Bill Summary for H 77 (2019-2020)

Summary date: 

Jun 17 2020

Bill Information:

View NCGA Bill Details2019-2020 Session
House Bill 77 (Public) Filed Wednesday, February 13, 2019
AN ACT TO ADJUST THE DEPARTMENT OF TRANSPORTATION CERTIFIED BUDGET FOR THE 2020-2021 FISCAL YEAR AND TO IMPLEMENT GOVERNANCE MEASURES AND OTHER MODIFICATIONS RELATED TO THE OPERATIONS OF THE DEPARTMENT.
Intro. by Torbett, Presnell, Iler, Shepard.

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Bill summary

Senate committee substitute replaces the content of the 2nd edition with the following.

Part I

Appropriates all budget codes listed in the Department of Transportation (DOT)'s certified budget for the 2020-21 fiscal year, as published by the Office of State Budget and Management (OSBM), up to the amounts specified, subject to the act's modifications. 

Provides for the act to supersede any conflict with SL 2019-231.

Provides for the continued validity of 2019 legislation appropriating funds to entities covered by the act, unless expressly repealed or amended.

Part II

Sets forth a schedule for adjustments, including reductions, to the appropriations from the State Highway Fund for the current operations of DOT for fiscal year 2020-21. Now, current operations budgeted total $2,333,400,000. Sets forth a  conforming schedule for Highway Fund availability for 2020-21, distinct from that for 2019-20 set out in SL 2019-231 (DOT Budget for 2019-21 Biennium), now totaling $2,333,400,000.

Sets forth a schedule for adjustments, including reductions, to the appropriations from the Highway Trust Fund for current operations of DOT for 2020-21, now totaling $1,230,900,000. Makes a conforming schedule for Highway Trust Fund availability for 2020-21, distinct from that for 2019-20 set out in SL 2019-231, now totaling $1,230,900,000.

Part III

Requires $112,221,003 of the funds appropriated to DOT from the Highway Fund by the act to be used in specified amounts to increase the net appropriations of General Maintenance Reserve and Contract Resurfacing.

Requires reduction of the funds appropriated to DOT from the Highway Fund for 2020-21 by $181,921,003, with specified reductions to the Mobility Modernization Program; the Powell Bill Program; the State Secondary System; Commercial Airport Funds; State Aid to General Aviation Airports; Amtrak Payment Cap; Freight Rail & Crossing Safety Improvement Program Fund; Lynx Blue Line Extension; State Maintenance Assistance Program; Rural Operating Assistance Program; and Capital Repairs; and Division of Motor Vehicles (DMV) headquarters lease. Reduces by $3,542,874 funds appropriated for specified 41 vacant DOT positions.

Reduces the net appropriation from the Highway Trust Fund to the Strategic Transportation Initiative, of the funds appropriated by the act to DOT, from $425,900,000, to $1,039,408,940.

Part IV

States legislative authorization and certification of anticipated revenues for the Highway Fund and the Highway Trust Fund for fiscal years 2021-22 through 2024-25, ranging from $2,471.1 million to $2,587.8 million for the Highway Fund, and $1,390.6 million to $1,661.7 million for the Highway Trust Fund. Makes conforming changes to repeal Section 4.1(b) and (c) of SL 2019-231, enacting similar provisions. Adds a new annual requirement for DOT to collaborate with OSBM to develop a five-year revenue forecast, as described, beginning with the 2021-22 fiscal year.

Sets the motor fuel excise tax for the period beginning January 1, 2021, and ending December 31, 2021, at the greater of 36.1 cents per gallon or the rate calculated pursuant to specified state statute. Requires calculation of the tax for the period beginning January 1, 2022, using the amount for the 2021 calendar year, as calculated under this provision.

Authorizes the Department of State Treasurer to issue $700 million in Build NC Bonds, subject to compliance with appropriate credit, control, and disclosure requirements. Restricts use of bond proceeds to currently existing projects, meaning projects in the process of design or construction as of June 1, 2020. Clarifies that the provisions do not modify the Build NC Bond limits under state law. Repeals Section 1.1 of SL 2019-251, which authorized issuance of $400 million in Build NC Bonds. Additionally, requires DOT to use any unexpended net proceeds from the Build NC Series 2019A Bonds on currently existing projects to the extent authorized by law and any applicable contract.

Amends GS 136-18(12b) to increase the maximum Grant Anticipation Revenue Vehicles (GARVEE) bonds debt service from 15% to 20% of the expected average annual federal revenue.

Mandates DOT maintain a GARVEE/Federal Repayment Reserve in the amount equivalent to the next debt service payment owned on all GARVEE bonds. Additionally, requires DOT to use any unexpended GARVEE/Federal Repayment Reserve funds on currently existing projects to the extent authorized by law and any applicable contract.

