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Sandag Ponders Loaning State Money for Local Road Projects

Sandag Ponders Loaning State Money for Local Road Projects

Transportation: Contractors Worried About Not Getting Paid Due to Budget Crunch

BY LEE ZION

San Diego officials have taken the unusual step of lending the state some money to prevent several local transportation projects from being shut down. But the state warns this might not be enough.

The San Diego Association of Governments is debating whether to loan the state $10 million a month, for up to three months, to continue construction during California’s budget crisis. As early as July 10, state officials had warned that highway contractors would walk off the job because the state didn’t have enough money to pay them.

The transportation committee approved the measure to loan money to the state July 21, referring it to the full Sandag board for discussion July 25. No decision was made as of press deadline.

Eric Pahlke, transportation director for Sandag, said this would help continue construction on about $475.6 million worth of county transportation projects. More than 50 local highway projects are at risk, he said.

It would cost more in the long run to shut down the projects than it would to loan county transportation money to the state, Pahlke said.

Sandag would provide the money using TransNet, an existing countywide sales tax of half a cent which goes to fund local transportation projects. The TransNet money would not come from reserves, but from a special fund Pahlke likened to a credit card.

The “commercial paper program” would allow Sandag to borrow money for short periods at a 2 percent interest rate. Sandag has about $68.8 million in credit it hasn’t yet used, he said.

Of the projects at risk of being shut down, the three major ones are the expansion of the I-5/805 merge, and construction to complete state routes 56 and 905. Other projects are much smaller in scope, such as widening a few roads throughout the county, Pahlke said.

Dennis Trujillo, a press secretary for Caltrans, said Sandag’s proposed loan to the state is not an isolated incident. The Riverside County Transportation Commission and the San Bernardino Association of Governments are looking into setting up similar loans in their respective counties, he said.

However, Trujillo warned that these loans may not be enough. Not only must cities and counties loan money to Caltrans, but the contractors must still agree to work without pay temporarily during the budget impasse.

“What we have here is a plan that in essence is a house of cards. And it’s a house of cards because the failure to be able to execute any one of those elements could in fact derail this plan and force the shutdown of projects throughout the state,” he said.

Whether construction can continue or not may change from day to day. With each passing day, more contractors are stepping forward to say they can’t continue working without being paid, Trujillo said.

Also, the situation is so fragile that a failure to reach agreement in Riverside County could cause the deal to collapse in San Diego, he said.

Trujillo added that despite the complexity of the situation, there’s an easy way out.

“There’s a simple fix to all this, which is getting the Legislature to pass the state budget,” he said.

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