State officials hope that the House soon will approve a Senate bill that would resume highway and transit funding reimbursements and keep them coming through December. But in the meantime, some worried state DOTs are starting to pull back.
States typically finance highway projects with their own money and then get reimbursed by Uncle Sam. In the face of the cutoff, some states have enough cash on hand to keep projects alive, but only for a matter of days or weeks.
Not all states are even that fortunate. Susan Martinovich, Nevada DOT director, says, "Many states...don't have the state balances to pick up for the loss of the federal money. There's no reserves to put out projects."
Larry L. "Butch" Brown, Mississippi DOT executive director, says, "Severe cash-flow shortages will occur." He adds, "If we're not reimbursed....we're going to be in deep trouble."
When Martinovich, Brown and other state DOT chiefs gathered in Arlington, Va., for the American Association of State Highway and Transportation Officials' annual winter meeting, they quickly were slammed with the funding cutoff.
The problem was triggered when Sen. Jim Bunning (R-Ky.) blocked passage in that chamber of a one-month highway-transit continuation.
Missouri DOT has taken perhaps the most drastic action so far. Last week, it was forced to cancel a $60-million February bid letting and this week has decided not to advertise a $70-million March letting, MoDOT Director Pete Rahn said at a March 1 press conference at the AASHTO meeting.
"If Congress does not act and act soon," Rahn says, "the next step will not only be the suspension of new projects, but we will have to consider the suspension of ongoing contracts which people are working on currently."
Rahn adds, "I think Missouri's action is just the leading edge" of further moves by other states.
Alabama DOT had a bid letting on Feb. 26, but after the funding cutoff, "We will not award those projects," at least for the time being, says Don Vaughn, chief engineer.
Even before March 1, New York DOT had delayed some projects because of the state's own fiscal crunch. The new federal move hasn't resulted in any additional project postponements or payment suspensions yet, says Stan Gee, acting transportation commissioner. "But if it goes on beyond a few days," he adds, "we will not be able to keep the payments going."
Martinovich says Nevada has a $155-million project ready in northwest Las Vegas, but she says she is "reluctant to put it out for advertising, not knowing if I'll get reimbursed with the federal money."
Also affected are projects funded directly by the Federal Highway Administration through the Federal Lands program, which includes roads and bridges through national parks.
One such project is a $50-million 9th Street bridge replacement in the District of Columbia, on which work was halted March 1, because funding was cut for FHWA inspectors says D.C. DOT Director Gabe Klein. The suspension is costing the District $10,000 a day in delay claims, he adds.
In general, Mississippi's Brown says, "I think we can manage this storm," but only for a short time. Based on information AASHTO has received, he says, "We can manage this thing through around Thursday [March 4]."
Washington state has some reserves built up and can hold out a bit longer, says DOT Secretary Paula Hammond. She says, "We can last two weeks before I start getting nervous about whether we'll advertise or whether we'll award projects."
Iowa has been accumulating gas-tax revenue funds during the winter when road construction comes to a halt, says Nancy Richardson, DOT director, "We have some balances," she says, but adds, "You don't make decisions about putting a contract out for bid and getting it under contract overnight or in a week."
Richardson says, "What folks are worried about is if you don't know how long it's going to last how much further should you put your state at risk by continuing to work through that bid-letting cycle in case this doesn't get solved? One can work on faith but we're working with taxpayers' dollars and we need to make informed decisions."
FHWA highway reimbursements to states average $157 million a day and federal transit funding runs $157 million a week, Brown says.
Not all federal highway money has been closed off, however. Brown says American Recovery and Reinvestment Act highway aid still will flow, because it comes from the general fund, not the Highway Trust Fund.