Federal Government Shutdown Disrupting Major Infrastructure Projects Everywhere
By GEORGE DRAPEAU III
WASHINGTON, D.C. (Oct. 15)—With the federal government shutdown now headed into its third week, the Trump administration’s battle with Democrats in Congress for not complying with its budget demands are now being felt on a host of vital projects and programs both in New York State and nationwide. The political warfare began on Oct. 1 when USDOT Sec. Sean Duffy announced in the earliest hours of the federal shutdown that the department would put on hold billions in funding for two major NYC area projects: the long-anticipated extension of the Second Ave. subway into East Harlem and the construction of a new tunnel under the Hudson River to double train traffic between New York and New Jersey.
Other multi-billion-dollar programs that are now stalled include billions for California Hydrogen Hub construction through the Department of Energy and $2.1 billion in Chicago for infrastructure projects funded through the federal office of Management and Budget.
These and other actions were immediately blasted by John L. Downey, general president of the International Union of Operating Engineers in Washington. “Let’s call this what it is: political retaliation at the expense of workers,” he charged. “These are billions of dollars appropriated on projects already moving forward. And simply because they don’t fit a political narrative, they are thrown on the burn pile.”
Mr. Downey noted that the Trump administration “campaigned on ‘American Workers First.’ But instead, they have consistently taken away job opportunities leaving Operating Engineers and thousands of other construction workers scrambling for work.”
The administration’s termination of crucial infrastructure projects funding and the shutdown are also having ripple effects nationwide in Republican districts as well. Other affected projects include $1 billion for the Pacific Northwest hydrogen hub that was expected to create jobs in Republican districts in Oregon, Washington and Montana; $29 million for a new hydrogen fuel cell manufacturing facility; and more than $26 million for two projects in the district of Congressman Mike Lawler (CD-17) in sections of Rockland and Westchester counties. One project, the $19.7 million “methane characterization” project at IBM’s global research headquarters in Yorktown Heights, NY, is among the biggest casualties.
“I’m in New York and I’m a Republican, and obviously this project cancellation impacts my district, so it’s not just Democrats getting impacted,” Mr. Lawler said.
Politico reported on Oct. 7 that New York is getting whipsawed by the Trump administration’s aggressive cost-cutting strategy. It listed about $467 million that is being cut from clean energy projects in New York by the Trump administration, a portion of the $8 billion in Department of Energy grants in mostly blue states, according to the Democratic Congressional Campaign Committee’s calculations.
On Thurs., Oct. 9, New York State Gov. Kathy Hochul called out Washington Republicans for cutting critical safety and security funding for New York’s mass transit system. The Metropolitan Transportation Authority (MTA) had been slated to receive $34 million in federal Transit Security Grant Program funds, which support essential counter-terror and transit security functions. Last week, lawmakers were notified that the MTA was to be the only agency of 21 applicants nationwide to not receive federal security dollars via this program.
She accused the Trump administration of defunding the police. “Since 9/11, New York has relied on federal support to ensure that our transit system has the counterterrorism resources it needs to keep millions of riders safe every single day. The shocking actions of Washington Republicans to slash these funds and defund the police put New York City at risk. We will not tolerate these cuts; New York will take every action available to us — including the courts — to ensure the MTA gets this critical funding to keep millions of riders safe.”
Future delays now threaten tens of thousands of jobs and billions in contracts that will significantly impact New York-based infrastructure contractors, especially those facing delayed timelines and potential job losses, MTA Chairman Janno Lieber explained. While the MTA has a set state-sponsored budget in place, it still relies on federal grants. The freeze is anticipated to affect MTA operations and delay future bids, with uncertainty likely to ripple through the broader economy, particularly in sectors tied to public infrastructure.
In other published reports, New Jersey Republican Tom Kean also denounced the cancellation of federal funding for the Gateway tunnel project but dug in his partisan heals by blaming his counterparts across the aisle in Congress for the shutdown, which is now into a second week.
IUOE’s Mr. Downey offered a different perspective. “Taking advantage of a government shut down to exact revenge from political enemies is unacceptable.” The general president of the 400,000-member labor organization added, “It hurts workers, plain and simple, and Operating Engineers won’t stay quiet while our members are treated like political pawns.”
How Impacted Contractors Can Respond
It’s been a turbulent year for the construction industry. Tariff uncertainties, volatile markets and fluctuating labor costs have prompted new strategies throughout 2025. Now, the federal shutdown adds another challenge to the mix. With billions in funding frozen and project timelines up in the air, contractors are rethinking their approach in several key areas:
Strengthening Financial Management
This level of uncertainty is prompting sharper financial oversight from contractors, as projects that impact financial results are now in question. In any economic climate, the fundamental “tried-and-true” construction financial management tools—cash flow forecasts and project budgets—are essential. These reports will help management identify peaks and valleys in cash flow across projects and the company as a whole, allowing for proactive planning rather than reactive fixes.
Evaluating Liquidity Options
Even with the consensus that the shutdown will eventually be resolved, a prolonged funding freeze would impact operational liquidity. As part of ongoing financial modeling, it’s essential to understand where cash is accessible. The obvious source is working capital lines of credit from banks. Although interest rates are beginning to creep lower, there is still a cost to that capital.
Contractors should evaluate other potential cash sources, including short-term loans from ownership, liquidation of marketable securities or other readily tradable investments and negotiating advance payment from project owners. Some firms may also consider temporarily scaling back discretionary spending or postponing equipment purchases to preserve cash reserves.
Maintaining Communication with Financial Partners
Whether the stakeholders are bonding agents, sureties, bankers or other financial parties, transparent communication regarding the shutdown’s potential impacts could prove critical in maintaining relationships and reinforcing confidence in management. Demonstrating how the business could be impacted and outlining the plan(s) to remediate and alleviate those risks will build support for any short-term help.
What’s Ahead For New York?
City officials have not yet announced emergency funding measures, but the pressure is mounting. With New York’s transit system serving millions or riders daily, any prolonged disruption could have cascading effects on mobility, employment and urban development. Industry leaders are urging Congress to reach a swift resolution as every day of delay costs time, money and public trust. For now, the industry waits—but contractors with strong financial buffers and proactive communication strategies may be better positioned to weather the uncertainty.
–Carl Oliveri/Grassi & Co.
Published: October 16, 2025.
