California transportation contractors are looking for financial legerdemain that will keep them and the states roads programs going if the governors proposed budgetwhich contains another $1.3 billion in transportation funding suspensionsis approved.
The California Transportation Commission claims that the state is effectively stalling $2.6 billion in projects that have been planned but not funded by deferring delivery of Proposition 42 fuel taxes for the fourth year in a row to fill a deficit. Applying standard economic multipliers, the work not going to construction this year alone will result in the loss of well over 50,000 jobs, says the CTCs annual report. Californias transportation program is in crisis and on the verge of collapse, the report concludes.
The state funds roads through three channels: the State Transportation Improvement Program, the State Highway Operation and Protection Program and the Traffic Congestion Relief Program (TCRP). By June 2004, $800 million in STIP and SHOPP projects were placed on the shelf. The high cost of the Bay Bridge seismic retrofit could lead to the loss of future funding from STIP altogether without help from the legislature, claims CTC (ENR 12/20/04 p. 12).
Even when the money begins flowing againwhich could be 2006-07, the way the budget readsreduced spending on preconstruction work means the delay
of billions of dollars worth of projects in future years if environmental approvals and matching funds are allowed to expire.
That is bad news for contractors, says Michael Lawson, executive director of Transportation California, a lobbying coalition of business, labor and government interests. The group claims that many contractors are leaving the state. Fewer projects means longer bid lists, more competition and smaller margins. We have to quit using transportation dollars to fill budget potholes, Lawson says.
"California's budget woes have been a point of deep concern for a couple of years now," says Larry Rhodin, vice president and district manager for Sacramento-based Teichert Construction. "We started gearing up for a highway building boom when proposition 42 was passed and it never materialized so we are looking at projects in Nevada, Oregon and other places. We may even set up shop there if things don't get better."
In addition to the blow to contractors, Rhodin worries about the price to taxpayers. "Highway 70 south of Marysville is a two-lane road that was scheduled for a $70 million improvement project two years ago. It has once again been back-burnered and the price could be as much as $78 million if it goes forward two years from now. That doesn't take into account the fact that in the meantime, people are losing their lives on that road."
Creative contractors might be able to take advantage of legislation Gov. Arnold Schwarzenegger (R) is promoting that would make public-private partnerships to build toll roads and truck-only lanes possible.
Overall, Lawson says he is deeply disappointed in the Jan. 10 proposed budget. It arrived just days after Schwarzeneggers State of the State speech emphasized the importance of roads. Californians cant get from place to place on little fairy wings. This is a car-centered state. We need roads, he says. The magic bullet in the budget seemed to be the promise of Indian gaming revenues, but Lawson says they could be held up in court for years.
Lawson says the transportation community is not ruling out putting an initiative on the ballot if the governor doesnt come up with one that creates a sufficient firewall for the state highway account.
A proposed constitutional amendment would close the loophole that allows for diverting transportation money for other purposes, but not for two years. Until then, a number of California cities hope to squeak by with sales tax measures that passed in November.
Jim Earp, executive director of the California Alliance for Jobs, a Sacramento-based coalition of 2,000 contractors and 50,000 union construction workers, is pushing a temporary gasoline excise tax hike. The proceeds would be dedicated to transportation. We have to look at everything when our economy is at stake, Earp says.
