Road contractors feel the pain as North Carolina DOT’s shortfall deepens

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Updated Jun 1, 2020
A series of natural disasters in the past few years are among the reasons the North Carolina Department of Transportation has endured financial difficulties. The coronavirus pandemic has made revenue matters worse. Photo: N.C. Division of Aviation of the Outer Banks following Hurricane Florence in 2018A series of natural disasters in the past few years are among the reasons the North Carolina Department of Transportation has endured financial difficulties. The coronavirus pandemic has made revenue matters worse. Photo: N.C. Division of Aviation of the Outer Banks following Hurricane Florence in 2018

Road and bridge building contractors throughout North Carolina have seen a drastic reduction in work, and some have laid off workers.

The North Carolina Department of Transportation headed into 2020 having overspent $2 billion in 2019 and delaying hundreds of projects, but the coronavirus pandemic has exacerbated that problem as gas-tax and other revenues have dropped.

“It’s been pretty devastating to the transportation infrastructure contractors here in North Carolina,” says Victor Barbour, director of N.C. government relations and Highway-Heavy Division for Carolinas Associated General Contractors. “Future lettings of projects for the next few months are virtually nonexistent right now, so there’s no work to be bid on.”

The NCDOT reports it faces a $300 million revenue drop due to coronavirus and will begin furloughing its entire workforce of more than 9,000 employees in stages starting May 30. The agency has also delayed all except 50 major projects over the next 12 months and has laid off hundreds of temporary and contract workers. Without more funding, the transportation infrastructure industry fears some contractors may go out of business.

Barbour says he’s heard from contractors who have had to reduce their workforce, including one that cut its number of employees in half. Some have also slowed work to about 40 hours a week to make it last, he says.

“Some of the bigger contractors here in North Carolina have a little bit of a backlog to make it through the year, but everybody’s worried about next year,” he says.

S.T. Wooten Corporation, based in Wilson, is one of the companies that has projects underway, but is concerned for the industry, especially if more funding doesn’t come through.

“If they slow down some more, there’s going to be a lot of the smaller contractors who aren’t going to make it,” says Jonathan Bevins, S.T. Wooten vice president of engineering and design-build. “We know a lot of people that do bridge work and even some of the smaller paving companies, they’re down to half-staff.”

“If they’re not going to let any money by fall,” he adds, “there won’t be any bridge work or paving work. Especially the paving won’t start till spring, and by then, I think you’ll see a lot more layoffs throughout the industry.”

Project delays are also occurring as the NCDOT hasn’t been able to purchase rights-of-way on its larger design-build projects. Typically, right-of-way purchases occur before bid lettings, but on the larger design-build projects the property purchases occur during the design phase. Bevins says Wooten and other contractors have seen delays in those payments that have led to project delays.

The slowdown has been particularly frustrating as most states have been able to proceed with transportation infrastructure projects and even speed them up because of less traffic on the road, thanks to stay-at-home orders.

“We’re an industry that’s worked through the COVID,” Bevins says. “… We’ve been able to work safe and I think the industry as a whole has worked safe. And it would be a shame for us to be shut down due to lack of funding when people are trying to crank the industry back up.”

Barbour says AGC Carolinas has been working with legislators to try to increase funding for the NCDOT, but it’s not an easy task as various sectors of the economy are also in need. He noted that the legislature recently set aside $300 million it expects to receive from the federal CARES Act passed by Congress to help stimulate the economy. That money, however, can’t be spent without federal approval because it is not designed to be used to recoup revenue. The legislature has begun discussing a bond referendum that would provide $1.5 billion to the NCDOT for road and bridge projects.

“Construction was lucky to be classified as an essential function that could continue,” Barbour says. “The shame over here in North Carolina is there’s no funds to continue or to speed it up.

“I wish we were like Florida that was able to speed up a bunch of projects.”