MADISON - Gov. Scott Walker’s administration is giving up on reconstructing I-94 in Milwaukee between the Marquette and Zoo interchanges in the near term.

The about-face from Walker's team came two weeks after federal authorities warned the state it would pull its authorization for the project if the state didn't come up with a funding plan, according to a document released Wednesday under the public records law.

The development comes soon after the GOP governor signed a state budget that did not include funding for the project, which was expected to cost $1 billion or more.

Transportation Secretary David Ross noted in his Sept. 29 letter to the Federal Highway Administration that it was unlikely lawmakers would bankroll the project soon and that a federal lawsuit has already been filed by opponents of the project. His letter asked the federal government to formally rescind its authorization for the project.

“Without statutory authorization to advance this project, pursuing this litigation presents an unnecessary expense for all parties involved,” Ross wrote.

The Wisconsin Gazette first reported on that letter.

Ross had few choices but to pull the plug. Two weeks earlier, Michael Davies at the Federal Highway Administration sent Ross a letter telling him his agency would revoke its approval for the project if Ross didn't detail a funding plan for it by Sept. 30.

"This action clearly highlights the absence of any coherent plan to rebuild the freeway system in southeast Wisconsin," Craig Thompson, executive director of the Wisconsin Transportation Development Association, said in a statement. "It will diminish investments already made and make it nearly impossible for business to make informed decisions."

Walker had no comment and his office referred questions to the Department of Transportation.

DOT spokeswoman Rebecca Kikkert said in an email that the state's move "has several benefits at this point, including avoiding litigation expenses and clarifying near-term transportation funding plans."

Massive road projects need approval from the federal government for funding and the Federal Highway Administration issued its “record of decision” clearing the way for it last year.

It signed off on the project after Walker sought federal approval for it, saying he planned to fund it in the state budget. But after getting the federal approval, Walker reversed course and decided not to provide initial funding for the job. Republicans who control the Legislature went along with him and left the project unfunded.

Now, Walker’s transportation secretary is telling federal officials he doesn’t want to do the project in the foreseeable future.

Funding for roads held up the state budget for nearly three months, with Walker and legislative Republicans split on whether to hike taxes for roads and how much to borrow for projects.

FULL COVERAGE:Wisconsin state budget

In the end, they did not raise taxes and limited borrowing to about $400 million over two years, much less than in other recent budgets. That spelled delays for the I-94 east-west project and other roadwork.

The project proposed adding an additional lane in each direction of I-94 between 16th and 70th streets.

Cost of building a new eight-lane freeway in the 3.5-mile section was estimated just under $1 billion.

West of 70th St., the freeway is being rebuilt to eight lanes as part of the Zoo Interchange project.

A temporary auxiliary lane that had been built along a portion of the westbound lanes will remain in place for the time being, according to Mike Pyritz, state DOT southeast region communications manager.

The fourth lane extends from 12th St. to 35th St. where it becomes the turn lane to northbound Highway 175.

The state DOT had already spent $20 million on planning for the project, according to Steve Baas, senior vice president for government affairs at the Metropolitan Milwaukee Association of Commerce. MMAC supported construction of the expansion to eight lanes.

"To leave this chokepoint in place is shortsighted and decreases the benefit from the improvements motorists will see in the Zoo Interchange and Marquette Interchange," Baas said.

The Milwaukee branch of the NAACP, a chapter of the Sierra Club and the Milwaukee Inner-City Congregations Allied for Hope in March sued over the project in federal court in Milwaukee. They sought to have an expansion of public transit included in plans to rebuild I-94.

RELATED:NAACP sues to stop Milwaukee County's I-94 east-west project

Dennis M. Grzezinski, attorney for the groups suing, said in a statement: "The transportation agencies' own studies and reports regarding the I-94 expansion project show that spending almost a billion dollars to rebuild that stretch of the highway and adding more travel lanes will not achieve the project's goal of reducing congestion unless regional public transit facilities and services are doubled "

State Sen. Alberta Darling (R-River Hills) said she and state Rep. Joe Sanfelippo (R-West Allis) will ask to meet with Walker about the project.

“We have to make sure our Department of Transportation is cost-effective and efficient,” she said. “We’re not going to find all the cost savings to finish these mega projects.”

She said it was “unfortunate” that the project was put on hold.

“I understand why it happened because there is the lack of consensus on how to fund our roads,” she said. “But I was under the assumption that we needed to continue the projects we started.”

Asked if she thought the project was dead, Darling said: “It’s not dead. It can’t be. It’s too integral to the infrastructure of our state in terms of public safety and economic growth.”

Mayor Tom Barrett said, "The most prudent and fiscally responsible course of action has always been to repave or reconstruct in its current footprint. But the combination of irresponsible alternatives like double-decking, coupled with refusal to adequately fund this, clearly has doomed the project."

In a statement, consumer advocacy group WISPIRG said: "The state has to shift its transportation investment priorities, and scrapping this expansion is the right way to go. Young people today are less car-focused than previous generations, and the Milwaukee region’s aging population will need non-driving alternatives to get around."

State Rep. Daniel Riemer (D-Milwaukee) said there were differences of opinion among his constituents on the project, especially among those who lived near the freeway.

“The vast majority (near the freeway) were not happy, did not want to see either a double-decker or an expansion of the freeway into their community,” Riemer said. “But most wanted to see the freeway reconstructed or repaired.”

“These are not infinite resources,” he said. “We can’t raise taxes, borrow or toll forever."