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Budget Shortfall to Postpone Most Major Road Projects

Wed July 05, 2006 - Southeast Edition
CEG



ASHEVILLE, NC (AP) The state Transportation Department will have to postpone most major road improvement projects over the next three years because of a $920 million shortfall, officials said.

The major problem is an anticipated $720 million shortfall in federal money, while state financing is expected to be approximately $200 million less than needed, largely due to rising construction costs, agency spokesman Ernie Seneca said.

The affected projects are “primarily new construction, major projects, though it does include some widening and maintenance,” he said. “We’re not going to delay ongoing projects. We’ve made commitments, we’ve got ongoing projects and that work will continue.”

Jay Swain, division engineer of the NC Department of Transportation in Asheville, said the shortage could mean an average five-month delay for projects not yet under construction or in advanced planning phases, such as widening and resurfacing roads and signal improvement projects.

Joel Setzer, department division engineer in Sylva, said the shortfall means the state will have to look to maintenance money to keep roads serviceable.

“One of the big impacts is all the extensive patching we have to do,” he said. “It pushes us to other funding sources — maintenance funds — to try to keep traffic moving and keep it moving safely.”

“We’ve seen an increase of about 45 percent in construction costs over the past three years and it’s still climbing,” Seneca said. “These increasing costs are affecting future projects and those that are already under way.”

The federal shortfall is partly due to lower revenues, while much of the state funding shortfall can be blamed on an estimated $100 million increase in construction costs for projects over the 36-month period.

The shortfall also includes a 7 percent, or $33 million, anticipated decrease in revenue from the highway use tax — money the state receives from the sale of new and used vehicles — and a 4 percent ($40 million) decrease in revenue from the highway trust fund, Seneca said.

In his budget proposal, Gov. Mike Easley called for providing some relief by directing $207 million to the Highway Trust Fund for road construction and $18 million for the highway fund for maintenance and resurfacing, Seneca said.

But Easley and the state Senate, in its proposal, both call for capping the state’s gas tax — one of the nation’s highest — a move critics said would further depress the road work budget.

The cap is not included in the budget proposal passed by the House for the fiscal year that begins July 1. The House and Senate are working to reconcile their different spending plans in order to have a final budget ready by the end of the month.

Lawmakers have proposed spending much of an estimated $2 billion surplus on state employee pay raises, tax cuts and cash infusions for programs that were left out during financially tighter periods over the past several years.

It’s too early to predict whether money constraints will delay more projects, but the odds don’t appear good, Seneca said.

“This is a continuation of what we have had to do over the past year and a half,” he said. “We had to readjust [some projects] in September and delay projects until December of this coming year. And now this is an additional five months on top of that. It affects projects on down the line, too.”