$133m shortfall cited on Big Dig
Cahill describes financial woes
By Raja Mishra and Andrea Estes, Globe Staff | August 9, 2006
A freeze in federal highway funds has created a $133 million shortfall in the Big Dig's budget, and spending on the project threatens to siphon funds from other public works projects around the state, according to state Treasurer Timothy P. Cahill.
In a three-page letter delivered yesterday to Governor Mitt Romney, Cahill said that in addition to the $133 million shortfall, he discovered that the Turnpike Authority collected $67 million less than expected from a recent real estate deal and that the state diverted another $40 million in Turnpike funds to pay for a commuter-rail extension to Hingham.
Cahill suggested the overall cost of the Big Dig may exceed the widely-used $14.6 billion price tag. He called the Big Dig's financial situation troubling and demanded that Romney explain how the state will address the project's finances.
``I am concerned that the Big Dig, in its final stages, will become an increasing financial burden on the Commonwealth and detract from other critical statewide road and bridge maintenance initiatives," Cahill wrote. ``There is legitimate concern . . . that the Turnpike Authority has not budgeted enough money to fully pay for the finished Central Artery Project."
The cost of repairs stemming from the fatal July 10 ceiling collapse in the Interstate 90 connector tunnel remains unclear. Extensive repairs in the tunnel, where car passenger Milena Del Valle was killed by falling concrete, have yet to commence. Meanwhile, Romney is preparing an exhaustive ``stem to stern" audit of the entire Big Dig, which could uncover other costly problems.
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Romney and law enforcement and transportation officials say that repair costs may be covered by lawsuits against Big Dig contractors and by insurance policies. But money from lawsuits and insurance claims could take years to secure, and Cahill said he is concerned that the Central Artery Project's cash flow problems could tempt state officials to siphon money from other projects to cover immediate costs.
Telling Romney that on the Big Dig ``all roads now lead to you," Cahill asked the governor for a full accounting of how the state will cover the project's costs. The Legislature gave Romney oversight of the project shortly after the ceiling collapse , and the governor forced out Turnpike chairman Matthew J. Amorello last month.
Romney spokesman Eric Fehrnstrom said yesterday: ``Just as we're finding problems with the construction of the project, we may very well find gaps and holes in the financing. If that is the case, the people of Massachusetts can trust Governor Romney to make full disclosure and to work constructively on solutions."
The Romney administration has not been able to scour the Massachusetts Turnpike Authority's books and doesn't expect to see them until after Aug. 15, when Amorello is scheduled to leave office, a Romney aide, who refused to be identified, said yesterday.
Cahill, a Democrat, refused to comment for this report.
The concerns arise at a sensitive time for the state: Cahill is planning to sell $500 million in bonds later this month to raise money for various state projects. By federal law, he must fully disclose the liabilities faced by the state, including the Big Dig's woes, so investors get a full picture of Massachusetts' finances.
Cahill's letter was also sent to Attorney General Thomas P. Reilly, Speaker of the House Salvatore F. DiMasi, Senate President Robert E. Travaglini, State Auditor A. Joseph DeNucci, Romney budget aide Thomas Trimarco, inspector general Gregory W. Sullivan, and comptroller Martin J. Benison.
In the letter to Romney, Cahill explained that he examined Big Dig finances as part of his preparation for the upcoming bond sale.
Cahill said that the Big Dig has a $133 million ``cash flow disruption" stemming from problems with the Federal Highway Administration. The federal agency last year froze $81 million in funds, saying the Turnpike Authority needed to explain how it would fix the numerous leaks in Big Dig tunnels and how much the repairs would cost. The Turnpike Authority, in the meantime, had spent $52 million on the assumption it would get the federal money. Now, having spent the $52 million and still not getting the $81 million it was expecting from the federal government, the agency is $133 million in the hole.
Cahill also found that a Transportation Infrastructure Fund created by the state to cover some Big Dig costs currently has a negative balance after $40 million was diverted from the fund to pay for the Greenbush MBTA commuter rail extension to Hingham.
Cahill's letter does not say exactly what projects the $40 million was originally meant to finance. Nor does he say who diverted the money, and his staff said yesterday they had not been able to identify the responsible parties.
To raise cash for the infrastructure fund, the Turnpike Authority recently counted on selling its Kneeland Street office building for $100 million but was only able to fetch $33 million on the market, the Cahill letter says. With less money in the fund to invest, the Turnpike Authority has not been able to realize interest returns it had anticipated, causing even more of a shortfall, the letter said, not specifiying an amount.
Cahill also wrote that the Big Dig contingency fund, meant to cover emergencies like the July 10 ceiling collapse, has been ``nearly depleted and certainly not at the level that the Legislature is relying on." After Del Valle's death, many lawmakers on Beacon Hill estimated that the fund held about $160 million. It has $20 million, Cahill's aides said.
Frank Phillips of the Globe staff contributed to this report. Raja Mishra can be reached at
rmishra@globe.com.
? Copyright 2006 Globe Newspaper Company.
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This won't help the situation at all. How will the government fix this problem? They either shortchange other projects to finish the Greenway, or they somehow pull together other funds, which I don't see where they would come from, because the public is not going to want to put that kind of money into this mess.