As House Republicans force a fight over federal spending, it’s looking increasingly likely that Congress will not pass bills that fund federal operations before the start of the new fiscal year, which would shut down the government on Oct. 1. Among a slew of negative impacts, a shutdown would hold up federally funded infrastructure projects, according to the White House.
The impacts will be wider-ranging that one might expect, according to American Society of Civil Engineers President Maria Lehman. In the current landscape of complex project funding, even builds that aren’t fully federally funded will be impacted.
“Most projects these days have lots of different funding sources, they maybe have local and state and federal, maybe a private component, maybe an authority,” said Lehman. “So [a shutdown has] a much bigger impact than it might have been in the past as far as the number of projects potentially that could get hit.”
Some vital government functions are exempt, but most federal agencies would be curtailed. For example, the U.S. DOT and other key federal agencies responsible for infrastructure would not be fully operational, meaning new federal projects would largely not get started, awards would be suspended and current projects could be put on hold, according to Lehman. Federal agencies are also unable to issue new guidance on how funds should be used.
That could impact new Infrastructure Investment and Jobs Act work, such as the newly announced $7.5 billion in financing for water infrastructure 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 over worries they won’t be reimbursed — that’s what happened in the 34-day 2019 shutdown triggered by a dispute over former President Donald Trump’s proposed border wall with Mexico, according to Lehman. She thinks this problem would be even more pronounced this time around, since many IIJA programs are new and agencies don’t have a historical precedent to use to gauge whether they’ll be reimbursed.
“Because a lot of those [federal] programs are new, there’s even more anxiety about what the impacts might be,” Lehman said. “It’s kind of disheartening, because we were starting to really get some momentum on moving projects that were in a big backlog and moving them effectively and efficiently, and so this is just another bump in the highway to keep us from doing that.”
Wide-ranging impacts
In addition, workers at the Environmental Protection Agency and the Department of the Interior would be furloughed, preventing them from issuing necessary project documents.
That “could delay major infrastructure projects across the country due to a delay in EPA and DOI environmental reviews, which would affect multiple federal agency projects,” said the White House in a press release last week. “In addition, permitting could be disrupted.”
The Federal Emergency Management Agency’s Disaster Relief Fund is nearly depleted and if it runs out during the shutdown, its ability to respond to disasters would be hobbled and long-term recovery projects would be delayed further as it awaits new appropriations, according to the White House.
The Federal Highway Administration will stay 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, according to Lehman. Federal transit employees will be furloughed, so local transit and rail agencies will have to use their own funds to pay contractors, or shut down work altogether. Airport construction activity will also see shutdowns, depending on how the funding came in.
“This will cost money. Ramping down, ramping up costs money. That money has to come from somewhere, so your buying power just got eroded a bit,” said Lehman. “It is a system, and one chink is going to have a ripple through the whole thing … everybody’s going to be impacted on some level.”
Historically, Congress has relied on a continuing resolution to keep government offices functioning while budget talks are underway, but hardline congressional Republicans say any temporary funding bill is a non-starter, according to AP News. They are pushing for a shutdown until Congress negotiates all 12 bills that fund the government — a laborious undertaking that typically isn’t finished until December at the earliest. Despite movement Tuesday night in the Senate, a continuing resolution for short-term funding in the House is anything but a done deal.
The shutdown could hit the building industry in ways that are impossible to predict, Lehman said.
“The biggest thing that Congress has to grapple with is that markets hate uncertainty. And so, what happens to construction prices after this is over? What happens to contracting prices if companies got caught carrying costs?” said Lehman. “It’s going to cost us time and money, there’s no doubt about that. But what else is it going to cost us?”
Editor’s note: This story was updated with information about a tentative short-term funding deal in the Senate.
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