Thursday, May 20, 2021

Highway Trust Fund Reaches $646.8 million Treasurer Folwell Attributes Success to N.C. Department of Transportation Secretary Eric Boyette’s Leadership

Raleigh
May 20, 2021

Agrees to Issue $300 Million in GARVEE Bonds

(Raleigh, N.C.) – State Treasurer Dale R. Folwell, CPA, announced today that the state’s Highway Trust Fund (HTF) had reached $646.8 million in April 2021. The HTF was created by the North Carolina General Assembly (NCGA) in 1989 to provide revenue sources for specific highway projects.

The NCGA requires that there be a minimum of $282 million in cash reserves. However, because of overspending and poor cash management practices under the previous secretary, the balance in the fund fell as low as $108 million in April of 2020. The April 2021 balance represents almost a 500% increase from the fund’s low. The HTF is funded by allocations from the Motor Fuel Tax, Department of Motor Vehicles Fees and the Highway Use Tax.

“This is great news for taxpayers, road builders, legislators and rank-and-file employees at NCDOT that rely on sustainable and predictable funding for important infrastructure projects,” Treasurer Folwell said. “Secretary Boyette and his staff deserve the credit for this great news.”

Treasurer Folwell noted that at the end of April the NCDOT’s Unreserved Cash Balance was $4.75 billion. In the past, he has been critical of the money management practices at the North Carolina Department of Transportation (NCDOT). In 2019, he called for Gov. Roy Cooper to replace NCDOT Secretary Jim Trogdon, citing out-of-control spending of nearly $7 billion for fiscal year 2019 against revenues of only $5 billion for that year, resulting in a $2 billion deficit. 

In addition, he criticized a $1.1 billion “short-term” loan from the HTF to the Highway Fund (HF) between April 2018 and April 2019. Under state law, many of the projects funded could not have been paid using HTF funds. Additionally, NCDOT neither sought nor received approval of the State Treasurer, as is required by statute, to loan the funds from the HTF to the HF. There had been no other loans from the HTF in over 10 years.

Treasurer Folwell added that the State and Local Government Finance Division (SLGFD) is currently working on issuing $300 million in Grant Anticipation Revenue Vehicle Bonds (GARVEE bonds). GARVEE bonds are revenue bonds that allow the state to pledge future federal highway funds to pay debt service. They do not create a liability obligation for the state and are used to accelerate construction on a variety of NCDOT projects.

The issuance is the eighth in a series of GARVEE bond sales over the last 14 years. The GARVEE program is intended to be “evergreen,” meaning additional projects will be added to the program and additional bonds issued over time. 

The bonds are expected to go before the N.C. Council of State and the Local Government Commission in July. Pricing for the bonds is planned for mid-August, with an anticipated close in early September. 

The N.C. Department of State Treasurer’s State and Local Government Finance Division handles the sale and delivery of all state and local debt and monitors the repayment of state and local government debt. More information can be found at http://www.nctreasurer.com/slg.