As House Republicans press for a fight over federal spending, it is increasingly likely that Congress will fail to pass bills funding federal operations before the start of the new fiscal year, which would shut down the government October 1 Among a number of negative impacts, a shutdown would keep infrastructure projects with federal funding, according to the White House.
The impacts will be wider than expected, according to the president of the American Society of Civil Engineers, Maria Lehman. In today’s complex project financing landscape, even construction that is not fully federally funded will be affected.
“Most projects these days have many different sources of funding, maybe they have a local, state and federal component, maybe a private component, maybe an authority,” Lehman said. “So [a shutdown has] a much greater impact than it might have had in the past in terms of the number of projects that could be affected.”
Some vital government functions are exempt, but most federal agencies would be reduced. For example, the US DOT and other key federal agencies responsible for infrastructure would not be fully operational, meaning new federal projects would largely not begin, awards would be suspended and current projects could be suspended, according to Lehman. Federal agencies also cannot issue new guidelines on how the funds should be used.
This could affect new work in the Jobs and Infrastructure Investment Act, such as the recently announced $7.5 billion in financing of water infrastructures and another $1.4 billion to fund 70 rail and supply chain infrastructure projects
State DOTs, uncertain of future federal funding, may hesitate to authorize new construction projects out of concern that they won’t be reimbursed, which is what happened in the 34 days. Closure of 2019 caused by a dispute on former President Donald Trump’s proposed border wall with Mexico, according to Lehman. She believes that problem would be even more pronounced this time around, since many IIJA programs are new and agencies have no historical precedent to gauge whether they will be reimbursed.
“Because many of these [federal] The programs are new, there’s still more anxiety about what the impacts might be,” Lehman said. “It’s a little discouraging, because we were starting to get some momentum to move projects that had a big backlog and move them effectively and efficiently, so this is just another bump in the highway to prevent us from doing that.”
Broad impacts
In addition, workers at the Environmental Protection Agency and the Department of the Interior would be laid off, preventing them from issuing the necessary project documents.
This “could delay major infrastructure projects across the country due to a delay in EPA and DOI environmental reviews, which would affect several federal agency projects,” the White House said in a news release last week. “In addition, could interrupt the permit.”
Federal Emergency Management Agency The Disaster Relief Fund is almost exhausted and if it runs out during the shutdown, its ability to respond to disasters would be hampered and long-term recovery projects would be further delayed pending new appropriations, according to the White House.
The Federal Highway Administration will remain open and construction should continue without interruption for current projects because they use highway trust fund money, but rail and transit projects are a different matter, Lehman said. Federal transit employees will be laid off, so local rail and transit agencies will have to use their own funds to pay contractors or shut down work altogether. The airport’s construction activity will also see halts, depending on how the funding came in.
“That’s going to cost money. Going down, going up costs money. That money has to come from somewhere, so your purchasing power has been eroded a little bit,” Lehman said. “It’s a system, and one breach will have repercussions throughout the whole … everyone will be affected at some level.”
Congress has historically relied on continuing resolution to keep government offices open while budget talks take place, but hard-line congressional Republicans say The temporary funding bill is a non-starter, according to AP News. They seek a shutdown until Congress negotiates the 12 bills that fund the government, a laborious undertaking that typically isn’t finished until December at the earliest.
The shutdown could affect the construction industry in ways that are impossible to predict, Lehman said.
“The biggest thing Congress has to wrestle with is that markets hate uncertainty. So what happens to construction pricing once this is over? What happens to contracting pricing if companies are caught with the costs?” Lehman said. “It will cost us time and money, there is no doubt. But what else will it cost us?”
