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S356: DOT Cash and Accountability. Latest Version

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2019

SESSION LAW 2019-251
SENATE BILL 356

AN ACT TO MAKE REVENUE ADJUSTMENTS, IMPLEMENT BUDGET
STABILIZATION MEASURES, AND ENHANCE TRANSPARENCY AND

ACCOUNTABILITY AT THE DEPARTMENT OF TRANSPORTATION.

The General Assembly of North Carolina enacts:

PART I. REVENUE ADJUSTMENTS AND BUDGET STABILIZATION MEASURES

BUILD NC BONDS

SECTION 1.1.(a) Notwithstanding G.S. 142-97(4), for the 2019-2020 fiscal year,
the Department of the State Treasurer shall authorize the issuance and sale of Build NC Bonds
in the amount of four hundred million dollars ($400,000,000).
SECTION 1.1.(b) Nothing in this section shall be construed as modifying the Build
NC Bonds limit set forth in G.S. 142-97(3).

LOAN TO HIGHWAY FUND

SECTION 1.2.(a) Notwithstanding any provision of law to the contrary, the
Department of Transportation shall transfer one hundred million dollars ($100,000,000) in
nonrecurring funds as a loan from the Highway Trust Fund to the Highway Fund according to
the following schedule:
(1) $50,000,000 on or before February 1, 2020.
(2) $50,000,000 on or before May 1, 2020.

SECTION 1.2.(b) The Department of Transportation shall repay the Highway Trust
Fund loan according to a repayment schedule approved bythe Department of the State Treasurer.

TRANSPORTATION EMERGENCY RESERVE
SECTION 1.3.(a) Legislative Intent. – It is the intent of the General Assembly that
the Transportation Emergency Reserve shall only be used for major disasters and not for snow
and ice removal or non-declared emergency operations.

SECTION 1.3.(b) Article 2A of Chapter 136 of the General Statutes is amended by
adding a new section to read:
"§ 136-44.2E. Transportation Emergency Reserve.
(a) Creation. – The Transportation Emergency Reserve (Emergency Reserve) is
established as a special fund in the Department of Transportation.
(b) Funding; Use of Funds. – Subject to subsection (d) of this section, no later than July
30 of each fiscal year, the Department of Transportation shall transfer from the Highway Fund

to the Emergency Reserve the sum of one hundred twenty-five million dollars ($125,000,000),
and these funds are hereby appropriated for expenses related to an emergency. For purposes of
this section, the term "emergency" has the same meaning as in G.S. 166A-19.3.
(c) Access to Funds. – The Department may only use funds in the Emergency Reserve
after the President of the United States issues a declaration under the Stafford Act (42 U.S.C. §§

*S356-v-6*5121– 5207)that amajordisasterexistsin theState. TheSecretaryofTransportationshall ensure
all funds in the Emergency Reserve are accessed and used pursuant to this section.
(d) Limitation on Funds. – The total funds in the EmergencyReserve shall not exceed the
sum of one hundred twenty-five million dollars ($125,000,000). If a transfer under subsection
(b) of this section would cause the Emergency Reserve to exceed this limitation, the amount
transferred shall equal the difference between one hundred twenty-five million dollars
($125,000,000) and the amount of funds in the Emergency Reserve on the transfer date set forth

in subsection (b) of this section.
(e) Evaluation of Emergency Reserve. – No later than February 1 of the first year of the
2021-2023 fiscal biennium, and biennially thereafter, the Department of the Transportation shall
submit a report on the Emergency Reserve to the House of Representatives Appropriations
Committee on Transportation, the Senate Appropriations Committee on the Department of
Transportation, and the Fiscal Research Division. The report shall contain the results of an
evaluation of the Emergency Reserve, based on a methodology developed jointly by the Office

of State Budget and Management and the Department of Transportation, to determine the
minimum amount of funds needed in the Emergency Reserve."
SECTION 1.3.(c) G.S. 143C-6-11 is amended by adding a new subsection to read:
"(d1) Unanticipated Expenditures; Adjustment of Budget. – In any fiscal year, when all
funds allocated for snow and ice removal, and emergencies are depleted, the Department may, in
coordination with the Office of State Budget and Management (OSBM), reduce the budget for

every departmental division, grant-in-aid, and category of expenditures, excluding salaries, to
pay for any unanticipated expenditures from snow and ice removal, and emergencies. Within 30
days of an adjustment made pursuant to this subsection, the Department shall submit a report to
the Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division."
SECTION 1.3.(d) No later than 30 days from the effective date of this section, the
State Controller shall transfer from the unreserved balance in the General Fund to the Emergency
Reserve the sum of sixty-four million dollars ($64,000,000).

SECTION 1.3.(e) Revise Department of Transportation Base Budget. – The
Department of Transportation, in consultation with the Office of State Budget and Management,
shall revise the Department base budget to increase the amount of funds available for snow and
ice removal and emergency expenditures.
SECTION 1.3.(f) This section is effective when it becomes law.

