"States cannot proceed doing business as usual - planning projects, implementing projects, and financing projects - without any kind of certainty about federal funds. Federal funds have to be there for us," said Larry L. "Butch" Brown, executive director of the Mississippi Department of Transportation and AASHTO president. "Congress has to move quickly to correct this by passing legislation and getting it signed into law. This is a bad situation and it's only going to get worse."
The press conference took place following a 30-minute conference call that state DOT executives had with Federal Highway Administrator Victor Mendez to discuss the crisis. Mendez said 1,350 of the Federal Highway Administration's 2,900 employees are being furloughed today, most in the Washington headquarters office. Other FHWA employees will remain on duty to work on essential safety and security matters as well as American Recovery and Reinvestment Act projects, which are funded by the federal government's General Fund rather than the Highway Trust Fund.
Legal authority for the Highway Trust Fund expired Sunday after the House and Senate could not agree on an extension. (see Feb. 26 AASHTO Journal story) The shutdown means that $768 million in highway outlays and $157 million in transit outlays for this week to state transportation departments will be delayed.
"The timing could not be worse for a lot of reasons," said Susan Martinovich, director of the Nevada Department of Transportation and AASHTO vice president. "States need every dollar they can get to improve our aging roads and bridges and put people to work. My home state of Nevada has the nation's seventh-highest unemployment rate at 10.4 percent. We should be awarding contracts for spring construction right now, but instead many states are forced to delay and, in some cases, cancel projects."
Martinovich cited the Hoover Dam bypass road as an example of one sigificant project already affected in Nevada. Work on that bridge halted Monday due to the Highway Trust Fund shutdown.
In Missouri, the Department of Transportation has already postponed awarding contracts for $60 million worth of projects due to the stoppage of federal funding, said Pete Rahn, MoDOT director. MoDOT has also chosen not to advertise its previously scheduled March bid lettings, worth an estimated $70 million, until the federal funding suspension is resolved.
"If Congress does not act and act soon, the next step will not only be the suspension of new projects but we will have to consider the suspension of ongoing contracts on which people are currently working," Rahn said. "This crisis is just the latest example of why states need either a long-term extension of highway and transit programs or a multiyear authorization bill. If Missouri and other states aren't able to plan major, long-term projects, then contractors can't hire workers or purchase new equipment. The result will be higher unemployment and more economic stagnation. Going from one extension to the next and one crisis to another is not the answer."
Kirk Steudle, director of the Michigan Department of Transportation, said he's already been called by a bond rating agency inquiring about whether the state will make an $18.5 million bond payment due in two weeks. Steudle said the bonds were issued through the federal GARVEE program, which relies on federal funding to make the payments.
"We don't have the ability to carry on for a couple weeks" without federal reimbursements, he said.
Furloughs Begin for U.S. DOT Workers
The shutdown is also having an effect on thousands of U.S. Department of Transportation employees whose salaries are paid from the Highway Trust Fund. U.S. Transportation Secretary Ray LaHood issued a statement early this morning that U.S. DOT will furlough nearly 2,000 employees without pay today, temporarily shutting down highway construction projects as well as FHWA's administrative functions.
"As American families are struggling in tough economic times, I am keenly disappointed that political games are putting a stop to important construction projects around the country," LaHood said. "This means that construction workers will be sent home from job sites because federal inspectors must be furloughed."
Because of the shutdown, FHWA inspectors will be removed from federal construction sites, forcing work to come to a halt on federal lands, according to U.S. DOT. These federal projects include the $36 million replacement of the Humpback Bridge on the George Washington Memorial Parkway in Virginia, $15 million in bridge construction and stream rehabilitation in Coeur D'Alene, ID, and the $8 million resurfacing of the Natchez Trace Parkway in Mississippi.
"These are important projects," LaHood posted on his blog early this morning. "And the workers will be sent home from their job sites. ... To all of our great employees at the Department of Transportation, I very much regret the hardship that this will cause you and your families."
U.S. DOT employees were instructed to report for work this morning as they normally would unless given specific alternate instructions. They were to then receive furlough papers if affected by the Highway Trust Fund shutdown. Furloughs will affect employees funded by the trust fund at the following agencies: FHWA, the Federal Motor Carrier Safety Administration, the National Highway Traffic Safety Administration, and the Research and Innovative Technology Administration.
More than 200 state transportation leaders from 36 states and the District of Columbia are participating at the AASHTO Washington Briefing, which began today and continues until Wednesday. More information is available at http://tinyurl.com/AASHTO-WB10.