04/15/2011

House Budget Released

The GOP House Leadership released their budget late Tuesday afternoon and appropriations sub-committees met today to review their budgets and special provisions. Education and the Department of Environment and Natural Resources took the most dramatic cuts. The budget for NCDOT contains big changes, with some programs seeing large cuts in staff – but overall we are in good shape.

Here are the highlights:

Contract Resurfacing will be increased $81 million for a total of $355 million. (These numbers are dependent on the gas tax adjusting with inflation and not being capped.)

System Preservation will also be increased by $81 million for a total of $159 million; however, THE ENTIRE AMOUNT WILL BE USED FOR BRIDGE REPLACEMENT. (The Ready Mix people should be happy)

Maintenance Reserve will be increased by $81 million. NCDOT tells us that they are still committed to pavement preservation and will use the extra funds in maintenance to compensate for the re-direction of the System Preservation funds. This will be at their discretion and not required.

Urban Loops will no longer be a part of the Highway Trust Fund. One of the 31 special provisions in the House budget takes the money from the Highway Trust Fund designated for loop construction and moves the money to the Mobility Fund. The urban loops that were designated in the Trust Fund will become Mobility Fund eligible and will have to compete with other congestion relief projects for funding. The Mobility Fund was created by the General Assembly last year as a means to fund the Yadkin River Bridge project outside of the Equity Formula. What the House budget does is get around the Equity Formula by designating a revenue source for the Mobility Fund and dumping urban projects into the Fund. This is a major policy change. Also, original language creating the Mobility Fund required that priority be given to intermodal projects. That requirement has been removed in the proposed House budget, increasing the likelihood that the fund will be used entirely for road and bridge construction.

What else? Almost 300 positions at NCDOT to be eliminated, some of them vacant but most are currently filled and in preconstruction. The plan is to privatize at least 50% of all engineering.

The Gap Funding that was previously designated for the Mid-Currituck and Garden Parkway projects has also been moved to the Mobility Fund. It is unclear as to whether this will be the death knell for both projects.

Overall, given that there is no new money, we fared pretty well. It looks like we will have more contract resurfacing money than we have ever had and pavement preservation projects will still be funded. Funds that have been held up for urban loops will now be made available for projects that are ready to go. There is also $500 million still in the Trust Fund for Intrastate Construction.

The only fly in the ointment would be a gas tax cap. We are working hard to get that issue resolved in a way that we can live with.

Right now, all the drama is around vetoes and over-rides and budget resolutions. Stay posted.