Revenue shortfalls lead to cuts in road projects
Leaders of the Pennsylvania Department of Transportation and Pennsylvania Turnpike painted a picture of future road and bridge projects Tuesday as a result of the COVID-19 pandemic, and it wasn’t pretty.
With a loss of revenue projected at as much as $900 million for PennDOT because of extremely reduced driving cutting gasoline tax revenue, Acting Secretary Yassmin Gramian told a state Senate hearing her agency will shift maintenance projects from resurfacing to tar-and-chipping where possible. She said only 33 of 96 contracts the agency has received bids for worth $380 million this construction season currently have funding and the rest are being re-evaluated.
Turnpike CEO Mark Compton said extremely light traffic due to stay-at-home orders related to the pandemic are projected to cost the agency $400 million to $500 million in toll revenue. As a result, the turnpike has cut its capital budget for the fiscal year that starts June 1 from $606 million to $459 million and will delay changes as part of its shift to cashless tolling for two years.
Ms. Gramian said she expects money for road and bridge paving to drop from $2.2 billion to $2.4 billion this year and next year to $1.8 billion to $1.9 billion. As a result, she said, the agency is “transitioning to a new normal.”
Unless safety is involved, Ms. Gramian said, the agency likely will change projects to a lower form of construction. For roads, that may mean tarring and chipping rather than full paving or reconstruction; for bridges, more may be rehabilitated than replaced.
“Some of those nonessential contracts we put on hold for the time being,” Ms. Gramian said. “Many of the ways we did business may be changed forever.”
Ms. Gramian said putting off needed work “isn’t the best” practice, but Executive Deputy Secretary George McAuley said the agency is “buying time” until more money is available.
“It makes sense to preserve these conditions for now, but it’s not a long-term solution,” Mr. McAuley said.
In addition, some contractors will have to wait longer for payments because of the agency’s cash-flow problem. Mr. McAuley said there often is a delay of about a month at the beginning of the state’s fiscal year July 1, but that will begin sooner this year.
“We are limited in what revenue we have,” he said. “Contractors will be paid. It is a challenging time.”
Ms. Gramian said PennDOT isn’t sure what it will do if the turnpike is unable to make its quarterly $112.5 million payments to PennDOT for public transit. PennDOT has agreed to delay the July payment and cover funds transit agencies may need, but it’s unclear whether the turnpike will be able to make that payment late or resume regular payments in October.
“If they can’t make payments … we need to review the program and see how we can fund it,” she said. “I don’t have an answer right now.”
At the turnpike, Mr. Compton said the agency expects to cut 25% of its capital budget for the new fiscal year. It will continue projects that already started, but some new projects won’t begin, he said.
One project that will take a hit is part of the agency’s conversion to cashless tolling. The agency still will be eliminating cash toll payments by October 2021, but it will push back replacing toll booths with the installation of overhead gantries to read E-ZPass transponders or license plates to send drivers a toll bill by two years until 2024, Mr. Compton said.
That project also involves revamping entrance and exit ramps across the state to allow free-flowing traffic so turnpike traffic no longer has to stop, but that work could be delayed as well.
After the hearing, the turnpike would not identify other projects scheduled to be delayed. The turnpike commission may take formal action on the delayed work when it meets next Tuesday.
The dire projections for road agencies could change if Congress comes through with a national infrastructure program or stimulus money for toll agencies. Ms. Gramian said PennDOT could receive $700 million this year and $1.3 billion next year if a bill currently under consideration is approved.
“We have started looking at what are the big projects we want to push out now [if stimulus money is approved],” she said, noting the agency may want to replace money from local roads that it has shifted to interstate highways in the past year.
“We don’t know what kind of strings will be attached to that money. It doesn’t matter. We will figure it out.”
U.S. Rep. Conor Lamb, DMt. Lebanon and a member of the House Committee on Transportation and Infrastructure, joined 135 House members Tuesday urging help for state transportation programs.
“The coronavirus is having a devastating economic impact on states,” Mr. Lamb said in a news release. “We need to take bold action to invest in infrastructure projects to spur our economy and ensure that we are protecting good paying jobs. This is a strategic investment that will help our state and local communities recover faster while improving our roads and transportation systems.”