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Budgetless Illinois Road Construction Shutdown Would Cost $345 Million Per Week

What 'No-Budget Illinois' stands to lose if IDOT has to halt transportation construction projects

June 28, 2017
Here are the sectors that will be impacted

With no state budget in place - again - all highway and bridge construction work will be shut down June 30, according to a June 14 statement from IDOT.

Above: The IDOT Shutdown puts nearly 43,000 Illinois jobs at risk. These are the sectors that will be impacted.

An American Road & Transportation Builders Association (ARTBA) analysis released June 27 finds that a prolonged shutdown of Illinois transportation project sites could cost $345 million per week and jeopardize 43,000 jobs.

The shutdown will stop a planned $2.2 billion in highway and bridge construction spending on 900 active projects with an awarded value of $3.3 billion. IDOT will also be unable to start work on any new projects in FY 2018.

The report comes as Illinois Road and Transportation Builders Association (IRTBA) President & CEO Michael Sturino prepared to testify Tuesday on the floor of the Illinois House of Representatives regarding the impacts the Illinois Department of Transportation (IDOT) shutdown will have on the transportation industry and the state’s economy as a whole.
 
According to ARTBA's analysis, the direct costs of a week-long shutdown include:

Demobilization Costs - At least $20 million in total demobilization costs — this includes one-time costs associated with shutting down project sites to stop construction activity.

Contractors will continue to spend $14 million each week to ensure public safety and maintain existing facilities at the job sites, despite the order to shut down. This includes expenditures for project maintenance and traffic control. These expenditures will continue for the duration of the shutdown and are estimated to be $2 million per day.

Direct Employment Losses - Highway and bridge contractors employed an average of 11,000 workers in 2016. Shutting down projects could displace some of those employees and could put their jobs at risk. These workers collectively earn about $17.5 million each week. As hourly employees, many will not get paid if they do not work. The longer these transportation projects are stopped, the greater the negative impact will be on the rest of the state’s economy as construction workers and firms have reduced income.

GDP Loss - An estimated $127 million in construction work would have been completed on the identified projects the week of July 1—outside of the direct costs that contractors will incur to maintain their site. This construction work supports $331 million in purchases through other sectors of the Illinois economy, adding $171 million to the state’s Gross Domestic Product. Although some of that spending will still occur next week, a prolonged shutdown will weaken that economic impact as contractors cut back on orders for materials, equipment and supplies.

$2.2 billion in annual highway and bridge construction spending adds up to over $5.7 billion in total economic output for Illinois businesses and adds nearly $3 billion to the state’s GDP.

Support Employment Loss - Construction spending on the affected IDOT projects supports an additional nearly 43,000 jobs through the major sectors of the economy, including manufacturing, healthcare and retail. 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.

Taxpayer Loss - A month of delay can raise project costs by 1% to 1.5%

Illinois Lockbox Amendment

The newly-added section to the Illinois Constitution, Section 11 of Article 8 -- the Lockbox Amendment that received overwhelming public support, should have provided Illinois citizens and businesses the certainty that Illinois’ valuable transportation infrastructure will not face the neglect it has received in the past. The amendment requires transportation-related revenues to be expended solely upon transportation-related expense.
 
“The current budget impasse is frustrating not only those in the transportation industry, but also to all of those voters who expected that transportation funds would be secured, and that those funds would be expended on improving our state’s economy. Providing an IDOT appropriation is required to serve the public interest,” Sturino said.
 
“Let me be clear – the shutdown is already happening, and it has major costs associated with it. Contractors and engineers, in consultation with IDOT, are engaging in proper procedures in preparation for the shutdown, including safety and traffic control, erosion and sediment controls, environmental stabilization, relocation of idled equipment, and removal of all construction debris,” Sturino added.

“Illinois has not made any significant increases to transportation funding since 1991, resulting in a 40 percent loss in buying power for transportation investments. The voters of Illinois sent a loud and clear message about the importance of proper transportation funding when they passed the Lockbox Amendment last November. It’s time to listen to their voices and get Illinois moving again.” Sturino said.

To view the full report on the long-term economic impact of the IDOT shutdown, visit the “Economics” section of www.artba.org and click on “Research.”

Chart: ARTBA

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