Federal Government Gridlock Jeopardizing Maine Jobs and Transportation Infrastructure

July 11, 2014

For Immediate Release: Friday, July 11, 2014
Contact: Adrienne Bennett, Press Secretary, (207) 287-2531

AUGUSTA – Governor Paul R. LePage has announced that he will take action, if necessary, to avoid losing hundreds of construction jobs this summer and fall.

In a letter, Governor LePage urges Maine’s Representative from the U.S. House Committee on Transportation and Infrastructure, to work to resolve pending funding shortfalls in the federal Highway Trust Fund.

The immediate risk for Maine is an approximate 70 percent reduction in federal highway reimbursements in August. The lack of reauthorization from Congress of the Moving Ahead for Progress in the 21st Century Act by October 1 may also cause the USDOT to reduce new federal highway obligations by almost 100 percent in 2015.

Recently the federal government notified the State of Maine that due to the lack of a long-term deal providing transportation infrastructure funding to states, new cash management procedures will take effect on August 1 if Washington cannot resolve the pending shortfalls in the Highway Trust Fund.

“Inaction on both of these matters has both short- and long-term negative effects on transportation infrastructure and construction industry jobs, as well as Maine’s economy as a whole,” said Governor LePage. “This is another example of the federal government playing games, which harm Maine’s ability to keep people working and fix our roads and bridges, which are in need of repair after the long winter.”

The LePage Administration is working hard to address these funding problems. As Governor LePage states in his letter, the Administration is adopting methods to address the cash flow shortfall. “If necessary, I will seek additional bonding to offset federal shortfalls,” Governor LePage wrote.

Additionally, Governor LePage in his letter suggests if Congress is unable to reach an agreement that States ought to be allowed to collect taxes, such as the gas tax, which is now sent to Washington. “My Administration knows how to manage money, and it knows how to get it done.”

From a longer-term planning perspective, the Maine Department of Transportation operates on a three-year Work Plan that may require a delay or suspension of that publication of the fall construction forecasts, as well as the CY 2015 Construction Advertisement Plan (CAP) and the three-year Work Plan itself in early January. These are eagerly awaited and closely watched by contractors making employment decisions, as well as communities and policymakers that are looking for their projects to proceed.

“This potential inaction would have devastating effects in Maine,” said Maine Department of Transportation Commissioner David Bernhardt. “Unlike warm-weather states, Maine has hundreds of capital projects that are performed in a short construction season.”

Based on average federal reimbursement for the month of August over the last two years, it is estimated that the need for reimbursement will be $40 million. That means that the cut to the expected federal reimbursement is estimated at $27 million to $29 million, or about 70 percent.

As a short-term cash-flow strategy, the MaineDOT intends to get through August by temporarily accessing cash from a state trust fund established for future capital transportation projects. This is a one-time temporary solution; it is not new money.

“For the month of September, MaineDOT hopes to access state bond funds from the State Treasurer. Again, this is not new money, and if federal funds for full reimbursements are not restored, there will be a need to curtail projects statewide,” Commissioner Bernhardt said. “If there is still no resolution to the cash-flow crisis by October 1, there will be few options left and would likely force a devastating decision to reduce and/or delay payments to contractors for work already performed,” Bernhardt concluded.

“The inaction by Transportation Committee authorizers is a stark contrast to the effective work by Senator Susan Collins. Time and again, Sen. Collins’ work ends with results, not gridlock. She continues to recognize the need for a strong transportation infrastructure by securing funds that have helped build and maintain Maine’s transportation network,” said Governor LePage.

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