South Carolina Department of Transportation (SCDOT) officials say ongoing cleanup efforts from a February ice storm that paralyzed the Midlands, Upstate, and Pee Dee for three days will end up costing nearly $164 million, as more than 1.3 million cubic yards of debris still needs to be removed.
But that bill — mixed with the federal Highway Trust Fund’s uncertain future — could lead to a “slowdown” in new road construction work, according to Acting Transportation Secretary Christy Hall. Hall made the comments on Friday after she and other agency officials briefed the South Carolina Transportation Commission on the situation.
Because the White House designated much of South Carolina a “disaster area” following the storm, the Federal Emergency Management Agency (FEMA) will reimburse South Carolina for much of cleanup. The “sliding scale” reimbursement incentivizes state officials to remove storm debris as quickly as possible. FEMA will repay the state 87 percent for costs incurred over the first 30 days, then 82 percent over the next two months after that, and 75 percent from days 90 through 180. No expenses can be reimbursed after six months.
The $164 million payout will require a significant amount of SCDOT’s available cash balance, according to Chief Financial Officer Jim Warren. The agency had a roughly $200 million balance in March, he said. While incoming funds from the state gas tax and federal payments will keep the balance around $100 million over the summer, Warren said the agency is preparing for the possibility that the federal Highway Trust Fund could become insolvent by August.
“Even with our very best efforts to deal with the federal bureaucracy quickly, we’re still going to take a very substantial hit,” Warren told the commissioners.
If the Highway Trust Fund becomes insolvent, the resulting loss of federal money could drop SCDOT into a negative balance this fall. Hall said the agency is rescheduling the timing of its payments to vendors in order to stay in the black should that happen, which she called a worst-case scenario.
But even a best-case scenario does not predict any FEMA reimbursement before January 2015. “We have to make the payouts in a rapid fashion, but we’re not going to get it back so quickly from FEMA,” Warren said. The final reimbursement could be as late as October 2016.
Agency leaders say they are trying to do as much work as possible within 90 days of the storm, in order to get the higher reimbursement rates. SCDOT chief engineer Leland Colvin said crews are focusing first on removing storm debris before switching to work to removing “hazardous trees.”
“We don’t have the equipment to handle that for a storm of this magnitude,” he said.
In all, another 1.3 million cubic yards of storm debris still needs to be removed from road shoulders and rights-of-way across the state. About 71 percent of the work has been completed, according to SCDOT estimates. But that number is significantly lower in Georgetown and Horry counties, where Colvin said problems with a state contractor have led to only 40 percent completion through Wednesday.
Hall said SCDOT anticipates it will perform $35 million in work that cannot be reimbursable. While that amount is small compared to SCDOT’s overall construction budget, it is still significant (for comparison, state legislators plan to set aside about $50 million in state funds to SCDOT next year).
Hall said the money will likely need to come from the agency’s maintenance budget over the next three years. “Basically, what we’re projecting is to absorb that within our operations over time. $35 million relative to a $1.6 billion budget, we would have to make adjustments to our activity level over time.”