DOT could be broke in weeks

COLUMBIA -- Without some sort of bailout, the state Department of Transportation will be broke in a matter of weeks.

Salaries for SCDOT workers and payment for contractors who have built and repaired highways across the state are on the line.

The agency had $28.3 million on hand Friday and nearly $120 million in immediate outstanding debts.

If it pays the $8 million in payroll expenses left this month and $12.6 million to the state Transportation Infrastructure Bank to get current on major construction loans, SCDOT would have only about $8 million left to pay toward the $98 million it owes contractors, consultants, utilities and others.

The state is expecting a regular $28 million deposit from the Federal Highway Administration next week, but that won't be enough.

To pay the bills, SCDOT has asked the federal government for an additional $52 million in speeded up highway construction reimbursements. SCDOT took that action after a Post and Courier story earlier this week revealed the agency's money problems. The agency, with Gov. Nikki Haley's blessing, chose to do that instead of borrow money from the state treasury.

On Tuesday, Haley, who oversees the SCDOT, and state Treasurer Curtis Loftis sparred over the best way to settle the agency's cash-flow crunch. The SCDOT staff said tapping the federal government makes more sense than having Loftis sign off on a loan that comes with interest and must be repaid within six months.

Loftis said the agency should have been proactive rather than waiting for the situation to be exposed publicly.

"My concern is for the contractors," he said.

Haley's critics accuse the Republican governor of playing a political game to win favor with the tea party crowd rather than directing her Cabinet agency to pursue the quickest route to paying back contractors, even as some of the owners report that they've sold off equipment to make sure workers are paid or face the possibility of folding.

Haley's press secretary, Rob Godfrey, said anyone who accuses the governor of playing politics on the matter is wrong.

"We were presented with two options, one of which cost the taxpayers more money and one of which cost them less. We went with the one that cost less. End of story," Godfrey said.

Transportation Commissioner Sarah Nuckles of Rock Hill said the action is not good enough. Nuckles wants the agency to have an open line of credit through the state treasury as a backup for cash flow problems, an issue with the SCDOT that was uncovered in 2006 and was supposed to have been corrected through a legislative overhaul of the agency. SCDOT needs a contingency plan for emergencies, such as a hurricane or sharp spike in oil prices, she said.

"It is unconscionable that we have not paid our contractors on a timely basis," Nuckles said. "This is taxpayer money, and when it is paid to those contractors, that money is going back into the economy. We should not and cannot slow that down or we slow our economy and hurt individuals and businesses.

"There is a significant ripple effect to this problem that creates a much greater burden than just the immediate, serious problem for contractors, not to mention potential legal liabilities."

Nuckles said the SCDOT's cash flow will be limited in the future, as the agency waits for final approval of a $344 million bond that she calls ill conceived. The money would finance several projects, including preliminary work on the controversial Interstate 73 connecting the Grand Strand to Interstate 95 -- and Northern tourists.

Neal Thigpen, a Francis Marion University political science professor, said Haley is trying to have it both ways.

The governor gave the nod to SCDOT to turn to the federal government for its cash problem. But she supports state Superintendent of Education Mick Zais in turning down $144 million in federal money for schools, allowing the money to be divided up among other states.

"The solution to our education challenges is not a federal bailout," Godfrey has said.

Thigpen said, "It looks to me like the governor is talking out of both sides of her mouth."

One Democrat had another word for Haley: "Hypocrite," state party Chairman Dick Harpootlian said. Harpootlian blamed tea party politics.

"They want to keep their tea party credentials pristine; it's all about the next office," he said.

Pete Poore, spokesman for the SCDOT, said Friday the agency anticipates $28 million in regularly scheduled federal reimbursements and another $52 million in accelerated payouts within the next week. Including the cash on hand now, that would bring the SCDOT's cash balance to about $108 million, still about $10 million short.

Poore has said the financial problems are a combination of the demands on the agency during the peak summer construction months and the economic drag on both state and federal gasoline taxes, which fund the SCDOT.

Nuckles blames it on poor planning.

The oldest contractor reimbursements will be the first ones paid, SCDOT financial staff said.

The agency has been working with contractors since the cash crunch started around June to avoid putting any out of business with late payments. Traditionally, contractors are paid 30 days after they complete their work.

Payments have stretched to 45 days although some contractors have reported waiting as long as 90 days to get paid. Subcontractors, which are paid by the prime contractors, have reported faring worse.

Individual contractors were reluctant to speak out publicly, citing concerns about their ability to get future work with the SCDOT.

Leslie Hope, director of government relations for the Carolinas Associated General Contractors, said she is aware of some situations where contractors are struggling to keep their doors open, but overall the association has found that the SCDOT has acted quickly to address concerns.

Reach Yvonne Wenger at 803-926-7855, follow her on Twitter at @yvonnewenger and read her Political Briefings blog.