During today’s Virtual Fall Seminar program, PennDOT Deputy Secretary Melissa Batula laid out a potentially disastrous situation with PennDOT’s current and future program should the agency be unable to secure an immediate cash infusion. You may also have heard about this problem from your regional District Executive.
Here are some key facts:
- The Motor License Fund was originally expected to lose $850 million from the start of COVID 19 through June of 2021. That loss is still estimated to be $500 to $600 million.
- Motor License Fund revenue is starting to return to normal but, what was lost–$380 million to date due to COVID-19–is not recoverable.
- PennDOT reduced its capital program from $2.5B to $2.2B prior to COVID, expecting continued revenue reductions from increasing vehicle fuel efficiency. Regarding projections of losses due to COVID, they reduced the program to $1.9B for 2020, and for 2021.
- The $300 million Letting reduction for 2020 does not offset $300 million in COVID revenue losses until three to four years because projects are cash flowed over multiple years. In the first year of a project we average 43% expenditures.
- PennDOT is asking for authority to bond up to $600 million to continue to pay bills timely for the remainder of calendar year 2020 and into 2021.
APC believes that currently, we face a budgetary standoff among our political leaders that, quite obviously, could have severe impact on our industry. Accordingly, APC and our industry partners are involved at the highest level of state government and the General Assembly. APC staff has personally contacted House and Senate leaders and committee chairs on behalf of our membership and employees.
This is a situation that could drag into next week. The current session of the General Assembly adjourns November 30 as provided in the Commonwealth’s Constitution. So, a solution must be found before the end of the month.
We are very hopeful that, in the end, Governor Wolf and House and Senate leaders can reach agreement that will alleviate PennDOT’s cash flow situation.
We will continue to keep you up to date as negotiations in the state Capitol progress.