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Budget woes hinder financing of Arizona highway work

PHOENIX — Financing of highway work around Arizona is being hindered by the state’s budget crisis and resulting cash-flow problems, coming on top of anticipated delays in projects due to slipping tax collections.

The Arizona Department of Transportation announced Wednesday that its contractors will have to wait longer for payments because the department had to repay $110 million in short-term financing early at the request of Treasurer Dean Martin.

Martin has said he legally had to call in the ADOT financing before resorting to short-term borrowing in the past week to pay for a big payment to schools. That short-term borrowing was the state’s first since the Great Depression.

Arizona faces a shortfall in the current budget despite a $1.6 billion fix approved by lawmakers in January. Lawmakers expect to eventually use up to $1 billion of federal stimulus money to keep the budget in the black.

A construction industry group, Associated General Contractors, criticized the development, saying it was “the latest erosion of funding for transportation projects.”

“The construction industry in Arizona is one of the hardest hit by the economy,” said David Martin, president of the group’s Arizona chapter. “To not pay contractors for work that has already been performed is unacceptable. This continual raiding of transportation funds, including those by the Legislature, cannot continue.”

ADOT officials told the state Transportation Board last week that reduced revenue from fuel-tax collections and other sources would require deferrals of numerous construction and repaving projects, including work on such major routes as Interstate 10.

“We are looking at a reduced five-year plan overall,” ADOT Director John Halikowski told The Associated Press on Wednesday.

ADOT said the short-term financing provided by the treasurer acts as bridge between when the state spends money on highway work and when it is reimbursed by the Federal Highway Administration and other sources for that spending.

ADOT said it might have borrow money from other accounts to pay contractors.

“Without this additional operating capital, ADOT contractors and their subcontractors may have to wait longer for payment, affecting working families across the state,” ADOT said. “Early repayment of these funds will impact ADOT’s ability to manage cash flow and does reduce funds available for transportation projects.”

The department noted that the repayment came at a time when the agency is gearing up to launch $350 million of highway projects funded by the federal stimulus program.

Gov. Jan Brewer said Tuesday she had asked the Obama administration to change the stimulus program so that cash-strapped states like Arizona don’t have to advance the money for the stimulus work and get repaid by the federal government.

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