ROM KIRK STEUDLE (Michigan Department of Transportation Director):
Here’s what this means in real terms for Michigan. FHWA is working today until noon to shut down their systems. All meetings are canceled including conference calls. The phone will not be answered after 12:00 noon until something is passed. This means NO money is flowing. As a reminder the federal program is a reimbursement program where states expend money and then submit for reimbursement. So nothing coming in means we need to manage what goes out and when. It also means NO new projects can be obligated. This is usually when we advertise projects for lettings. So nothing new is moving out. We were already contacted by Moody’s rating company inquiring about our bond payment due in two weeks and whether we can make the payment or will we default. We told them we intend to make the monthly $18+ million payment on time. These bonds are backed by federal gas tax revenue. To make this payment will take a big chunk of cash from the check book. The only good thing is that this happened during a time of low construction activity when out payments are at their lowest. In the past we have been able to handle disruptions like this because we had significant state revenue and had a sizable state funded only program. Since this hits at a time of declining state revenue we have less options to mitigate the impact. We are engaged in the national debate as we speak. I’m in DC today and will be participating in the national press conference calling for quick resolution and I will be meeting with Congressional members today as well. Our DC and Lansing policy staff are connected and on top of developing issues.I’ll keep you all updated as we get new information and as we develop plans for specific action Michigan will have to take.
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This from Charles Yessaian. Government Affairs Director for Jamian McElroy & Hamlin LLC.,
The Jobs Bill that includes the short term extension of the Highway Trust Fund. DOT furloughed 2,000 employees w/out pay unless Congress restores funding, which provides $42 Billion a year, construction contracts will be delayed & loans may be jeopardy & projects can be suspended.
JMH will confirm and provide updates as this process evolves.