Transportation Project Delays Could Have Major Impact on Contractors

Bullock’s proposed budget calls for state to postpone awarding $127 million for construction projects

By Justin Franz
Construction on the Kalispell Bypass . Beacon File Photo

The state’s roadways could be a lot quieter next spring after the Montana Department of Transportation announced that it would delay awarding road construction contracts worth more than $127 million until at least May.

Gov. Steve Bullock is proposing the delay to help cover a shortfall in the 2017 budget, but transportation and infrastructure advocates say the decision to postpone road projects could have major repercussions for the state economy.

“This is going to have a huge impact on the construction industry and other small businesses,” said Cary Hegreberg, executive director of the Montana Contractors’ Association. “This is going to be a big blow.”

Traditionally, MDT puts road projects up for bid in early winter so that by the time the ground thaws, construction companies are ready to roll. But this year, because fuel tax revenues were lower than expected, MDT will hold off putting some projects up for bid unless the Legislature acts.

MDT officials say bids for 30 projects will be delayed. The only one that will be impacted in the northwest corner of the state is a pavement project near Seeley Lake. Projects like the construction of a new bridge on U.S. Highway 2 over the South Fork Flathead River near Hungry Horse are expected to proceed uninterrupted, said MDT District Administrator Ed Toavs.

Delaying the bid process means that the road projects might not begin until late summer or possibly 2018.

“None of these 30 projects are going to be canceled for good, but they may be delayed because we just don’t have the money for them,” said MDT Director Mike Tooley. “We’re going to do what we can with the budget we’re given.”

Hegreberg said some construction companies are already warning employees that they may not get called back in the spring and that they are delaying or canceling new equipment orders. Hegreberg said it’s particularly frustrating because most of the money for Montana’s road projects comes from the federal government. If the state can’t contribute its portion — in this case about $14 million — the money goes elsewhere.

“We’re sending federal highway funds that have been set aside for Montana back to Washington D.C. where it’s just going to be given to other states,” Hegreberg said.

Hegreberg said for every $1 million spent on road construction, 28 jobs are directly or indirectly supported.

Darryl James, executive director of the Montana Infrastructure Coalition, said the Legislature should make it a top priority to cover the MDT budget shortfall early so that construction projects can move forward as soon as possible. He said Montana also risks losing well-trained road builders if the state does not resolve its budget problems, adding that the state has lost 1,900 construction jobs in the last 12 months. He pinned much of the blame on uncertainty in state funding.

“These workers will go elsewhere,” he said. “We’re losing a well-trained labor force because of this.”

“This cannot wait,” he added.

James said in the long-term it’s critical for the state to increase its fuel tax, which often helps cover the funds needed to match federal grants. Montana’s fuel tax is currently set at 27 cents a gallon. The last time the Legislature raised the tax was in the 1990s.

The MDT funding shortfall is already shaping up to be a contentious issue for the 2017 legislative session. On Dec. 16, Republican leaders in the Montana Senate proposed scrapping Gov. Bullock’s statewide preschool program in order to get the highway projects out to bid. Bullock said there were other ways to get the projects funded.

“We’ve got some hard decisions to make as we look to pass a responsible budget in 2017, but pitting 4-year-old Montana kids against funding for highway infrastructure is not a constructive way to begin those conversations,” Bullock said in a statement to the Associated Press.

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