White House Warns of Shutdown Impacts

MONDAY, OCTOBER 2, 2023


White House officials and industry association leaders are reportedly warning the country that U.S. infrastructure projects will be held up if the government is not funded by Sunday, Oct. 1.

A report from Construction Dive stated that it is looking more likely that Congress will not pass bills to fund federal operations before the start of the new fiscal year, as House Republicans push for a fight over federal spending, subsequently shutting down the government.

According to the White House, in addition to many other negative impacts, a shutdown would reportedly hold up federally funded infrastructure projects.

Additionally, impacts may be wider ranging than some may expect, according to American Society of Civil Engineers President Maria Lehman. According to the report, even builds that aren’t fully federally funded would be impacted.

“Most projects these days have lots of different funding sources, they maybe have local and state and federal, maybe a private component, maybe an authority,” said Lehman. “So [a shutdown has] a much bigger impact than it might have been in the past as far as the number of projects potentially that could get hit.”

The report states that though some vital government functions are exempt, most federal agencies would be curtailed. The U.S. Department of Transportation and other large federal agencies responsible for infrastructure would be affected, causing new federal projects to delay start dates, awards being suspended and current projects being put on hold.

Federal agencies are also reportedly incapable of issuing new guidance on how funds should be used in the event of a shutdown.

This could impact new Infrastructure Investment and Jobs Act work, such as the newly announced $7.5 billion in financing for water infrastructure and another $1.4 billion to fund 70 rail and supply chain infrastructure projects.

State DOTs are also reportedly unsure of future federal funding, and could be hesitant about approving new construction projects over worries they won’t be reimbursed, according to the report.

A similar incident had previously happened during the 34-day shutdown in 2019, triggered by a dispute over former President Donald Trump’s proposed border wall with Mexico, according to Lehman.

Lehman stated that she thinks this problem would be even worse this time around, since many IIJA programs are new, and agencies don’t have a historical precedent to use to determine whether they’ll be reimbursed.

“Because a lot of those (federal) programs are new, there’s even more anxiety about what the impacts might be,” Lehman said. “It’s kind of disheartening, because we were starting to really get some momentum on moving projects that were in a big backlog and moving them effectively and efficiently, and so this is just another bump in the highway to keep us from doing that.”

Broader Impacts

Additionally, the report states that in the event of a shutdown, workers at the Environmental Protection Agency and the Department of the Interior would be furloughed, blocking them from issuing necessary project documents.

That “could delay major infrastructure projects across the country due to a delay in EPA and DOI environmental reviews, which would affect multiple federal agency projects,” the White House stated in a recent press release. “In addition, permitting could be disrupted.” 

The Federal Emergency Management Agency’s Disaster Relief Fund is also reportedly almost empty, and if it runs out during the shutdown, its ability to respond to disasters would be hobbled and long-term recovery projects would be delayed further as it waits for new appropriations.

The report adds that the Federal Highway Administration would stay open and construction is expected to continue without interruption for current projects, as the Adminstration uses highway trust fund money, but Lehman stated that rail and transit projects may be a different matter.

Federal transit employees will reportedly be furloughed, meaning that local transit and rail agencies will have to use their own funds to pay contractors, or shut down work completely. Airport construction activity will also reportedly see shutdowns, depending on how the funding is received.

“This will cost money. Ramping down, ramping up costs money. That money has to come from somewhere, so your buying power just got eroded a bit,” said Lehman. “It is a system, and one chink is going to have a ripple through the whole thing … everybody’s going to be impacted on some level.”

During past budget discussions, Congress had relied on a continuing resolution to keep government offices functioning, though certain congressional Republicans say any temporary funding bill is a non-starter, according to the report.

The Republicans are reportedly moving for a shutdown until Congress negotiates all 12 bills that fund the government—an undertaking that typically is not finished until December at the earliest. Despite movement Tuesday night in the Senate, a continuing resolution for short-term funding in the House is reportedly not certain just yet.

Lehman stated that the impacts of the potential shutdown on the building industry are "impossible" to predict.

“The biggest thing that Congress has to grapple with is that markets hate uncertainty. And so, what happens to construction prices after this is over? What happens to contracting prices if companies got caught carrying costs?” She added. “It’s going to cost us time and money, there’s no doubt about that. But what else is it going to cost us?”

The list of potential impacts of the shutdown in the White House’s release include:

  • Threatening vital nutrition assistance for nearly 7 million vulnerable mothers and young children;
  • Forcing servicemembers and law enforcement officers to work without pay;
  • Endangering disaster response;
  • Undermining research on cancer and other diseases;
  • Eliminating head start slots for kids;
  • Risking significant delays for travelers;
  • Undermining public health and environmental protections;
  • Denying capital for small businesses;
  • Delaying infrastructure projects; and
  • Impairing workplace safety and accountability.

The White House stated that these consequences are "real and avoidable"—though “only if House Republicans stop playing political games with lives and catering to the ideological demands of their most extreme, far-right members.”

The White House brief also states that President Joe Biden’s administration believes that it is time for House Republicans to abide by the bipartisan budget agreement that many had voted for, keep the government open and address other urgent needs for the American people.

   

Tagged categories: American Society of Civil Engineers (ASCE); Department of Transportation (DOT); EPA; Federal Highway Administration (FHWA); Federal Railroad Administration; Funding; Government; Government contracts; Health & Safety; Infrastructure; Infrastructure; Jobs; NA; North America; Program/Project Management; Quality Control

Join the Conversation:

Sign in to our community to add your comments.