Transportation Cabinet hitting pause button on new projects with road fund approaching negative balance in late summer, fall

06/07/2016 10:20 PM

FRANKFORT — The Kentucky Transportation Cabinet is suspending new highway projects as it grapples with a dwindling road fund, Greg Thomas, the agency’s secretary, told a legislative panel on Tuesday.

Road projects slated to begin in the upcoming fiscal year, which begins July 1, and current projects in pre-construction phases will he halted under the cabinet’s Pause-50 initiative.

Thomas said projected negative balances in the road fund during the “low days” in August, September and October this year necessitate the reprieve on highway construction, telling Pure Politics that the deficit under current operations was expected to hit $50 million in some models.

“We decided this was the best approach in terms of reinforcing and shoring up our road fund,” Thomas said after testifying before the Interim Joint Transportation Committee.

Among items left untouched in the Pause-50 plan include federally funded projects, local “flex” funding and bridge replacement programs, and $125 million for resurfacing, he said.

Thomas said that about $50 million in state projects will be launched in fiscal year 2017 and possibly sooner based on need, if funds are available.

The biennial road plan sets out more than $1.2 billion in high-priority state projects and $619.8 million in low-priority construction.

The primary causes of the Pause-50 plan include flatlined road fund receipts, more than $1 billion in state construction in the past five years coupled with higher maintenance costs in the last two, and a backlog of state projects totaling about $1 billion by the end of the current fiscal year, nearly twice as much as a the $506.6 million backlog at the end of fiscal year 2012, according to materials presented Tuesday. The cabinet also noted in materials that the fund last approached a zero balance when it dropped to $30 million in 2004.

The loss of projects caused some misgivings among legislators.

Sen. Dorsey Ridley, D-Henderson, said the state’s road fund has not, in his experience, ever had a “rainy day” fund.

“I would guess that’s something you’re trying to create with this pausing so you can have, create a cash surplus for a period of time,” he said.

Thomas, though, said he’s looking for “a sustainable trend.”

“We think, based on the current model, that that is going to be somewhere in the range of $500 million in the pipeline versus $1 billion today and that the projects, in terms of state lettings in the long-term, will be somewhere in that $160 million range,” he said. “… I really don’t care about hoarding money because there’s really nothing you can do with it other than improve roads.”

Rep. Leslie Combs, a Pikeville Democrat who helped craft the road plan, said she’s already fielded complaints from road contractors, particularly those in rural areas of Kentucky warning of possibly layoffs under the Pause-50 plan.

“I understand what you’re trying to do,” she said. “I understand what you’re up against, but be particularly conscious about where it’s affecting because there’s some places that just can’t take anymore.”

Thomas said after the meeting much of the concern comes because the program is new.

“I don’t have any grave concerns yet,” Thomas said. “There are obviously people worried about their projects being halted or stopped, but the message is, look, if the revenue’s there, we’re all about investing in our infrastructure.”

Kevin Wheatley

Kevin Wheatley is a reporter for Pure Politics. He joined cn|2 in September 2014 after five years at The State Journal in Frankfort, where he covered Kentucky government and politics. You can reach him at kevin.wheatley@charter.com or 502-792-1135 and follow him on Twitter at @KWheatley_cn2.

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