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State treasurer blasts DOT spending, calls for transportation chief to be fired

State Treasurer Dale Folwell called Thursday for Gov. Roy Cooper to replace state Transportation Secretary Jim Trogdon, blaming him for excessive spending at the Department of Transportation that has led to a potential legislative bailout.

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NC Department of Transportation building, DOT sign, DOT building
By
Matthew Burns
, WRAL.com senior producer/politics editor
RALEIGH, N.C. — State Treasurer Dale Folwell called Thursday for Gov. Roy Cooper to replace state Transportation Secretary Jim Trogdon, blaming him for excessive spending at the Department of Transportation that has led to a potential legislative bailout.
DOT has complained for months about a cash crunch because of unusually high repair costs following a series of natural disasters and ongoing legal settlements over a since-repealed law that allowed the agency to block development in future highway corridors. The shortage of operating funds forced DOT to lay off hundreds of temporary employees and contractors and put about 900 pending road projects on hold in recent months.

But Folwell insisted that DOT's money woes are manmade. He accused the agency of purposely overspending to force the Treasurer's Office to issue highway bonds this year that wouldn't have been needed otherwise.

DOT made $1.1 billion in “short-term” loans from the Highway Trust Fund to the Highway Fund between April 2018 and April 2019, Folwell said. The trust fund is used for new construction, while the Highway Fund pays for road maintenance and agency operations.

Folwell said many of the projects funded by the transferred money couldn't legally have been paid for out of the trust fund, and the DOT never received permission from the Treasurer's Office for the transfer, as required by law.

"The word 'trust' in the Highway Trust Fund implies that taxpayers, rating agencies and bond holders trust that the money is being used properly," Folwell said. "The lack of oversight at NCDOT is outrageous."

DOT spokesman Steve Abbott said in an email to WRAL News that Trogdon "is focused on continuing to deliver critical projects in every region of the state and implementing improvements to our internal processes to continue to improve what we do for the people of this state while operating within our cash window."

Cooper's office was more blunt, firing back at Folwell.

"A financial lecture from the nation’s least effective state treasurer, who boasts among the worst fiduciary returns on investment and raised the cost of health care for state employees during his tenure, is not credible," spokeswoman Megan Thorpe said in an email. "NCDOT is continuing to complete projects across the state while working within the guidelines set by the legislature in statute and navigating unprecedented costs from historic storms and flooding and the MAP Act settlements."

Folwell said his office issued $300 million of Build NC bonds in March and $600 million of GARVEE Bonds in June after lawmakers expressed concern over the DOT's cash flow needs.

Lawmakers approved the Build NC bonds last year, up to $300 million a year over 10 years, to speed some highway projects. GARVEE bonds are used to pay for highway construction with the understanding that they will be repaid through reimbursements to states from federal highway funds.

The Treasurer's Office learned about the loan from the Highway Trust Fund while preparing to issue the Build NC bonds, Folwell said, adding that DOT officials misrepresented the impact of the legal settlements over the former Map Act and development in highway corridors during the bond process.

"We cannot trust what we’re being told by NCDOT," he said. "Their mismanagement directly undermines the faith that the rating agencies put in our disclosures and threatens the state’s AAA bond rating. We should not spend additional taxpayers’ money or put more transportation debt on the backs of North Carolina’s citizens until Governor Cooper fixes this mess."

Lawmakers have been working on a $600 million package to help ease DOT's cash-flow problems, but the measure hasn't yet cleared either the House or the Senate.

"The NCDOT didn’t know it was speeding. When it was told that it was speeding, it didn’t slow down, and, eventually, it didn’t slow down enough," Folwell said.

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