Yesterday afternoon, MDOT’s Chief Operations Officer, Tony Kratofil, notified industry that MDOT, like other state departments, would be implementing temporary layoffs starting next week for a number of their employees due to budget concerns. Mr. Kratofil’s email message included disappointing, but realistic commentary about the significant budgetary impacts the State may suffer due to the COVID-19 pandemic. Mr. Kratofil’s message to the industry, in total, was the following:
As you may be hearing in the news or through other channels, the State of Michigan is implementing temporary layoffs for a number of state employees for a two-week period starting next week.
The COVID-19 emergency and necessary responses to “flatten the curve” of the pandemic to reduce the number of cases and deaths, has resulted in significant economic impacts, which in turn results in significant budgetary impacts for the State of Michigan. Preliminary estimates of the General Fund shortfall are in the range of $7 billion, including a $3 billion shortfall in the remaining months of the current fiscal year and another $4 billion in fiscal year 2021. MDOT will likely see reductions in our dedicated transportation revenues, like gas tax and registration fees, as people are driving 60% less than normal and buying fewer new cars. As part of the 2015 transportation funding package, significant amounts of income tax revenue are being directed to the transportation budget, which may now be needed to help fill the widening gap in the General Fund. Consequently, while MDOT provides critical infrastructure and related services necessary during this emergency response and for the upcoming economic recovery, we are not exempt from these budgetary impacts and we must actively participate in the overall state efforts to address the budget shortfalls.
MDOT has 134 employees who are subject to the temporary layoffs announced today. These include permanent staff assigned to Welcome Centers (the travel information portion of which is currently closed) and other internal support staff whose two-week absence will result in administrative efficiencies while not having significant adverse impacts on delivery of our mission critical programs, projects and services. I don’t expect that any of you should see any dramatic changes in your interactions with the department during this upcoming two-week period. If you do, or if you have any questions, please do not hesitate to give me a call.
With these projected losses in revenues to the state, the $600 million that the Transportation Fund was to receive from the general fund in 2021 (from the Transportation Package of 2015) is severely at risk. Much will depend on how much bailout money the states receive from the federal government and how quickly the economy responds once the “Stay at Home” order is lifted.
In addition, MITA expects that the Governor’s transportation bonding plan, announced earlier this year, will see intense scrutiny from the legislature during these increased budget debates. However, in a webinar earlier this week, Director Ajegba mentioned that the bonding proposal is still moving forward as planned, according to the administration.
Obviously, MITA staff will be making both of these funding decisions a priority.