Transportation's future uncertain
after Supreme Court decision

A recent decision by the N.C. Supreme Court has left NC State’s Transportation Department with a huge hole in its budget and a very uncertain future.

The court found that money being collected by the department – and similar departments throughout the University of North Carolina system – for parking citations is subject to a state constitutional law requiring “all money collected from penalties, forfeitures and fines to be appropriated and used exclusively for maintaining free public schools.”

The UNC system – and other state agencies facing similar situations – had argued that the fines were “remedial rather than punitive in nature,” and thus not subject to the law. The N.C. Court of Appeals supported that argument in a 2003 decision, but the Supreme Court rejected it as it related to campus parking citations.

Just how much impact the ruling will have on Transportation’s budget is unclear. A superior court judge will decide how much the department must give back to the public schools. The department has put into escrow more than $2 million in fines collected since 2001, when the original superior court ruling sided with the school boards. However, the judge could force repayment all the way back to 1995 – three years before the case was filed – in which case the department would be forced to pay more than $6 million, assuming no interest payment is required.

“We’ve basically been in limbo since the first ruling in the case,” said Ronnie Wright, assistant director of finance for Transportation. “Now we’re in limbo again because we don’t know where the money’s coming from to pay it and how the court will react to it. We have a lot of unanswered questions.”

Not only are Transportation officials concerned about finding an additional $4 million, they don’t know how they will continue to fund their existing budget. Since the department receives no appropriated funding, all of its operating money comes from parking fines, parking permits, student transit fees and pay-lot receipts. Now the fines are no longer part of the equation.

“Short-term, we have looked at our budget and cut or postponed a number of projects that we were hoping to do,” said Tom Kendig, director of Transportation. “We went forward this year with an overall 2 percent permit increase, but obviously that isn’t going to help us maintain this loss. We’re certainly looking at costs, and that will be a big part of how we address this.

“Long-term, we had laid out a five-year plan listing how we had hoped to grow the transit system (the Campus Paths Plan) and build a new parking deck at Riddick Stadium. We’re going to have to go back and re-evaluate both those things.”

The ruling could not have come at a worse time, officials said, as demand for services is running extremely high.

“With engineering moving to Centennial Campus, that means we need increased bus service,” department spokeswoman Christine Klein said. “We’re getting more and more parking decks that require costly maintenance. We will have a new direct Wolfline route this fall from Wolf Village and E.S. King Village to Centennial that was needed. Demand is up and money is down. We have some tough decisions to make.”

Ultimately, the department will either be forced to cut some of those services or raise fees, or do both, officials say.

“We are in the process of putting our financial model together again,” Wright said. “Over the next year, we will be looking at cost-cutting measures as well as implementing fee increases.”

Posted July 14, 2005

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