GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
S	2
SENATE BILL 901
 Committee Substitute Adopted 6/18/01 

Short Title:	DOT Cash Management.	()	
Sponsors:	     	
Referred to:	     	
April 5, 2001

A BILL TO BE ENTITLED
AN ACT TO IMPLEMENT THE RECOMMENDATIONS OF THE JOINT LEGISLATIVE TRANSPORTATION OVERSIGHT COMMITTEE STUDY OF DOT CASH MANAGEMENT.

The General Assembly of North Carolina enacts:
Whereas, at the end of fiscal year 1999‑2000, the Highway Trust Fund had a cash balance of $858 million and the Highway Fund had a cash balance of $270 million; and
Whereas, Section 25.14 of S.L. 2000‑67 directed the Joint Legislative Oversight Committee to contract for a study of these cash balances to determine if DOT could more effectively use its cash balances to meet the transportation needs of the State; and
Whereas, the study produced numerous recommendations to improve DOT's management of these cash balances; Now, therefore, 
The General Assembly of North Carolina enacts:
SECTION 1.  DOT Directed to Use Cash Flow Financing. – The Department of Transportation is directed to reorganize its cash management procedures consistent with the March 2001 Joint Legislative Transportation Oversight Committee Cash Management Study final report. The Department is directed to:
(1)	Utilize cash flow financing to the maximum extent possible to fund highway construction projects, with the goal of reducing the combined average daily cash balance of the Highway Trust Fund and the Highway Fund to an amount equal to twelve percent (12%) of the combined estimate of the yearly receipts of the Funds, exclusive of municipal aid funds.
(2)	Establish necessary management controls to facilitate use of cash flow financing, such as establishment of a financial planning committee, development of a monthly financial report, establishment of appropriate fund cash level targets, review of revenue forecasting procedures, and reduction of accrued unbilled costs.
(3)	Strengthen the project delivery process by reorganization of preconstruction functions in order to expedite project delivery and maximize use of cash flow financing of projects. The Department shall designate one person responsible for project delivery, develop project delivery reports, and continually assess which projects can be accelerated using cash flow financing. 
(4)	Report quarterly for a period of two years, beginning in September 2001, to the Joint Legislative Transportation Oversight Committee on its efforts to reorganize the cash management and project delivery process and the results of those efforts.
SECTION 2.  Article 6A of the General Statutes is amended by adding a new section to read:
"§ 147-86.15. Cash management of the Highway Fund and the Highway Trust Fund.
The State Treasurer is authorized to combine the balances of the Highway Fund and the Highway Trust Fund for cash management purposes. The State Treasurer is authorized to make short-term loans between the Funds to accomplish the purposes of this section."
SECTION 3.  Study of Short-Term Borrowing to Facilitate Cash Flow Financing. – The Department of Transportation and the State Treasurer are directed to jointly:
(1)	Evaluate the recommendations of the March 2001 Joint Legislative Transportation Oversight Committee Cash Management Study final report concerning authorization for the State Treasurer to borrow funds on a short-term basis in order to allow the Department of Transportation to maintain lower target cash balances and expedite highway construction projects;
(2)	Develop recommendations concerning short-term borrowing for cash management purposes, including any needed legislation; and 
(3)	Submit findings and recommendations to the Joint Legislative Transportation Oversight Committee by February 1, 2002.
SECTION 4. G.S. 136‑176 is amended by adding a new subsection to read:
"(a1)	The Department is authorized to use one hundred fifty million dollars ($150,000,000) per year of the cash balance of the Highway Trust Fund, in fiscal years 2001-2002, 2002-2003, and 2003-2004 only, for primary route pavement preservation. The Department shall certify to the Joint Legislative Transportation Oversight Committee each year, on or before November 1, that use of the cash balances of the Highway Trust Fund for this purpose will not affect the delivery schedule of Highway Trust Fund projects in the 2002-2008 Transportation Improvement Program."
SECTION 5. G.S. 136‑176 is amended by adding a new subsection to read:
"(a2)	The Department is authorized to use fifteen million dollars ($15,000,000) per year of the cash balance of the Highway Trust Fund, in fiscal years 2001-2002, 2002-2003, and 2003-2004 only, to fund preliminary engineering costs for projects not included in the current year Transportation Improvement Plan. The Department shall certify to the Joint Legislative Transportation Oversight Committee each year, on or before November 1, that use of the cash balances of the Highway Trust Fund for this purpose will not affect the delivery schedule of Highway Trust Fund projects."
SECTION 6. G.S. 136‑176 is amended by adding a new subsection to read:
"(b1)	The Secretary may authorize the transfer of funds allocated under subdivisions (b)(1) through (b)(4) of this section to other projects that are ready to be let and were to be funded from allocations to subdivisions (b)(1) through (b)(4) of this section. The Secretary shall ensure that any funds transferred pursuant to this subsection are repaid promptly and in any event in no more than four years. The Secretary shall certify, prior to making any transfer pursuant to this subsection, that the transfer will not affect the delivery schedule of Highway Trust Fund projects in the current Transportation Improvement Program. No transfers shall be allowed that do not conform to the applicable provisions of the equity formula for distribution of funds, G.S. 136-17.2A. If the Secretary authorizes a transfer pursuant to this subsection, the Secretary shall report that decision to the next regularly scheduled meetings of the Joint Legislative Commission on Governmental Operations, the Joint Legislative Transportation Oversight Committee and to the Fiscal Research Division."
SECTION 7. This act is effective when it becomes law.