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NJ Shutdown Week 1: 1,700 Jobs, $41M

Tuesday, July 19, 2016

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As the shutdown of road, bridge and rail work continues into its second week in New Jersey, a trade association representing the U.S. transportation design and construction industry has identified the potential impact the executive order could have on the industry and taxpayers.

Meanwhile, state transportation officials have not yet identified any suspended projects that need to be restarted to protect the health, safety and welfare of state citizens after week one of the shutdown, state news media indicated.

Double Yellow lines
© iStock.com / Thomas Shanahan

The first week of the New Jersey transportation project shutdown will cost the transportation construction industry and New Jersey taxpayers at least $41 million and displace as many as 1,700 construction workers, according to the American Road & Transportation Builders Association.

As reported earlier, Gov. Chris Christie put $3.5 billion worth of transportation improvement projects on hold as of July 8 after declaring a state of emergency regarding the state’s Transportation Trust Fund (TTF).

According to Executive Order No. 210, issued at the end of June, a State of Emergency exists because the fund has only enough reserves to sustain it through August.

At that time, the New Jersey Department of Transportation (NJDOT) and NJ TRANSIT (NJT) each identified what they deemed to be their nonessential state-funded projects. NJDOT tapped more than $646 million worth of projects for stoppage, while NJT identified $2.7 billion worth of projects that could be put on hold.

Millions of Dollars, Thousands of Jobs

As state legislators continue efforts to reach a consensus on how to put more money into the TTF, the American Road & Transportation Builders Association (ARTBA) issued its economic analysis of the far-reaching effects of the work stoppage.

The initial week-long closure will have cost the transportation construction industry and New Jersey taxpayers at least $41 million and displace as many as 1,700 construction workers, the report claims.

As the shutdown continues, costs could grow to as high as $1.3 million per day—or $9 million per week—in lost sales, wages and economic activity throughout the state, according to Dr. Alison Premo Black, the report’s author and ARTBA’s chief economist. 

Over time, the reduction in demand could affect another 1,500 non-construction jobs, Black added.

“There are no winners in this situation,” Black said in the association’s announcement. “Important transportation projects that are designed to improve safety and reduce traffic congestion will come to a grinding halt. Workers will be sidelined and lose wages. It’s a recipe for market chaos.”

Immediate and Long-Term Effects

In its analysis, ARTBA looks at both the immediate costs of the initial weeklong shutdown and the long-term effects if the stoppage continues.

For the 904 transportation projects identified by NJDOT alone, one week’s worth of stoppage means spending $39 million in total mobilization costs—that is, shuttering project sites to stop construction activity, plus remobilizing when work is permitted to begin again.

deteriorating bridge
© iStock.com / Robert Morton

Acting DOT Commissioner Richard Hammer indicated that the state's Transportation Trust Fund is almost out of money and remaining funds must be held for "emergent needs that we need to respond to on a daily basis."

Additionally, although work will not be underway, contractors will still have to spend about $1.7 million per week to ensure public safety and maintain existing facilities at the job sites, ARTBA says. These expenses include weekly rent for field offices on major projects and expenditures for project maintenance and traffic control throughout the shutdown.

Because it is unclear whether contractors will later be reimbursed by the state for these expenses, the association notes, “This could have a significant negative impact for smaller companies that do not have a large cash reserve.”

For the first week, approximately 1,300 to 1,700 construction workers, or 9 percent of the state’s transportation construction employees, were displaced. As a group, these workers earn between $1.4 and $1.9 million each week, and hourly employees would likely not be paid if they did not work, ARTBA states.

A long delay will spread the negative impact to the state’s economy because of a reduction in income for construction workers and firms, it adds. Moreover, a prolonged shutdown brings with it a reduction in orders for materials, equipment and supplies.

“Construction spending on the affected projects supports an additional 1,500 jobs through other major sectors of the economy, including manufacturing, healthcare and retail,” the association notes.

“As more construction workers lose their jobs and cut back on spending, this will reduce demand in other sectors of the economy, and could put these jobs at risk.”

Immediate Outlook

Meanwhile, NJDOT spokesman Steve Shapiro indicated Friday (July 15) that the agency had not determined any projects needed to be restarted for the public good, NJ.com reported.

According to Acting DOT Commissioner Richard Hammer, at this time the priority is holding current funds for emergency situations.

"[T]he bottom line is we don't have any money," he told the Senate Judiciary Committee on Thursday (July 14), adding that what remains must be on hand to be disbursed to "emergent needs that we need to respond to on a daily basis."

Although $85 million was estimated to remain in the state’s TTF coffers at the time of the shutdown, NJDOT now puts that figure at $29 million, according to NorthJersey.com. Having started with $1.6 billion last summer, the fund may be depleted as soon as early August, it added.

Contractors are available and ready for that work if needed, Hammer noted.

A solution to restoring the TTF is not likely to come before July 25, sources said, as Christie and other state Republicans participate in the Republican National Convention in Cleveland.

   

Tagged categories: Bridges; Department of Transportation (DOT); Economy; Funding; Government; Infrastructure; Jobs; Maintenance coating work; North America; Program/Project Management; Rail; Roads/Highways; Striping; Transportation

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