plan.”
The NCDOT has maintained that one of the major reasons it overspent its budget was due to unexpected expenses from the North Carolina Supreme Court decision that the Map Act was unconstitutional. However, as the state auditor’s office notes, Map Act payments amounted to $13 million in SFY 2019.
The Map Act allowed the NCDOT to set aside property that it intended to use for future roadways without purchasing the property, which left property owners with land they couldn’t improve or sell. The court ruled that property owners had to be compensated for the state taking their land.
Another reason the NCDOT has said that it overspent its budget was the increased cost of disaster spending. The audit states that the NCDOT “did not estimate SFY disaster spending based on historical spending information or any other type of available data.
“Instead the Department set-aside the same $50 million for disaster spending as it had for the last four fiscal years despite actual disaster spending that exceeded the planned spend every year by at least $28 million.”