Dear Highway User:

A little discussed cut resulting from the special session held last Friday is a reduction of $30 - $50 million in NDOT’s preservation projects for the remainder of the fiscal year (ending on June 30, 2009).

The cut, proposed by both the Legislature and the Governor’s office, did not technically require legislative approval. The cut removes an additional $50 million from the funding for the I-15 design/build project in AB 544 from the 2007 legislative session. This returns $50 million to the “general fund” to contribute to the $275 million sought in overall budget cuts. The total reversion of the AB 544 money amounted to $106 million of the original $170 million, to address the overall billion dollar shortfall.

The problem with this solution is that the contract for the I-15 work has already been awarded so it technically could not be “cut.” So, in order to pay for the I-15 work, $50 million is being removed from NDOT preservation programs, decimating that maintenance in the coming year.

So, the true cut will come from the Highway Fund!!

In order to ameliorate the situation, the administration proposed the passage of AB 5 which allows the proceeds from $20 million in General Obligation Bonds to be used by NDOT to reduce the $50 million in funding cuts in preservation projects to $30 million.

In order to access these funds, NDOT will have to submit a detailed plan for how the funds will be used to the State Board of Examiners, which will forward its recommendation to the Interim Finance Committee (IFC). IFC is not obligated to take this recommendation so the use of these funds for preservation projects is certainly not guaranteed.

Another issue is that it is unclear is the timing during the next fiscal year when these bond funds will be available. It is possible that it will be close to June 30, 2009, which would essentially eliminate NDOT’s preservation program in FY 2009.

Also not articulated in the bill is how the General Obligation Bonds will be repaid. Will it ultimately be out of the “General Fund” or out of the “Highway Fund”?

Susan Martinovich, NDOT’s Director, prepared a spreadsheet of proposed preservation program cuts. They include repairs to various sections of US 395, McCarran Blvd., US 95 and one project in the south on I-15 north of Logandale. These projects were identified as priority needs through the department’s extensive pavement analysis process and were in the queue for repair in the 2009 fiscal year. Due to this unfortunate timing, the north is getting hit with the bulk of this cut.

The elimination of these maintenance projects in FY 2009 will certainly result in a higher cost to taxpayers. According to the February 2007 NDOT Preservation Report, it cost at least $4 later to fix roads that could have been overlayed in a timely manner for $1.

So, ultimately, this cut will cost all of us far more in the long run. And the further NDOT gets behind in preservation projects, the bigger the ripple effect on cost will be.

The bottom line is that part of the “band-aid” solution applied to our highway funding problem during the last session has been ripped off.

Sincerely,
Nevada Highway Users Coalition