Amends GS 105-449.125(b) to modify the distribution of remaining motor fuel excise tax revenue collected following other required distributions as follows. Effective July 1, 2020, 81%, rather than 71% to the Highway Fund, and 19% rather than 29% to the Highway Trust Fund. Effective July 1, 2021, 80% to the Highway Fund and 20% to the Highway Trust Fund. Effective July 1, 2022, 75% to the Highway Fund and 25% to the Highway Trust Fund. Applies to excise tax revenue collected on or after the specified effective date.

Amends GS 136-44.2E, as enacted by SL 2019-251, to require the Secretary of Transportation (Secretary) to ensure the funds in the Transportation Emergency Reserve are not used in a manner that jeopardizes federal reimbursements for disaster-related expenses. Adds a new requirement for the Secretary to notify the Governor within 24 hours of determining that anticipated emergency expenses by DOT will exceed funds in the Emergency Reserve, deemed to be an extraordinary occasion, and authorizes the Governor to convene the NCGA in Extra Session under the NC Constitution. Urges the Governor to convene the NCGA within 14 hours of notice by the Secretary in order to appropriate funds from the Savings Reserve to the Emergency Reserve. Prioritizes federal reimbursement for major disaster expenditures with the Emergency Reserve as first priority, followed by the Reserve for General Maintenance in the Highway Fund, and the Savings Reserve.

Amends GS 143C-6-11 to require, rather than permit, DOT to reduce the specified budget and expenditures to pay for unanticipated expenditures for snow and ice removal, and emergencies, in any fiscal year when all funds allocated for such are depleted. Specifies the budget reductions must be by the same percentage.

Amends Section 3.3(4) of SL 2020-4 (2020 COVID-19 Recovery Act), regarding the $300 million allocated to the General Maintenance Reserve from the Coronavirus Relief Fund. Now provides for reversion to the Coronavirus Relief Reserve if by September 1, 2020, rather than June 15, 2020, federal Treasury guidance or Congressional act has not authorized the use of the funds for the purpose of replacing lost revenue due to the COVID-19 emergency.

Further amends GS 143C-6-11, modifying the required content of the weekly cash flow report of DOT. Additionally amends the statute to require DOT to submit its balance sheet report to the specified NCGA committee and division by the 15th day of each month, rather than the 3rd.

Requires municipalities with a population of 400,000 or more to only receive 2/3 of the 2019-20 fiscal year allocation of Powell Bill Program funds, with the remaining funds allocated to municipalities with a population of less than 400,000 pursuant to state law requirements. Makes conforming change to repeal Section 5.4 of SL 2019-250, which appropriates additional funds to the Program and provides for different allocations.

Repeals the 2020-21 fiscal year allocation of funds for specified capital, repair, and renovation projects in Section 4.2 of SL 2019-231.

Authorizes up to $1.5 million of the funds appropriated to DOT, excluding funds appropriated to DMV, to be used for information technology expenses related to the DMV's headquarters relocation.

Provides for allocation of Commercial Airport Funds in specified amounts for seven airports for the 2020-21 fiscal year. Requires quarterly disbursement to compliant airports, and reversion of unexpended or unencumbered funds by August 31, 2021.

Directs DOT to submit a fleet management plan for Rail Division equipment to the specified NCGA committees and division by November 1, 2020. Details plan requirements. Directs the Rail Division to offer for sale surplus idle equipment, as described, by December 31, 2020. Requires credit of sale proceeds to the Rail Equipment Overhaul Fund. Further, directs the Rail Division to relocate the described caboose located in Gastonia to the NC Transportation Museum and to transfer ownership of the caboose and the Atlantic Coast Line locomotive currently located at the Museum to the Department of Natural and Cultural Resources by June 30, 2021.

Requires the Ferry Division to lease a passenger ferry vessel for operation between Hatteras and Ocracoke with the term ending by September 10, 2020, using up to $1,146,179 of the contingency funds appropriated for lease and operation.

Requires DOT to distribute the funds allocated to the NC Ports Authority on a quarterly basis for the 2019-21 fiscal biennium.

