Dive Brief:
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Illinois Department of Transportation officials have said the agency will shut down projects across the state and stop payment to contractors if lawmakers can't reach a budget agreement by June 30, the end of the current fiscal year, according to the Chicago Tribune.
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If state legislators fail to pass a budget, work on approximately 700 projects worth $2.3 billion could stop on July 1 and put 25,000 to 30,000 workers out of a job. Lawmakers faced the same challenge last year but managed to pass a stopgap measure that prevented road work from coming to a halt.
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IDOT has already told contractors to delay destructive work so as not to leave the roads in severe disrepair in case of a prolonged shutdown. The inability of Illinois Republicans and Democrats to settle their differences could cost the state $19 million in roadwork shutdown, $2 million to secure and monitor abandoned sites and nearly $2 million to restart work.
Dive Insight:
It was only a year ago that New Jersey was in the same boat. State Republicans and Democrats agreed on a gas-tax hike to recharge the Transportation Trust Fund but disagreed on how to provide taxpayer relief elsewhere in the budget. New Jersey Gov. Chris Christie wanted a significant sales-tax reduction, and when Democrats balked, he declared the TTF empty and shut down about $3.5 billion of state-funded road projects on July 1.
Lawmakers negotiated through the summer, and Democrats came up with a $900 million plan of various tax breaks, but Christie also rejected that proposal. Meanwhile, contractors warned that the necessary mobilization and remobilization costs could reach $24 million. In addition, industry workers expressed concern that prime working weather was passing them by and that they would have trouble surviving the winter if they were not allowed to return to work.
Finally, in October, lawmakers reached an agreement on how to counterbalance the increased gas tax. The result was a phased-in, 0.375% reduction in the state sales-tax rate, the elimination of the estate tax and various other income-tax breaks for retirees, veterans and the low-income residents.
