State stalls on various local road projects
Sussex County will get its flagship Indian River Inlet Bridge project a little later than originally anticipated, and drivers sitting in traffic on congested local roads will just have to wait and see.
This year’s $834.9 million bond bill, which funds construction projects around the state, did include $393.1 million for road projects.
However, $280 million is earmarked for work at the I-95/Route 1 intersection near Newark (Christiana Mall). And that leaves precious little for projects around the state that are still in the design phase.
Despite a more than 7 percent increase in bond bill spending overall, Delaware Department of Transportation (DelDOT) Secretary Nathan Hayward noted a substantial shortfall from the $515 million the department had requested.
Hayward credited state legislators for making difficult tradeoffs to keep the other construction projects going — community transportation and municipal street aid both took a big hit this year.
However, he said DelDOT was still spending $194 million worth of bond bill appropriations on operating expenses (not included in the $393.1 million figure), and with a different financing structure, the department could be spending that money on projects instead.
Hayward assured his staff that no one would be laid off as a result of the appropriations shortfall, and vowed to continue pressing forward on all of the road work in the pipeline “as rapidly and as aggressively as we possibly can.” However, he did say DelDOT would have to hold off on some projects in the pipeline.
Projects on Routes 26 and 54, and Clayton Avenue in Frankford will all be delayed.
Referencing local traffic congestion, he said every project was important.
“Their problem in Ocean View is the same problem that people in Odessa and Smyrna and Clayton and elsewhere had 25 years ago, when the drum was beating, saying ‘We’ve got to build an alternative way for people to get to the beach,’” Hayward said. “And that was Route 1. It was called the U.S. 13 Relief Route.”
However, language in the bond bill seems to suggest the state is not yet convinced of local need.
There’s a passage recommending a DelDOT study of options and potential costs, in cooperation with Sussex community leaders — and DelDOT is directed to “share its findings on these so-called Route 1 and East-West travails” with Gov. Ruth Ann Minner and members of the General Assembly (by Jan. 15, 2006).
Hayward referenced a Minner taskforce that would be looking at DelDOT finances over the same period, with recommendations due to the governor by late November.
“At the end of the day, I believe we’ll come out with a much more successful, and certainly a much more reliable source of revenue for DelDOT, which will allow us to get back into overdrive,” he said.
At Minner’s office, spokesman Greg Patterson said they’d be looking at the revenues that go into the Transportation Trust Fund — which primarily comes from bridge and highway tolls, document fees and taxes on gasoline, he said.
Patterson said DelDOT didn’t have the authority to make those changes on its own, but the state had approved increases in those areas over the years — and this year, a significant toll increase on I-95.
Those were the most obvious ways to generate new revenues, Patterson said, but they tended to carry negative impacts — the taskforce would look at those options alongside more creative ideas (selling Route 1 to a private company and then leasing it back, for example).
According to Patterson, DelDOT’s high profile projects in Sussex County had all experienced significant cost increases, and they weren’t alone.
“This is something that happens more often in the bond bill, because that’s the same place where we authorize projects that extend over a number of years,” he said. “In later years, if general fund revenues take a hit, you have to start spreading projects out.”
With the Transportation Trust Fund being DelDOT’s equivalent of a general fund, Patterson said that was just what the department was experiencing this year.
Local legislators said they’d be working to bring Sussex County projects back onto their original timelines, or at least closer, in the next legislative session.
Rep. Gerald Hocker (38th District) recognized the pressure of rising steel, asphalt and concrete prices on DelDOT’s bottom line.
He noted reduced funding for suburban street projects this year (down to $250,000 from $300,000) — which, coupled with higher materials costs, only made the situation worse. “The money isn’t going nearly as far,” he pointed out.
He blamed the revenue troubles at DelDOT primarily on bids coming back higher than anticipated.
“It doesn’t take too many projects like that to put you into a crisis,” he said. “Not that we’re in a crisis, but we’ve got to put on our thinking caps and figure out a way to get that fund built back up again.”
According to Hocker, getting general-fund spending under control would have to be the first step.
Sen. George Howard Bunting (20th District) added rising real estate values (making right-of-way acquisition more costly) to the list of pressures on DelDOT revenues, but also pointed out problems with the structure of the Transportation Trust Fund itself.
“All we’re hearing is we have a budget surplus — which, in fact, we do — but over a period of time, and perhaps unbeknownst to many legislators, DelDOT has been using that fund for operating expenses,” Bunting said. He suggested that tended to create a false picture when it came to the Transportation Trust Fund.
Bunting said community redevelopment projects in Dagsboro and Frankford had suffered for it — the leadership in those towns had asked for $350,000 and $100,000, respectively, but both would have to wait now. He anticipated further delays would only increase costs.
At the State Budget Office, Robert Scoglietti and John Trochimowicz agreed any extended timelines would certainly leave project bottom lines open to increased market fluctuation.
“The raw materials markets are very cyclical,” Trochimowicz pointed out. “Who knows — things can go up, but that’s not to say they can’t go down as well.”
Without going so far as to forecast oil and steel price trajectories, he did note the possibility of China’s changing role in the steel market, from importer to exporter, which could turn scarcity into glut.
Scoglietti said the department couldn’t bet on buying materials (or firing up equipment) when prices dipped, though. The state would still need to prioritize DelDOT projects, and not everyone would make the list in any given year, he predicted.
Gov. Ruth Ann Minner’s bond bill recommendations showed a gap between the wish list and the reserves as long ago as last December — “And since January, we’ve had reduce those figures again,” Trochimowicz added.
Scoglietti said the situation had really started to escalate starting last fall, with a “very significant number” of new projects piling into the pipeline.
Hayward coupled (1) that demand with (2) the operating budget pushed into the trust fund, (3) the trust fund being less than inflation-sensitive regarding revenues, and (4) the increased cost of work.
“You take those four items and you add them together and you wind up with a fiscal crunch, and that’s what we’ve got,” he said.