Cash flow crunch leaves SCDOT nearly broke
Mon, 15 Aug 2011 20:02:43 GMT —
The South Carolina Department of Transportation is running out of money and reaching out to the federal government to help to pay off road building contractors, some of whom are months behind on getting paid. As of Monday, the DOT had about $29 million dollars on hand, with nearly $120 million in immediate outstanding debts.
DOT officials say the agency is asking the federal government to speed up $52 million in highway construction reimbursements to help help it manage the cash flow crisis.
DOT spokesman Pete Poore said that payment was expected to arrive Wednesday.
DOT Commission Chairman Danny Isaac of Myrtle Beach said the money problem was due to a variety of factors, including a busy construction schedule and a drop in gas tax revenue.
"We let our reserves dip. We're not broke, we're just short on reserves and if the federal government accelerates our request, we'll be fine."
The state's largest road contractors have been working out a payment schedule with the DOT, Isaac said, so the dip in cash reserves shouldn't delay any projects. "We're trying to get the contractors enough money to keep them flowing smoothly and paying their subcontractors and paying their payroll."
It's a different story for the smaller contractors, Isaac said. "What we're concerned is, we want to make sure the little guy gets paid."
One Horry County contractor who asked not to be identified told NewsChannel 15 he received a small payment from the DOT last week, but is still owed nearly $10 million and the delay in payments "has put us in a major crunch." But he said the DOT was working with contractors to make partial payments on a regular basis, to allow construction work to continue.
The contractor said part of the problem stemmed from road builders getting their work done faster than the DOT expected. Isaac agreed that contractors have been busy this summer and making good progress.
"We got some great pricing and great opportunity to put a lot of contracts out and they've been doing very efficiently, but the bills may have come in quicker than we had anticipated, so we're working through the crunch."
Isaac expects the cash flow problem to be worked out within 90 days and perhaps less than that, if the federal government comes through with accelerated reimbursement to the state.
Adding to the cash flow problem, State Comptroller Richard Eckstrom said gas tax revenues are down by about 4 percent this summer and Isaac pointed out that the state's gas tax has not gone up since 1987. According to the American Petroleum Institute, South Carolina's gasoline tax is the fourth lowest in the country.
Isaac said the state will never solve its transportation problems with more taxes at the pump.
"If we took the taxes that we use on batteries, windshield wipers, tires and put it into our roads instead of into our general fund, we would not have a paving issue in the state of South Carolina."
The Associated Press contributed to this story.