Economic outlook bleak for state DOT
Posted November 13, 2008 6:01 p.m. EST
Updated November 13, 2008 9:43 p.m. EST
Raleigh, N.C. — There could be a bumpy road ahead for the North Carolina Department of Transportation, the agency's chief financial officer told lawmakers Thursday.
Mark Foster told the Legislature's Transportation Oversight Committee that DOT revenue is down 6 percent and that he is projecting an 11 to 12 percent budget shortfall – more than $300 million – for the fiscal year that begins next July.
Over the next three years, the DOT's budget could approach a $1 billion shortfall, and Foster projects it could reach a $65 billion shortfall over the next 25 years.
"We are in an economic downturn," Foster said. "The impact on the DOT budget may be worse than what people are talking about."
In October, the highway-use tax on automotive sales was down 27 percent. DMV fees were down 14 percent, and revenue from the state gas tax was down 10 percent.
Foster told the committee that Kansas transportation officials announced Thursday they were cutting all new construction immediately and that Virginia has already cut its new road construction for up two years and its work force by 10 percent.
"That's a bellwether of things to come," he said.
The DOT has already identified savings of $200 million without cutting projects or staff and is still looking at how it can trim an additional $100 million or more, Foster said.
Sen. Neal Hunt, R-Wake, said the DOT is going to have to cut road projects. Which projects could be affected is expected to be announced at next month's Transportation Oversight Committee meeting.
The DOT has about $500 million in cash, Foster said, and pays out roughly $15 million a day.
Its three most significant projects, set to start later this fiscal year – the Bonner Bridge in the Outer Banks, the Fayetteville Loop and Crescent Road at Global TransPark in Kinston – will cost approximately $700 million.
The statewide 21st Century Transportation Committee, charged by the governor to improve efficiency, is looking at more ways to fund road construction. Among options on the table are lifting the cap on the state gasoline tax, increasing the highway-use tax 1 percentage point and charging a miles-traveled fee to car owners.
Those options – based on numbers presented last week at a subcommittee meeting – have the potential to generate an additional $795 million to $960 million in revenue a year.
The 21st Century Transportation Committee is expected to submit its funding recommendations next month to the General Assembly.