Sunday, July 31

Obama Stimulus gone wrong: SCDOT can't pay its bills on time

The national and regional media are focusing on the federal government’s debt ceiling crisis, making points about who will get paid and who will not get paid if a deal is not reached before the August 2nd deadline.  That is a real story.

But, government is apparently already having trouble paying its bills.  Sources tell VUI that the South Carolina Department of Transportation is 60 to 90 days behind in paying contractors for paving projects.  Such sluggishness in the paying the bills comes in the heart of  “paving season,” that is the time of year in which paving can relatively easily be done.  As fall and winter approaches, such paving ends.

Now, how are sluggish payments affecting South Carolina roads?  Put bluntly, contractors, and their sub contractors pay for equipment, supplies and labor up front.  The longer the state takes to pay them, the more stretched everyone in the chain of money becomes.  As the days waiting for payment drag on, sub contractors are the first to fold, then contractors simply have to shut down their work.  When that work shuts down, projects on roads such as Interstate 385 and 26 will simply end.  Secondary road work soon follows.

How is this happening?  Well, it appears that the State of South Carolina ordered considerable road work counting on money from the federal government via President Obama’s shovel ready part of his stimulus package.  The state contracted with companies to do work that it thought it would get from the federal government in part to pay for.  The problem is, the federal payments to the state have not happened.

That has left the South Carolina Department of Transportation and the contractors who do business with it in a bind.  One source told VUI that the SCDOT has even went to the South Carolina Budget and Control Board and asked for a temporary loan of $50 million to pay contractors.  Another source made it clear, that without payment, his business would have to stop working on state projects altogether.  Various politicians know about this situation and are trying to help the unpaid contractors, but without the money, their efforts seem fruitless.

It is one big mess.  One that is before any fallout from the debt ceiling crisis.  South Carolina is having a hard time paying its bills to private contractors.  Blaming the federal government will be easy to do.  Whomever is to blame, there is a good chance private contractors can not go on paving in the paving season this year.  One thing is for sure, those private contractors are not to blame.  They can not be expected to work for free.

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