MAP ACT PAYMENTS

SECTION 1.4.(a) Limitation on Funds to Pay Map Act Settlement Costs. – The
Department of Transportation may use no more than one hundred fifty million dollars
($150,000,000) each fiscal year to pay compensation for damages arising from the Department's
recordation of a transportation corridor map under Article 2E of Chapter 136 of the General
Statutes (Map Act). This limitation does not apply to the payment of compensation for Map Act
damages arising from a Turnpike project. For purposes of this section, the term "Turnpike

project" has the same meaning as in G.S. 136-89.181.
SECTION 1.4.(b) G.S. 136-113 reads as rewritten:
"§ 136-113. Interest as a part of just compensation.
To said amount awarded as damages bythe commissioners or a juryor judge, the judge shall,
as a part of just compensation, add interest at the legal rate on said amount from the date of taking
to the date of satisfaction of the judgment; but interest shall not be allowed from the date of
deposit on so much thereof as shall have been paid into court as provided in this Article. For

purposes of this section, the term "legal rate" means the prime lending rate, as published by the
Board of Governors of the Federal Reserve System on the first business day of the calendar
month immediately preceding the date of taking. The legal rate established under this section

Page 2 Session Law 2019-251 Senate Bill 356shall not exceed the legal rate set in G.S. 24-1. An amount awarded as damages shall bear simple,
not compounding, interest."
SECTION 1.4.(c) Subsection (a) of this section becomes effective December 1,
2019, and applies to all pending and future claims and causes of action arising from the
recordation of a transportation corridor map under Article 2E of Chapter 136 of the General
Statutes. Subsection (b) of this section becomes effective January 1, 2020, and applies to causes
of action filed on or after that date.

FEMA REIMBURSEMENT
SECTION 1.5.(a) The Department of Transportation shall expeditiously seek
reimbursement from the federal government for all qualifying disaster expenditures. No later
than the end of each month, the Department shall submit a report to the Joint Legislative
Transportation Oversight Committee and the Fiscal Research Division that contains an itemized
list of all disaster expenditures that qualify for federal reimbursement for which reimbursement

is still pending and the expected amount, including the total amount spent for each disaster, the
expected amount of reimbursement to be received for each disaster, the reimbursement amount
received to date, the dates the work plans and reimbursement applications were submitted, and
the expected dates of reimbursement.
SECTION 1.5.(b) This section is effective when it becomes law.

REMOVE REQUIRED REPAYMENT OF GENERAL FUND LOAN
SECTION 1.6. Section 7 of S.L. 2019-15 reads as rewritten:
"SECTION 7. Repayment and Reversion of Loaned Funds. – Upon reaching the amount
limitation set forth in Section 5 of this act or June 30, 2021, whichever occurs earlier, the
Department shall transfer ninety million dollars ($90,000,000) to the Office of the State
Controller for deposit in the Savings Reserve and shall transfer the remainingbalance in the Fund
to the Highway Fund and close the Fund."

DISASTER RELIEF FUNDS
SECTION 1.7. In addition to any other funds appropriated during the 2019-2020
fiscal year, there is appropriated from the General Fund to the Department of Transportation the
sum of thirty-six million dollars ($36,000,000) to be used as follows:
(1) $30,000,000 for current and future activities related to recovery from
Hurricane Dorian such as debris removal and repair of highway infrastructure

damage.
(2) $2,000,000 for the Living Shoreline projects.
(3) $2,000,000 to expand the Flood Inundation Mapping Alert Network for
Transportation.
(4) $2,000,000 for a Flood Risk and Vulnerability Assessment on the Strategic
Highway Corridor System.

PART II. TRANSPARENCY AND ACCOUNTABILITY MEASURES

BUDGET ACCOUNTABILITY REPORTING
SECTION 2.1.(a) G.S. 143C-6-11 reads as rewritten:
"§ 143C-6-11. Highway appropriation.

(m) Target Amount Report. – No later than the fifteenth day of the month following a
month where the combined average daily cash balance (cash balance) is outside of the target
range established in subdivision (1) of subsection (k) of this section, the Department shall report
to the Joint Legislative Transportation Oversight Committee and the Fiscal Research Division on

Senate Bill 356 Session Law 2019-251 Page 3the reasons why the cash balance is outside of the target range, the actions to be taken by the
Department to bring the cash balance into the target range, and the estimated amount of time it
will take for the cash balance to return to the target range.
(n) Cash Watch Weekly Report. – The Department of Transportation shall publish for
publicreviewaweeklyreportoftheDepartment's cash position, whichshallbeentitled "NCDOT
Cash Watch Numbers." The report shall be issued as a press release to all interested parties,
posted on the Department's Web site, and submitted to the Joint Legislative Transportation

