California Halts Public Infrastructure Projects

By Loren Faulkner | September 28, 2010

What California Treasurer Bill Lockyer warned of two weeks ago has now arrived. The state’s fiscal crisis — a nearly $14 billion current deficit, that will balloon into a $42 billion shortfall in 18 months — has forced officials to halt loans to most on-going public works projects.

Here is the situation at this moment, according to Lockyer’s assessments:

  • $4 billion in loans for highway projects and other public works (including schools) will cease, at least until June
  • $660 million per month for infrastructure projects will stop
  • 2,000 infrastructure projects will be halted immediately
  • $16 billion is the value of all the projects that include highways, levees, hospitals, schools, etc.
  • 200,000 construction related jobs will be lost (Lockyer estimates)
  • $12.5 billion revenue that would have come from private industry sources will be lost

California’s legislature has been called into an emergency session to deal with the crisis deficit but as yet has not reached a solution.

"Without a budget solution, state financing of infrastructure projects will stop. It’s as simple, and dire, as that," Lockyer said in a written statement last week. "Highway projects, school construction and other vital work in communities across California will be delayed or not even break ground.

"Our ability to give our struggling economy a much-needed shot in the arm will be crippled. Tens of thousands of new jobs, potentially hundreds of thousands, will be lost. Thousands more existing jobs will vanish if projects already under construction are delayed. Businesses will lose billions of dollars in contracts. Our economy will lose billions of dollars in output. And to top it off, our budget will lose millions of dollars and be in even worse shape.

"The only way to avoid this economic and fiscal nightmare is to produce an honest, sustainable and balanced budget – not next month, or three months from now or next June – now."

Heavy/highway industry contractors have been bidding much more on public works jobs for months since the private and housing markets have been hard hit by economic woes. This new development will cause immediate hardships to that sector, according to industry sources.