With a federal government shutdown likely to stretch into the weekend, New York’s construction sector is bracing for significant disruption. Approximately $18 billion in federal infrastructure funding is now frozen, impacting two of the city’s largest and most critical transit projects: the Hudson Tunnel reconstruction and the Second Avenue Subway extension.
Major NYC Infrastructure Projects at Risk
These high-profile transit projects represent billions in construction contracts and tens of thousands of jobs across the region:
Hudson Tunnel Project
Part of the Gateway Program, this $17.2 billion initiative, which received more than $11 billion in federal grants, is a critical rail link between New Jersey and Manhattan. The project is designed to modernize aging infrastructure and improve the commuting experience. The tunnel, damaged during Superstorm Sandy, is considered vital to the Northeast Corridor’s economic health.
Second Avenue Subway Extension
A long-awaited and needed expansion into East Harlem, this project promises to bring improved transit access to over 100,000 residents, with Phase 2 of the project costing an estimated $2 billion. Though construction had been ramping up with federal support, the shutdown has paused reimbursements and furloughed key Department of Transportation staff.
With federal support paused, contractors involved in these projects may be left with uncertainty regarding operations and cash flow.
Economic and Operational Impacts of the Shutdown
It goes without saying that the funding freeze would significantly impact New York-based infrastructure contractors, especially those preparing for delayed timelines and potential job losses. While the Metropolitan Transportation Authority (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.
Strategic Next Steps for Impacted Contractors
Much like other challenges the construction industry has grappled with in 2025, there are steps contractors can take now to brace for an extended shutdown:
Financial Management Best Practices
This level of uncertainty demands sharper financial oversight from contractors, especially if projects that impact financial results are now in question. In any economic climate, the “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.
Access to Liquidity
Even with the consensus that it will eventually be resolved, a prolonged shutdown would impact the liquidity from operations. 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 the bank. Although interest rates are beginning to creep lower, there is still a cost to that capital. Contractors should evaluate other potential sources of cash, including short-term loans from ownership, liquidation of marketable securities or other readily tradable investments and negotiating advance payment from project owners.
Communicating with Financial Partners
Whether the stakeholders are bonding agents, sureties, bankers or other financial parties, transparent communication regarding the potential impact of the shutdown will go a long way 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: Construction Outlook Amid Shutdown
City officials have not yet announced emergency funding measures, but the pressure is mounting. With New York’s transit system serving over 3 million 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.
Support in a Shifting Infrastructure Landscape
Grassi’s Construction advisors are closely monitoring the shutdown’s impact on infrastructure funding and contractor operations. For firms involved in federally funded projects — or planning to bid on upcoming work — this is a critical time to assess financial exposure, liquidity planning and strategic response.
To learn how Grassi can help your business navigate a changing environment and maintain financial resilience, contact Carl Oliveri, Partner and Construction Practice Leader.
Frequently Asked Questions
How is the federal government shutdown affecting New York infrastructure projects? The shutdown has frozen approximately $18 billion in federal infrastructure funding, directly impacting major transit initiatives like the Hudson Tunnel and Second Avenue Subway extension. These delays are expected to disrupt contractor timelines, pause reimbursements and stall future bids.
What financial strategies should construction firms consider during the shutdown? Contractors should revisit cash flow forecasts and project budgets, evaluate liquidity sources such as credit lines and short-term loans and communicate proactively with financial partners to maintain stability and prepare for short-term disruptions.
What liquidity options should contractors evaluate during a funding freeze? Contractors should assess all available sources of cash, including working capital lines of credit, short-term loans from ownership, liquidation of marketable securities and advance payments from project owners. Understanding the cost and accessibility of each option is essential to maintaining operations during uncertainty.
How can financial reporting tools help contractors manage through uncertainty? Cash flow forecasts and project budgets are essential tools for identifying financial risks and planning proactively. These reports help contractors understand where cash flow may fluctuate and allow for strategic adjustments.
