MODOT Hits a Dead End

The day that the Missouri Department of Transportation (MoDOT) has been warning about for the last three years has come. On June 8, the Missouri Highway and Transportation Commission is expected to approve a plan to slash the transportation department's construction budget in half and cut 1,200 employees.

For the past five years, Missouri's state highway construction program averaged $1.2 billion a year. The new, proposed five-year construction program is only half that amount - about $600 million a year.

"We are facing a transportation funding crisis in Missouri," said MoDOT Director Kevin Keith said. Money from bonds approved by Missouri voters several years ago has been used up, revenues from fuel taxes are down, and federal spending is down with the exhaustion of stimulus funds.

The new plan also calls for reducing the 10 highway districts to seven and closing 135 MoDOT facilities, and selling 740 pieces of equipment. The reductions are expected to save MoDOT approximately $100 million a year, money which will be used to maintain the construction budget at an annual level of $600 million.

"This means the investment that has supported Missouri jobs is in jeopardy," Keith said. "It means the investment that has helped save lives is in jeopardy, and it means the investment that supports Missouri's economy and touches every industry in the state from agriculture to healthcare is in jeopardy."

But the cuts are not a surprise. "We knew this day was coming. We've fallen off of the cliff. We're at the bottom, and now we have to pull ourselves up, scrape the dust off and figure out what we can do to increase funding for transportation," Keith said.

Similar belt-tightening is being seen nationwide.

According to the latest quarterly survey by the American Road & Transportation Builders Association (ARTBA), transportation contractors say they are are working below 75 percent of capacity.

Fifty percent of contractors said they have fewer workers on payroll than last year. Project backlogs, a key indicator of market stability and performance, are down with 56 percent reporting less work in the queue. Similarly, overall capital spending is lower at 49 percent of firms while profit margins are down at 61 percent of companies.

Some of the comments returned on the survey were: "It's worse than ever before in my lifetime. Many competitors have closed their doors. We have been in a four-year downturn with no hopes of turning things around. Most left are just clinging to stay open."

Expectations for the market in the remainder of 2011 are low. "If I don't pick up some contracts soon, I will have to shut down operations," shared one industry executive.

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