Deepening state budget deficit forces layoff of 115 ADOT staff

PHOENIX, AZ (November 19, 2009) — Because of the ongoing and deepening State of Arizona fiscal deficit, the Arizona Department of Transportation is forced to implement a series of layoffs as part of its roadmap to reduce expenses and balance a budget ravaged by declining transportation revenue and legislative transfers.

On June 3, ADOT Director John Halikowski sent a letter to the Arizona Legislature that was read on the floor of the House of Representatives warning lawmakers of a “perfect storm” created by the state’s plan to use transportation dollars to pay for other state needs at a time when less money coming in from fuel taxes and vehicle sales has meant a big drop in transportation revenue.

With state transportation funding depleted by $500 million in fund transfers and continued declines in transportation revenues, ADOT last month announced its budget roadmap for fiscal year 2010 to address a $100 million shortfall through steps that include the temporary closure of most highway rest areas, a plan to shutter a dozen Motor Vehicle Division offices, and a reduction in roadway maintenance.

This week, 90 ADOT staff members were notified that they were the first to be laid off. The staff who are being forced to depart are primarily in MVD customer service roles – the very professionals who last year kept office visit times to a statewide average of 23 minutes for 4 million customers.

Additional layoffs, following a review by the Arizona Department of Administration, will occur before the end of 2009 as part of ADOT’s published budget roadmap, a comprehensive plan to account for the revenue declines and $500 million transfer of transportation funds over the past two years by lawmakers. The layoff plan totaling about 115 employees is expected to save $6 million annually.

Spurred by the state’s $2 billion budget deficit, these layoffs are separate from future legislative cuts that may attempt to balance the state budget. Future reductions in transportation funds, if enacted, will require further cuts in both operations and personnel. With dedicated funding primarily from the vehicle license tax and gas tax, transportation programs in Arizona are designed to be self funded. Transfers over a series of years, amplified as the budget crisis worsened, have siphoned away these dedicated dollars, leaving ADOT financially constrained and severely challenged to deliver public services.

Customer service has been a significant focus for ADOT in recent years. So far in the 2010 budget year, office visit times are averaging just under 25 minutes; last year, the average visit was 23 minutes. The statewide increase reflects the reduction in staffing before layoffs. On the phone, the wait time is currently comparable – about 23 minutes. Layoffs could contribute to longer waits for all customers.

In general, MVD customer service staff has been reduced by one-third due to vacant positions or layoffs. Currently, there are 61 field offices with 12 planned to be closed pending federal review.   Separated employees will be compensated for accrued leave time but there is no severance payment. Employees will have two weeks before their final day with ADOT.

Across the agency, ADOT is down about 480 staff members – more than 10 percent of the total workforce and many of those are in front-line customer service, operational support, engineering and technical roles. These necessary layoffs further hamper the department’s ability to meet motor vehicle service needs across the state while providing the diverse planning, construction and maintenance duties for the state’s highway network.

In light of these reductions in customer service, there are options. Residents can conduct a range of online transactions through www.ServiceArizona.com or by visiting one of more than 140 third-party vendors statewide. Visit www.azmvdservices.com to find locations providing MVD services.

“At a time when the people of Arizona are demanding better and faster service, and in an economy that desperately needs to retain jobs, this was a difficult decision like all of our budget reductions,” said Halikowski. “My thoughts and prayers are with the employees and families impacted by this event.”

“The reality of our budget leaves few options. This is a perfect storm – our revenues are down, we are suffering from the use of state transportation funds for other purposes, and the needs of the state are not decreasing. As I have often said, ADOT stands ready to do its part to help balance the state budget, but the key word is ‘balance’. Continued reliance on transportation funds to balance the budget will only harm the future of Arizona's infrastructure system which is a vital component in resuscitating and growing our state’s economy.”

Because of the correlation between a strong transportation network to economic growth and improved quality of life, the diversion of dedicated transportation funding has implications broader than potholes, snowplowing or rest areas. Arizona’s transportation needs fall far short of resources, a challenge requiring deliberative action and reform to protect economic sustainability, international trade, tourism, and current and future quality of life. 

Concurrent with layoffs and other budget reductions, MVD and other groups within ADOT continue to implement efficiencies to consolidate operations, streamline existing processes, eliminate some current responsibilities, and adapt to functioning with significantly fewer staff.

ADOT continues to explore public-private partnerships, legislative changes, alternative funding sources and other options for supporting the state’s transportation budget to be good stewards for the taxpayer.

Like most state agencies, ADOT has been under a hiring freeze since 2008. It has cut operational and highway maintenance expenses, deferred maintenance and construction projects and, last year, also implemented agency-wide furloughs two days per month for all employees to address budget shortfalls.

This layoff plan and ADOT’s budget roadmap do not address Governor Jan Brewer’s request to conceptualize 15 percent budget reductions or current special session action. Should such a plan be implemented this late in the fiscal year, ADOT would be forced to shed more than 50 percent of its workforce, close most MVD field offices and rest areas, and address only critical maintenance needs.