DALLAS - Kansas will not award approximately $200 million of anticipated highway construction contracts over the next two months due to concerns that actual and expected declines in state and federal funding impair its ability complete the work.
The Kansas Department of Transportation had been scheduled to award $203 million of highway contracts in December, and another $111 million of contracts in January. Instead, KDOT will let contracts totaling $57 million in December and $48 million in January.
Transportation Secretary Deb Miller said the suspension will affect most of the uncompleted projects in the state's current 10-year comprehensive transportation program, which will expire in 2009. Maintenance work, emergency repairs, projects financed mostly with federal and local funds, and preservation efforts will continue, she said.
Miller said the combined loss of state and federal funds could total $250 million in fiscal 2010. KDOT has reached the limit of its bonding authority, with some $1.7 billion in outstanding debt, and cannot issue more without legislative approval.
"We are operating in a time of extreme financial uncertainty, and it would be irresponsible for us to begin work on projects without knowing whether we will be able to pay for them," Miller said.
"We will continue to evaluate our financial situation to determine whether we can afford to let additional scheduled projects," she said. "We will continue to reassess the situation to determine if or when any additional projects can be let."
KDOT revenue bonds have underlying ratings of AAA from Standard & Poor's, Aa2 from Moody's Investors Service, and AA from Fitch Ratings.
The department is expecting lower revenues from fuel taxes, vehicle registrations, and sales taxes as part of an overall drop in state tax collections.
The Kansas Consensus Estimating Group said recently that state revenues will be $211 million less than expected in fiscal 2009, with the prospect of a $1 billion difference between revenue and expenses in fiscal 2010.
As a result of the revenue shortfall, Miller said, KDOT budget officials doubt the Legislature will make two scheduled repayments of $31 million in fiscal 2009 and 2010 to reimburse the department for money transferred from the highway fund to the general fund during the 2001-2002 economic downturn. In addition, she said, lawmakers will probably continue taking $36 million a year from the highway fund to finance operations of the Kansas Highway Patrol.
KDOT spokesman Steve Swartz said it was not yet clear if the department could return to expected contract authorization levels by early 2009.
"Right now we're dealing with things on a month-to-month basis, and we'll see where we are in February," he said. "For the longer term, an interim legislative committee has already begun work on the next 10-year comprehensive transportation plan, and the governor has appointed a transportation task force that we've been working with since August. Of course, there's no guarantee that the Legislature will approve a comprehensive plan in the 2009 session, and there's no guarantee that it will be for as long as 10 years."
Although Congress appropriated $8 billion to the Highway Trust Fund in September to avoid cuts in fiscal 2009, Swartz said Kansas will see a $160 million cut in its federal funds in fiscal 2010 unless an expected shortfall for next year is resolved.
"There's been talk of a federal stimulus program that will focus on infrastructure," he said. "We're keeping our fingers crossed, because that would help us a tremendous amount."