Despite the current economic crunch, the $53 million construction project along Highway 101 between Milpas and Hot Springs Roads will continue as scheduled — at least for now.

The project came dangerously close to grinding to a halt earlier this month when the contractor in charge of the project, Security Paving Company, received a letter on Jan. 9 warning of a default on payment for the work done between Nov. 20 and Dec. 19. In the following days, the state’s Pooled Money Investment Account Board met in Sacramento to hear testimony on the nearly $400 million price tag of halting the Santa Barbara construction project, as well as nearly 5,000 similar projects across the state funded by proposition 1B.

Gregg Hart, spokesman for Santa Barbara County Association of Governments, said the board’s decision to continue financing the projects buys the 101 project at least another month.

“The PMIA decided to continue to spend the money that was in the accounts, and hopefully there will be a state budget soon that can get this back on track,” Hert said. “This latest news basically guarantees funding through late February.”

Security Paving Company received back payment for services rendered on Jan. 12 and plan to continue construction as scheduled. Hani Jamaleddine, Security Paving’s Project Manager for the Santa Barbara site, claims that all previous delays were weather-related, and as of yet construction has not been delayed due to financing issues.

“We have been paid — so far the state has not withheld any payment,” Jamaleddine said. “The only reason we stopped was for weather delays. We are waiting for the next paycheck now, so we’ll see.”

This massive highway construction project is the largest in Santa Barbara history. It is currently funded primarily by Proposition 1B — which passed 2006 — granting the state government the power to sell nearly $20 billion in bonds to help finance infrastructure projects.

With the flexibility of the state budget in question, however, local law makers are looking to 20-year-old Measure D — a half-cent tax devoted to local infrastructure improvement — as well as federal aid, as a secondary means to finance the project.

“As a fallback option, there’s an unspent balance as we come to the end of the 20-year term of Measure D,” Hart said. “It’s possible that we might be able to borrow money from that measure. Also, a federal stimulus bill could potentially provide the funding to the state. The estimate is that California might get $3 billion, according to what’s been discussed in the house bill.”

The project is scheduled to be finished by Feb. 15, 2011, barring unforeseen weather-related or financial delays. It will include the addition of a third lane along northbound 101 from the Cabrillo exit to the Milpas exit, a third lane along southbound 101 from the Milpas exit to the Hot Springs exit, and the construction of a roundabout along Hot Springs Road.