Part V

Amends GS 143B-350, regarding the organization and powers of the Board of Transportation (BOT). Explicitly requires BOT to carry out its duties consistent with the fiduciary responsibility to ensure the solvency of the State Highway Fund and Highway Trust Fund. Changes the composition of BOT, increasing membership from 19 to 20 members, with six at-large members legislatively appointed, rather than 5 at-large members gubernatorially appointed. Adds one member elected by the Executive Committee of the Local Government Commission to serve as an ex officio, nonvoting member. Sets terms at four years, beginning July 31 of the year of initial appointment. Requires the Governor to appoint one member from each of the fourteen highway divisions to staggered terms beginning in 2020 and 2022. Provides for legislative appointments for similar staggered terms, with three members each appointed by the Speaker of the House and the Senate Pro Tempore. Provides for terms of members serving prior to July 31, 2020, to expire July 30, 2020. Requires a new board of 20 voting members to be appointed to terms beginning on July 31, 2020. Establishes member qualifications to include having a professional background related to transportation, budgeting, accounting, or financing to properly and effectively oversee the financial actions and accountability of DOT for its operations and the projects it manages. Requires the Governor to call BOT into session within 30 days after July 31, 2020. Requires monthly meetings, rather than meeting at least every 60 days. Modifies BOT's duties. Establishes that the primary duty of BOT is to serve as fiduciaries of the State Highway Fund and Highway Trust Fund and ensure the solvency of those funds when carrying out BOT's duties and powers. Adds new duties regarding review and oversight of the Spend Plan, DOT's use of bonds, and performance metrics. No longer includes the duty to consider and advise the Secretary on transportation matters referred by the Secretary. Explicitly prohibits BOT from making decisions on individual contracts, projects, or personnel matters. No longer includes consultation requirements for specified engineering or highway divisions. No longer requires prior NCGA committee approval of gubernatorial appointments. Makes conforming changes. Effective July 31, 2020.

Further amends GS 143C-6-11 to prohibit DOT from committing to further transportation projects that would cause the cash position to fall below the 7.5% requirement. Allows DOT to modify or supplement commitments for existing projects that result in a savings from the total estimated project cost of the existing commitment, based on a cost-savings analysis, or relate to the needs of an existing project to continue.

Adds a new requirement to GS 143C-6-11, requiring DOT to monthly post on its website and submit to the specified NCGA committees and division, a financial report statement containing seven specified components. Additionally, requires DOT to annually post on its website and submit to the specified NCGA committees and division a year-end summary at the end of each fiscal year, by July 15, of specified components of the monthly reporting requirements. 

Requires DOT to modify its performance dashboard to include and track information regarding projected revenues and the Spend Plan for the next 18 months. Requires completion by October 1, 2020.

Enacts GS 143C-6-11.1, mandating DOT to develop a Spend Plan, subject to approval of the BOT, the Director of the Transportation Budget at OSBM, and the State Budget Director. Provides the procedure for approval and modification. 

Directs DOT to transfer a vacant FTE position and funds to OSBM to be reclassified as Director of Transportation Budget. Specifies oversight and duties of the position. Requires DOT to grant access to data and information necessary for the Director to meet the responsibilities.

Directs DOT to develop and establish a uniform financial management personnel structure within all Highway Division offices, and develop and establish uniform report formats and policies and procedures that calculate spending and track cash management consistently among divisions. Allows position reclassification to establish uniform financial management personnel structure. Requires DOT to report to the specified NCGA committee and division by October 31, 2020, as specified.

Directs DOT to transfer one vacant FTE position and funds to the Department of State Treasurer to be reclassified as a financial analyst position focused on bond disclosure to review and monitor DOT's bond program and use of bond proceeds.

Directs DOT to consult with the Director of Transportation Budget and OSBM to create, develop, modify, and implement DOT forecasting methodology, best practices, and accuracy standards for the forecasting of spending. Requires DOT to report to the BOT and the specified NCGA committee and division on implementation by December 31, 2020.

Requires the Office of the State Auditor to annually conduct a performance audit of DOT, beginning with the 2019-20 fiscal year. Details requirements of the audit. Requires the State Auditor to annually report to the specified NCGA committees and division by January 15, beginning in 2021. Requires DOT cooperation.

Amends GS 136-44.6, regarding the formula for the allocation of funds for primary and secondary road maintenance. Requires the formula to be developed biennially and no longer limits allocation to funds from the Reserve for General Maintenance. Requires allocations to Highway Divisions and creation of a plan of action to reallocate funds among Divisions based on expenditures of the first three quarters. Now requires allotments to be made available to Divisions on a quarterly basis, based on the Spend Plan. Requires DOT to create a plan for reallocation to maximize funds each fiscal year.

Requires DOT to submit a detailed report on its use of federal Advance Construction authorizations within 90 days of July 1, 2020, to the specified NCGA committee, division, and OSBM. Details requirements of the report. Requires the Office of State Auditor to conduct a performance audit of this report and report to the specified NCGA committees and division by March 31, 2021. Requires DOT cooperation.

Part VI

Provides parameters regarding the legislatively enacted budget and Certified Budget, as adjusted, for 2020-21, establishing that the legislative budget controls in the event of conflict.

Requires OSBM to adjust the General Maintenance Reserve for 2020-21 to account for any change in employee benefit costs if HB 1136, HB 1218, or SB 818 become law.

Part VII

Effective July 1, 2020, unless otherwise provided. 

Changes the act's titles.

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