Funding crunch worse than thought

RICHMOND — Virginia Department of Transportation officials told a House committee Monday that Gov. Mark R. Warner’s report of the agency’s funding deficit two weeks ago “wasn’t the worst-case” scenario and that the extent of delays to state-wide projects will not be known until mid-February.

Seven forecasts of budget shortfalls are being studied that predict over the next six years shortfalls between $400 million and $2.4 billion, said VDOT Commissioner Ray D. Pethtel to the House Appropriations Committee.

“That number keeps changing,” he said. “We hope we’re at the worst-case scenario now.”

An itemized report of what road projects will be delayed will not be disclosed until next month, he said. The agency’s forecasts will be completed in two and a half weeks, he said, but how extensive delays are depends on three factors: how flexible legislators allow VDOT to be in allocating federal dollars, how much additional money the General Assembly gives VDOT and how the Commonwealth Transporta-tion Commission ultimately decides to allocate funds at its mid-February meeting, he said.

Prince William is not seeing any of its current projects put in jeopardy by the current crisis — including the Va. 234 widening project, said Manassas City Councilman Ulysses “Xerk” White, an at-large member on the CTB.

“There is never enough money to go around. Anytime you build a project, you take money away from another project to get it done,” he said. “That’s what has been the problem, people are jockeying for position [on the CTB].”

“We really do view our transportation system as in a period of crisis,” said state Secretary of Transportation Whittington W. Clement. Road projects going back to October that have been awarded to contractors have been put on hold, he said. “We’re holding because we don’t know if we have the money to pay them.”

He would not say how many projects statewide face possible delays. The rough benchmark cited by Appropriations members for the state’s present road dollar shortfall is $1 billion, of that $350 million for Northern Virginia, said Prince William Delegate John A. “Jack” Rollison, R-52nd.

Pethtel said an update on the shortfall was being sent out to localities Monday afternoon and would be done on a weekly basis.

“It sounds like they’re going to be dropping the ball on us soon,” said Mike Moon, Manassas City public works director. He said Manassas does not have any projects in limbo — yet. “The scarier part is if they just start pulling dollars out.”

Pethtel painted a bleak picture of the agency’s cash flow: The highway maintenance and operating budget, which borrowed $102 million from the Transportation Trust Fund this fiscal year, has an outstanding $92.1 million loan that must be paid out by the end of the fiscal year.

VDOT wants more flexibility in spending federal dollars, in the form of federal revenue anticipatory notes, or FRANs, to any projects in the six-year transportation plan, but Delegate Franklin P. Hall, D-69th, questioned allowing the agency more freedom when it had already mismanaged funds.

FRANs are monies the state borrows in anticipation of money it expects to receive from the federal government through the federal Transportation Equality Act.

“That’s incredible to me that, one, did you see that coming? And two, why hasn’t something been done about it?” he asked. “There should have been flags, warning systems … to say we’re going to run out of money.”

Clement said he was going to have to earn the legislators’ trust. With the FRANs, he said flexibility might look more attractive next month when the six-year plan is “ratcheted down” to be more realistic.

Relying on FRANs still will lead to debt problems, Rollison said.

“What we’ve done is created a debt backlog where very soon, and I hope you could tell me how soon, we would be paying out more for debt service than new construction,” Rollison said.

“You are correct in six years we will have larger debt payments than we have for secondary road construction,” Clement said.

On the administrative side, VDOT is operating with inherently higher costs due to 20 percent turnover of its senior staff in the mid-1990s, Clement said. Before that, 30 percent of its work was outsourced, whereas now 70 percent is outsourced and the agency’s total budget has doubled.

“The department has lost its core expertise,” he said, raising the need for more aggressive recruitment.

Staff writer Chris Newman can be reached at (804) 649-8710.

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