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RALEIGH – Sharp decline in revenue has resulted in the N.C. Department of Transportation falling below the statutorily mandated “cash floor” of $293 million, NCDOT announced on May 4. 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 Transportation Secretary Eric Boyette. “We need revenue to begin putting people back to work across North Carolina.”

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, according to the department’s announcement.

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.

While below the cash floor, NCDOT is still able to:

  • Continue active projects
  • Maintain existing infrastructure with existing supplies and staff
  • Pay incoming invoices from private sector companies as long as funds exist
  • Continue operating DMV functions
  • Respond to emergency situations (with existing staff and materials)
  • Hire new employees for critical, safety-related positions or DMV functions

However, at this time, NCDOT will not be able to negotiate right of way purchases on projects not underway, purchase additional equipment, supplies or services for transportation projects unless obligated to make such a purchase in an existing contract, or award new construction, engineering or repair contracts.

Since the beginning of the COVID-19 pandemic, NCDOT has laid off nearly half of all temporary employees and embedded consultants, suspended most programs, halted its hiring process, canceled contracts for passenger ferries and evaluated programs and areas for cuts.

According to the release detailing the department’s cash floor, NCDOT has also been “developing a department-wide plan to furlough employees,” but the plan has not been completed as of May 4.

The NCDOT does not know when the cash reserves will be above the cash floor and development may resume. The department must continue meeting existing obligations and pay invoices for work completed or currently under way.

For the department to begin reinstating suspended projects and programs, NCDOT would need revenue replacement to compensate for COVID-19 losses for the 2020-2021 fiscal year.

Additional information from NCDOT can be found by clicking to www.ncdot.gov.

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