ACP Pubs

Loren Faulkner

Good News-Bad News
July 1, 2008

Today’s good news for California infrastructure contractors is that yesterday Governor Schwarzenegger signed into law AB1252. This bill expedites the release of $300 million to voter-passed Proposition 1C and Proposition 1B bond projects. This money goes to important infrastructure and housing projects already awarded in the fiscal year 2007-2008 budget.

At the signing ceremony in Sacramento, Governor Schwarzenegger said, “This expedited funding will stimulate our economy, create thousands of jobs and help workers in the construction industry who have been hit especially hard by the mortgage crisis and housing slowdown.” He added, “We are not waiting for the economy to pick up - we are taking action to keep California's economy growing, to keep people working and to keep rebuilding our great state."
                

AB 1252 expedites the following amounts to the Proposition 1C and Proposition 1B bond funds to augment specified appropriations in the 2007-2008 budget:

• $100 million to augment the Regional Planning, Housing and Infill Incentive Account, 19 new projects;
• $50 million to augment the Transit-Oriented Development Account, five new projects;
• $87 million to augment the county portion of the Local Streets and Roads Program; and,
• $63 million to augment the Grade-Separation program

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The bad news is that fiscal year 2008-2009 begins today, but unfortunately, the Budget has not been passed. That means, among other things, that if you are a prime contractor, you still have to pay your sub-contractors and material suppliers – even though you may have to wait months to get your money from the State. Some are saying this impasse could last into September—an expensive proposition.

The following is a public letter written by Caltrans director Will Kempton concerning the budget problem:

As you know, California is facing significant financial challenges as we enter the 2008-09 fiscal year. We are looking forward to the conclusion of budgetary deliberations so that we can work with you in delivering projects programmed in 2008-09 and beyond.

While projects programmed in 2008-09 must be deferred until the new budget is enacted, those projects that have already been awarded under the authorized prior-year budget appropriations can proceed. The California Department of Transportation intends to continue to make progress payments for construction work performed on these contracts. We will continue to monitor the situation and will provide you prior notice if cash reserves will be insufficient for us to make timely payments.

I understand the financial uncertainty that a budget impasse will impose on the contracting industry, and I will continue to keep you informed on the status of our funding capacity.

Let’s hope the state legislatures get their act together and pass this 2008-2009 budget a.s.a.p.

Posted by Loren Faulkner on July 1, 2008 | Comments (0)