House, Senate disagree over using DOT funds to pay McCrory staff salaries

by Bruce Siceloff, News and Observer, June 17, 2014.

House leaders are OK with a quiet decision by the McCrory administration to pay some of the governor’s staff salaries with highway tax dollars, but the Senate has a different idea:

Nip it in the budget.

The Senate budget shines a spotlight on unreported transfers of more than $267,000 from the state Department of Transportation to the governor’s budget, and it says the move will be tolerated for one more year only. The House budget accepts the money shift without mentioning it.

The DOT transfer was authorized last year by the Office of State Budget and Management. Legislative staffers told House and Senate budget committees they discovered it a few weeks ago.

“This is a new transfer that has not been made before,” fiscal researcher Amna Cameron told the Senate Appropriations Transportation Subcommittee on Tuesday.

But a spokesman for Gov. Pat McCrory said the Republican governor simply expanded on a practice that began with his Democratic predecessor, former Gov. Bev Perdue.

The DOT money shift runs counter to an effort pushed in recent years by Republican leaders. The legislature has reduced the use of gas taxes and other transportation funds to cover nontransportation costs – which normally are paid for with income taxes and other General Fund revenues.

“I thought we were trying to reverse that situation,” Sen. Dan Blue, a Raleigh Democrat, said at Tuesday’s subcommittee meeting. “Especially given the shortage of funds from the Highway Fund and the Highway Trust Fund.”

Thomas Cheek of the budget office was asked to explain why McCrory is using transportation dollars to pay the full salaries for two staff positions and about 35 percent of the salaries for four other staffers.

“The thinking is that those positions help the governor’s staff with DOT issues, so that’s the rationale,” Cheek explained.

Not improving highways

Sen. Wesley Meredith, a Fayetteville Republican who co-chairs the transportation budget subcommittee, reaffirmed the Senate stance after checking into the McCrory staffers’ duties.

“They are not working in a DOT capacity,” Meredith said. “They are not supporting DOT efforts or improving our highway system in any way. So those positions need to be funded through the general government budget.”

DOT money pays the full salaries of Jonathan Harris, McCrory’s assistant legal counsel, and a vacant communications specialist position. And DOT funds pay about 35 percent of the salaries for Ryan Tronovitch, deputy communications director; Dion Terry, policy analyst; Phillip Christofferson, boards and commissions specialist; and former state Rep. Fred Steen, the governor’s chief lobbyist.

Tronovitch said McCrory had enlarged the list of staff positions paid for, originally by Perdue, with DOT money.

“How these positions were funded was a decision that was made by the previous administration,” Tronovitch said June 5 by email. He said the two fully paid jobs were added “at our request.”

Nick Tennyson, who started work in 2013 as DOT chief deputy secretary, said Perdue administration officials calculated in 2012 that DOT benefited from some of the work done by four employees on the governor’s staff.

“DOT derived benefit from 36 percent of these folks’ (work), and the department was sent a bill, which was paid,” Tennyson said. “The justification was that it was service provided to the Department of Transportation.”

He said McCrory administration and DOT officials agreed in 2013 to eliminate two DOT staff positions.

“And the funds that would have gone to pay those positions were instead used to pay two positions in the governor’s office,” Tennyson said.

He said he did not know whether this shift of salary money had been reported in McCrory and DOT budget documents.

A House budget leader said McCrory and DOT should be allowed to decide how to pay the governor’s staffers.

“I don’t like to see people’s jobs on the line by their title or number,” Rep. John Torbett, a Stanley Republican and co-chairman of the House transportation appropriations subcommittee, said last week. “So what we did is just kick that to DOT and let them have the flexibility to make those determinations.”

At least some of the money comes from lapsed salaries – unspent payroll money tied to vacant DOT positions. State law says lapsed salary money can be spent only for one-time costs, so it was not clear how McCrory intends to pay his staffers in future years.

DOT transfers continue

For years, Republicans and some Democrats disparaged a practice by legislative leaders and former Gov. Mike Easley, a Democrat, to balance the General Fund budget with money siphoned from the Highway Trust Fund, which is intended for new construction projects. Some of that money was never returned to the transportation budget, but the transfers from the Highway Trust Fund ended several years ago.

Money from the Highway Fund, earmarked mostly for road maintenance, continues to be transferred for non-DOT uses that usually have some transportation connection, including Highway Patrol salaries.

In its proposed budget, the Senate declares its intent to stop using Highway Fund money to help cover the cost of driver education classes. Such a change would increase the fees high school students must pay to take the driving classes.

And, reversing the thrust of legislation passed last year, the House budget would take $3.5 million from DOT gasoline pump inspection fees to support a Department of Environment and Natural Resources program that cleans up leaking underground storage tanks. The Senate budget would leave this money with DOT, using the General Fund to cover the cleanup costs.

State Rep. Charles Jeter, a Huntersville Republican, said the legislature should stop shifting transportation tax revenues to cover non-transportation needs.

“We’ve made an intellectual agreement with the citizens that the gas tax should be used for highway funds, not for staffing positions in the governor’s office,” Jeter said. “We have to hold our integrity. We’ve got to be honest with the citizens.”

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