| Caltrans MEMORANDUM |
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| Featured News | |||
| Thursday, 12 August 2010 10:36 | |||
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TO Dale E. Bonner, Secretary Business, Transportation and Housing Agency The absence of Fiscal Year 201 0-1 1 Budget Authority has an immediate result of restricting the Department of Transportation’s (Department) ability to initiate construction projects, award contracts and make payments to vendors. It also prohibits the Department from providing travel advances or reimbursement for our construction employees working in remote areas. Many of these employees are not financially able to front the costs and wait for reimbursement. Should the Budget Impasse continue through the end of August 2010, transportation fund cash balances may be depleted resulting in potential suspension of ongoing construction projects. Delayed and suspended construction projects and non-payment to vendors prevents the economic stimulation and job creation that result from the Department’s normal activities. During the 2008/09 fiscal year budget impasse, payment for over 96,000 invoices was delayed resulting in more than $215,000 in penalties. In addition, State tax revenue is impacted by delaying income to construction contractors and their employees. Furthermore, suspension of ongoing construction projects results in penalty payments to construction contractors resulting in significantly increased project costs. The Department currently has $9.5 billion worth of projects in construction. There are another $1 .5 billion worth of projects being delayed, including $977 million the Commission plans to allocate at the August 11-12 meeting, that have been allocated with 201 0/1 1 fiscal year funds contingent upon the passage of the budget. The Department will also delay $937 million worth of contracts that were allocated with prior year funds but where the contracts have not yet been awarded. While these contracts are funded from existing budget authority, the forecasted depletion of cash in the transportation funds at the end of August make award of these contracts imprudent. Between projects contingent upon budget passage and those held due to projected fund depletion, the Department has projects on hold totaling over $2.4 billion. Between bond funding sales, cash depletion issues and delays in the budget process, the Department cannot move forward with over three billion dollars in new projects that are ready for construction and may lead to suspension of ongoing contracts. A partial list of the projects impacted is identified below. Without a budget and with the uncertainty of available cash for contracts after September, the Department will not be awarding new contracts. This impasse will cause a delay in new construction starts and delay the creation or saving of jobs. Major projects allocated by CTC in April, May, June and July with 09/10 funds that have not yet been awarded: Projects approved by CTC at June 30-July 1 Meeting contingent upon passage of 2010 Budget Act: Select projects to be voted In Aug. that will be contingent on 2010 Budget Act which could not be Awarded:
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