Oversight Committee and the Fiscal Research Division. In addition to any cash flow categorythe
Department determines is beneficial to include, the report shall contain the following:
(1) Beginning Combined Cash Balance Total
a. Highway Fund Total
b. Highway Trust Fund Total
(2) Less Disbursements
a. Payroll

b. Debt Service
c. STI Construction Costs
d. General Operating Costs
e. Map Act Claims/Settlements
f. State Aid Payments
g. Disaster Related Costs

h. Other
(3) Ending Combined Cash Balance Total
a. Highway Fund Total
b. Highway Trust Fund Total
(4) Reserved Cash
a. Statutory Cash Balance
b. GARVEE/Federal Repayment Reserve

c. Transportation Emergency Reserve
d. Other Reserves
e. Trustee Accounts – Build NC proceeds
f. Trustee Accounts – GARVEE
g. Trustee Accounts – Other Bonds
(o) Balance Sheet Report. – By the third day of each month, the Department of
Transportation shall submit a balance sheet report of all assets, debits, liabilities, and fund

balances with an explanation of significant changes from the prior month to the Joint Legislative
Transportation Oversight Committee and the Fiscal Research Division."
SECTION 2.1.(b) Subsection (c) of Section 34.23 of S.L. 2014-100 is repealed.
SECTION 2.1.(c) This section is effective when it becomes law.

PERFORMANCE AUDIT OF DEPARTMENT OF TRANSPORTATION

SECTION 2.3.(a) The Office of the State Auditor shall conduct a performance audit
of the Department of Transportation. The audit shall include an examination of the following:
(1) Budget adherence by department, division, and highway division.
(2) Timeliness of federal reimbursement requests and timeliness of the
Department's responses to any federal requests for additional information or
action.
(3) Department controls and oversight of divisions and highway divisions as to

cash management, project coordination and delivery, and budget adherence.
(4) Efficacy of communication and coordination within the Department.
(5) Efficacy of cash management by the Department.
(6) Other items the State Auditor deems relevant to study.

Page 4 Session Law 2019-251 Senate Bill 356 SECTION 2.3.(b) By March 1, 2020, the State Auditor and the Department of
Transportation shall report to the Joint Legislative Commission on Governmental Operations,
Joint Legislative Transportation Oversight Committee, and the Fiscal Research Division. The
StateAuditorreportshall contain the performance audit required bythis section. TheDepartment
of Transportation report shall contain the Department's plan of action in response to the
performance audit. The Department of Transportation shall give the State Auditor full access to
all data necessary to complete the audit and the report.

FINANCIAL MANAGEMENT REPORT
SECTION 2.4. By January 15, 2020, the Department of Transportation shall submit
a report to the Joint Legislative Transportation Oversight Committee and the Fiscal Research
Division on:
(1) Internal management by department, division, and highway division of cash
and finances, including all financial controls, policies, and approval processes

for contracts and expenses.
(2) Projected total cost of remaining Map Act claims and an assessment of Map
Act settlement cost versus total litigation exposure of every remaining claim
exceeding one million dollars ($1,000,000).
(3) Actions taken by the Department in response to the "Monthly Projected
Ending Cash Balance" report presented to the Joint Legislative Transportation

Oversight Committee meeting of November 8, 2018.
(4) The Department summary of the McKinseyReport and measures taken bythe
Department to (i) ensure each Highway Division does not exceed its budget,
(ii) enhance coordination and communication between the Financial
Management Division and the Division Engineers, (iii) make changes to the
base budget for the Highway Fund that increases funding for disaster-related
expenses and for the Highway Trust Fund to include anticipated Map Act

related expenses, (iv) address contracting restrictions that do not permit
changes when necessary, (v)establishkeyperformanceindicators thatinclude
cash management measures, and (vi) develop real-time reporting of data
throughout the Department.
(5) Factors taken into consideration and justification for Department employee
salary adjustments, including any consideration of the Department's financial
position.

(6) TheDepartment authority, justification,andprocedures forHighwayDivision
offices to exceed annual budgeted amounts and to borrow from a future fiscal
year's allocation.
(7) The total amount of funds loaned from the Highway Trust Fund to the
Highway Fund, the legal authority to make the loans, the justification for the
loans, the use of the loaned funds, and the Department's plan to restore the

funds to the Highway Trust Fund.
(8) A review of the Highway Fund and Highway Trust Fund including (i) history
and statutory authority, (ii) rationale for transfers between the funds, and (iii)
use of Highway Fund for all accounts payable.
(9) The total amount of funds spent on outside contractors by highway division
for the 2018-2019 fiscal year.
(10) An assessment of Department contracting procedures, proposed changes to

increase the Department's contract flexibility in addressing cash flow
variances, and any legal or regulatory obstacles impeding the proposed
changes.
(11) Department internal audits: history, frequency, and findings.

Senate Bill 356 Session Law 2019-251 Page 5 (12) Any recommendations for legislation.

PART III. EFFECTIVE DATE
SECTION 3.1. Except as otherwise provided, this act is effective when it becomes
law.
th
In the General Assembly read three times and ratified this the 14 day of November,
2019.

s/ Philip E. Berger
President Pro Tempore of the Senate

s/ Tim Moore
Speaker of the House of Representatives

s/ Roy Cooper
Governor

th
Approved 9:33 a.m. this 18 day of November, 2019

Page 6 Session Law 2019-251 Senate Bill 356

Bill Biennium: 2019

Bill Type: bill

Bill Session: 2019

Bill Chamber: Senate

Last Action: Ch. SL 2019-251 | Senate | 2019-11-18

Bill Editions: