Today, Governor Bobby Jindal announced a new cash management plan developed by the Department of Transportation and Development (DOTD) that will free up $120 million in cash within the state's transportation system to accelerate road work all across Louisiana. Governor Jindal made the announcement in Lafayette and stressed that the new cash management plan builds off of his administration's continued commitment to improve the state's transportation infrastructure. Since Governor Jindal entered office, a total of $3.36 billion in state and federal funds has been invested in the state's roads -- more than Louisiana's last three governors combined over the same period of time.
Governor Jindal said, "While we have already invested an historic amount of funds into our state's transportation system, we know this must be a continuing commitment, as part of our mission to further grow our economy and create more jobs for our people -- especially during these challenging national economic times. This $120 million investment will not only support construction workers, but also make much-needed improvements to our roadways, while making more efficient use of our transportation funds. During these times of tighter budgets, we absolutely must make every dollar count. This new DOTD cash management plan is smart, efficient, and an important boost to our economy."
Louisiana Associated General Contractors CEO Ken Naquin said, "We commend Governor Jindal and his administration for bringing this forward and we look forward to working with them to repair these roads and bridges. The state needs it, our roads and bridges need it, and the construction industry needs it. We recognize too that ultimately we will have to look at the way we now fund the grid and find a better way to provide predictable, stable funding for the transportation needs of the state."
DOTD identified $120 million in cash balances that can be used to advance construction projects from their original bid dates. Governor Jindal said that gasoline revenue projections vary year-to-year, and therefore revenue is often over collected when compared to the projected budget and there are typically un-used operational funds. This results in an undesignated fund balance, which does not become available until the funds are approved in the next year's budget.
In fiscal year 2010, the approved undesignated fund balance for transportation is $40 million. Governor Jindal said DOTD will also request that the legislature approve the remaining $40 million in the undesignated fund balance in HB2 in the 2010 session--for a combined total of $80 million. (Note: Projects can still be let even before the session although expenditures for those projects will not be paid until the appropriation is made.)
The $80 million has been set aside in the Treasury to match federal funds in Fiscal Years 2011 and 2012. However, through this new plan, Governor Jindal said the state is choosing to bank these funds in construction projects, rather than in the Treasury.
The Governor said this technique is known as Advance Construction. 100 percent of state dollars will be used on federal aid projects that will be reimbursed when the job is actually programmed, or the advanced project can match future federal funds.
Governor Jindal said there is another $40 million in Transportation Trust Fund (TTF) dollars banked in the Treasury today that is typically used as a "seed fund" to make expenditures for capital projects. Instead, under the new plan announced today, the state will also use this seed money for Advance Construction -- generating a total of $120 million the state can use to speed up work on transportation projects across Louisiana.
Governor Jindal said, "This $120 million in newly identified cash for road work means there will be more work for contractors to bid on in 2010, which will protect jobs in Louisiana and improve more of our roads at the same time. This new cash flow plan also allows the state to take advantage of favorable prices and bids that have been consistently low over the past several months."
Under the new cash management plan, DOTD will swap out federal funds for TTF dollars in Fiscal Years 2011 and 2012, leaving the appropriate state match in place. In effect, Governor Jindal said $120 million of existing projects in the three-year state capital program will be bumped up to years one and two.
The Federal Highway Administration has given the state approval on this plan for projects that are already in the state's three-year transportation plan. To undertake projects as soon as possible and have the maximum effect on the economy, DOTD's criteria for this program stipulate that the road projects must be:
* Already in the Highway Priority Program
* In the State Transportation Plan
* Shovel-ready -- meaning all right-of-way, environmental, and design is complete and the projects can be let before the end of fiscal year 2010
Governor Jindal highlighted three projects in the Lafayette area that will be funded with this new plan as well as other key projects across the state.
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