The cash-strapped South Carolina Department of Transportation (SCDOT) will delay $24 million in highway projects for at least a month as it tries to catch up on late payments to contractors it hired for other completed jobs.
The agency was falling nearly two months behind on payments before it received federal help Wednesday.
Agency spokesman Pete Poore said the combination of work finishing ahead of schedule mixed with an aggressive push by SCDOT officials on maintenance projects caused the agency to deplete the funds needed to pay contractors.
“There’s so much work to do, we were turning projects around as fast as we could,” Poore said, “Typically our cash balances get low (in the summer) because we’ve got so much work going on. This time, there was more work out there than we had money coming in as the bills were coming in.”
He emphasized SCDOT was not broke; it just did not have enough funds currently available for contractors. Now, Transportation Secretary Robert St. Onge told commissioners Thursday the agency will not start any new work until it gets its fiscal house in order. He said $24 million in new road projects scheduled to start in August and September have been deferred.
The federal government helped out Wednesday, answering the agency’s request for $52 million in a one-time advance payment for reimbursements that were originally scheduled to come over the next 12 months. Governor Nikki Haley signed off on the request. That $52 million will go towards contractors who have not been paid within the 30-day window state law requires.
However, SCDOT is not in the clear, yet. That federal money was supposed to reimburse the state each month for debt repayments to the State Infrastructure Bank on projects already completed (such as the Conway Bypass and Palmetto Parkway in Aiken). The SCDOT is still liable for $4.2 million to the Bank each month on those particular projects– and it will no longer be able to receive the traditional 80-90 percent reimbursement by the federal government.
Legislators say they will investigate what happened at the agency. “It’s now routine for the department to be late, and it shouldn’t be routine,” Senate Transportation Committee Chair Larry Grooms (R-Berkeley) told SCRN, “We should be paying our contractors in a timely fashion. It’s good business for our state when we do that. It’s bad business when we don’t.”
Grooms said he had gotten complaints from contractors who were not getting paid. However, he said he did not realize the extent of the Transportation Department’s problems until recently.
He said his committee plans to hold hearings next month to find out what happened. Legislators were briefed by St. Onge on the situation Wednesday.
“There needs to be direct accountability,” Grooms said, “We need to understand some of the management issues that went on. Why are we in this fix? Why weren’t steps taken to correct it more immediately?”
Other legislators were more blunt. Rep. Harry Ott (D-Calhoun) said he believes the Legislature might take a second look at reforms passed in 2007 which shifted the Department of Transportation into the Governor’s cabinet.