Highway budget headed for cash shortage, MnDOT warns

  • Article by: PAT DOYLE , Star Tribune
  • Updated: October 4, 2007 - 10:15 PM

DFLers say the deficit could delay future construction, but Republicans counter that it's too soon to say.

The state budget for highway construction and maintenance is on a track to run short of cash even if it gets all of the money authorized by the federal government to rebuild the Interstate 35W bridge.

That was the message the Minnesota Department of Transportation (MnDOT) delivered Thursday to legislators at a hearing into its request to use $195 million from the state general fund to cover bridge reconstruction costs.

DFL legislators seized on the MnDOT cash-flow report as further evidence that the agency has been underfunded for years, and said the problem could force delays in future construction projects.

MnDOT said that without some unexpected sources of revenue, it probably will experience cash deficits of either $77 million a month or $271 million a month in late 2008, depending on how much federal money flows in to help reconstruct the 35W bridge. The higher cash-flow deficit figure would occur if MnDOT got only the $53 million in federal money that's already available. But the agency expects to face a deficit even if it receives nearly all of the $250 million the federal government has pledged for rebuilding the bridge.

"Even in the best case right now, MnDOT still is in the red, and it could potentially jeopardize the 2009 construction season," said House Speaker Margaret Anderson Kelliher, DFL-Minneapolis.

But Brian McClung, spokesman for Gov. Tim Pawlenty, said it's too early to tell if cash-flow problems stemming from the collapse will cause construction delays. "I don't think it would be fair to say that projects are going to be delayed in August 2008," he said. "There are a number of variables that could impact the outlook."

He said the state could seek more funding from the federal government, borrow, or transfer more money from the general fund.

Pawlenty has asked the Legislature to use general fund money to advance $195 million for the bridge construction until that much in federal funds becomes available. Finance Commissioner Tom Hanson has assured legislators that the federal money will eventually arrive, and said the state's general fund cash flow is more than adequate to advance $195 million for the bridge.

MnDOT on Thursday put out a list of nearly 200 projects planned for 2008 and said an undetermined number could be postponed if the crunch persists. The agency said it would preserve projects dealing with maintenance -- about 70 percent -- and choose new projects to delay if needed.

The MnDOT cash balance would have declined from at least $250 million in 2002 to an expected $55 million balance in January even if the 35W bridge hadn't collapsed. But the cost to replace the bridge -- MnDOT this week put it at $393 million, up from the $250 million estimated in August -- and the gradual flow of federal funding signal a projected deficit.

"This is providing a much starker description of reality than I think a lot of us have realized," said Sen. Richard Cohen, DFL-St. Paul.

Pat Doyle • 651-222-1210

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