State Treasurer Warns Of Port Project Delays Over Fiscal Crisis
April 28, 2011 Leave a comment
Bill Lockyer Addresses Pacific Merchant Shipping Association
by Sean Belk, Staff Writer
Before a room full of international trade executives and officials, California State Treasurer Bill Lockyer forewarned of major infrastructure projects – including the Gerald Desmond Bridge replacement project – either being delayed or halted if the state budget doesn’t pass this year.
Lockyer referred to the $950 million bridge project during an industry luncheon in mid April presented by the Pacific Merchant Shipping Association. The event at the Hyatt Regency hotel was attended by roughly 250 people connected to the maritime trade industry.
By all accounts, local, federal and state grants have already been committed for the highly lauded bridge project. The infrastructure improvement is a joint effort between the Port of Long Beach and the California Department of Transportation (Caltrans), along with the U.S. Department of Transportation and the Los Angeles County Metropolitan Transportation Authority. The project, according to port officials, is slated to begin construction either later this year or early 2012. However, Lockyer said the project is “on a list – a wish list.” He added, “Maybe by 2016 it will be completed, but it’s not on any Caltrans list at the moment.”
He said the reason for the hesitancy stems from the state’s current fiscal crisis. He said he has to be able to borrow about $10 billion to smooth out the cash flow system in the state, also known as short-term borrowing, and if that is delayed then the funding stream could become complicated. Caltrans is waiting for Lockyer to be able to sell bonds on the open market, and that can’t happen either if the state budget is tied up this year.
California state legislators, which are struggling to fix a near $26 billion budget deficit, have yet to pass a balanced budget, which requires a two-thirds vote majority from both the State Senate and Assembly, due to party lines not yet coming to terms on major budget cuts this year. Under the state constitution, the budget must be approved by June 15. But if that doesn’t happen, projects may eventually be halted midstream, Lockyer said.
“If I can’t get to markets this September or October to sell probably about $5 billion to $6 billion worth of bonds, then the project stream that we paid for this calendar so we can keep the projects going, the jobs going – it’s private sector jobs almost entirely and about 6,000 different jobs in the State of California that are ongoing – they shut down,” he said.
Both democrats and republicans in Sacramento have a long history of not coming to the table on issues and delaying the state’s fiscal plan for months on end. Lockyer added that the last time the state had a truly balanced budget was 11 years ago.
Out of the $950 million total funding for the Gerald Desmond Bridge replacement project, roughly $250 million has been committed from Proposition 1B, which was approved by voters in 2006, known as The Highway Safety, Traffic Reduction, Air Quality, and Port Security Bond Act. The proposition provided for $2 billion to be transferred to the Trade Corridors Improvement Fund (TCIF) for infrastructure improvements along California corridors that have a high volume of freight movement. The funds are available, upon appropriation by the Legislature, for allocation by the California Transportation Commission.
About $113.6 million in port funds are being used to cover gaps in funding, while other funding has come from Los Angeles County and the Federal Highway Bridge Program, according to port documents.
With regard to the bridge project funding, Port of Long Beach Executive Director Richard Steinke told the Business Journal, “It’s fully funded. We’ve gotten the obligated and pledged money from both the federal and state government so we’re in good shape in terms of the commitment by our partners and from Caltrans and the state.”