Maine News: No short-term fix for MaineDOT highway program
Investment shortfall affects design, reconstruction and paving
By DOUGLAS ROOKS
When the legislature adjourned in June without approving any new borrowing proposal to fill a $130 million shortfall in the Maine Department of Transportation’s (MaineDOT) highway and bridge program, predictions of a major slowdown in construction were not hard to find. A Governor’s Working Group had recommended finding $30 million in cash and borrowing $60 million to partially fill an estimated $130 million shortfall in the Biennial Capital Work Plan, MaineDOT’s bedrock plan for statewide projects. In all, 143 projects affecting 112 municipalities were put on hold in November 2005.
Despite the Working Group’s recommendations, a supplemental budget agreement concluded among legislative leaders ruled out borrowing, even a proposed revenue anticipation GARVEE bond. So the $30 million — $15 million each from the General Fund and Highway Fund — in the end was all MaineDOT had to work with.
The project restoration list released in early September includes 28 state-only projects, plus another 10 that fall under the jurisdiction of Maine’s four Metropolitan Planning Organizations in the Portland, Lewiston-Auburn, Bangor and Kittery areas. As state officials are quick to note, however, many of the restored projects have been sharply reduced in scope, with several of them converted from reconstruction to maintenance paving. “The needs are staggering,” said MaineDOT Deputy Commissioner Greg Nadeau, acknowledging that even the revised deferral list falls well short of existing and future needs.
What the money does
While a significant portion of the deferred projects received new funding, very few will take place in anything like their original form, said MaineDOT Acting Director of the Bureau of Planning, Dale Doughty. In all, just over $20 million has been returned to the state BTIP plan and $2.5 million to the MPOs; about $5 million went to beef up the paving budget; and the balance to other needs. Two bridge projects have new funding allocated to them — the North Turner West Bridge over the Androscoggin on Route 219 between Leeds and Turner ($4.4 million), and another Route 219 bridge in Leeds ($2 million). Both of those bridges are still in the design stage, however.
Those traveling Route 126 in Pittston also will see a $2.6 million reconstruction project for 2.55 miles of road resume, although it, too, is still in the design stage. Quicker reconstruction should occur on Route 186 in Gouldsboro on a 3.04-mile section selectmen there described as nearly impassable in frost heave season; that project is allocated $2.75 million. And a three-quarter- mile section of Routes 9/126 in Monmouth that lies between two previously reconstructed sections also will be put on the fast track, at a cost of $733,500.
More typical of the project restorations are sections of Route 9 in Sabattus and of Route 109 in Wells. Both were downgraded from major reconstruction projects to maintenance paving. The two Route 9 projects would originally have taken more than $11 million in design and construction funds; they are now allocated about $600,000 for paving, which should last six to eight years, Doughty said. On Route 109, MaineDOT had been looking to spend $7.4 million overall, but will now allocate about $300,000 in new money for paving. Taking this action now, he said, could somewhat delay these road sections’ chances for future reconstruction funding, but given the length of the process, “It isn’t really going to be that long before we’re looking at them again,” he said.
The MPOs took somewhat different approaches to the projects in their areas. The Portland Area Comprehensive Transportation Committee (PACTS) restored six deferred projects and offset construction inflation for four others, using $1.3 million from the state and $325,000 in local funds. The Androscoggin Transportation Resources Center (ATRC) restored three projects with $550,000. The Bangor Area Comprehensive Transportation System (BACTS) decided to use its $500,000 to beef up seven existing projects, while the Kittery Area Comprehensive Transportation Study did the same with $150,000 for a single project for which the federal funding had been cut.
The overall reason for the deferrals, and the small scale of the restoration, remains the soaring cost of construction at all levels, Greg Nadeau said. “Anything that’s dependent on energy is affected,” he said. “And that includes asphalt, steel, concrete — all the basic elements that go into highways and bridges.” While construction prices have been rising about twice the rate of overall inflation for the last several bienniums, the past two years have seen a huge spike — at least 10-12 percent a year. Doughty said that, before the current work plan, the state calculated that it needed to replace 30 bridges to keep even with deterioration of existing structures, which typically last 50-80 years, and replace them with new ones, designed to last 100 years. It was only building 15, however, and in this work plan will only do six. Estimates for highway construction show similar shortfalls, he said.
”We made our case [to the Legislature],” Nadeau said, “but I’m not sure everyone understood. It’s not just that we’re falling behind with our program, but that we risk losing the value of our previous investments by not maintaining them.”
Turning off the spigot
In interviews with designers and contractors around the state, it is clear the shortfall in the state’s highway and bridge programs began well before the cash crunch that led to the November 2005 deferrals. “We haven’t seen a new state contract in four years now,” said Steve Sawyer, vice president for Sebago Technics in Westbrook and a past MBTA president. His firm is just completing design work for improvements to the Exit 3 interchanges on I-295 around the Maine Mall area, “a nice project” — but that contract was awarded in 2002 and no new design work for the state is in view for his firm.
“We’ve had a healthy amount of private sector work, and that’s helped us,” Sawyer said. He’s been able to keep six engineers busy so far, but is concerned about a possible future slowdown. ”If you were dependent on state work,” he said, “you’d be in real trouble by now.” Sawyer said that outof- state design firms with offices in Maine are reporting the same conditions. “Most of them have reassigned people here to other states, or they’re bringing in work to keep them occupied. There’s just not a lot of new public business.”
He attributes some of the dearth of new design contracts to the funding and logistical emergency created by the need to replace the Waldo-Hancock Bridge over the Penobscot River, a span scheduled to open this fall. “The DOT said it wouldn’t affect the other design projects in the pipeline, but from our viewpoint, it did,” he said.
The story is much the same at Sargent Corp. in Stillwater, the state’s largest excavating contractor and second largest construction firm, after Cianbro. Herb Sargent, president, and Tim Folster, vice president (and immediate past president for MBTA), both say that reconstruction work for the state has practically disappeared from the radar screen.
“We haven’t had a DOT job this year, and that’s unusual,” Sargent said. Generally, he said, Sargent Corp. would be working on a $3-4 million contract somewhere in the state, and perhaps a couple of $500,000- $600,000 contracts, but that’s not happening now.
According to Tim Folster, the last project Sargent was planning to bid on, stabilization of the Penobscot riverbank in Brewer, has been removed from the state list and hasn’t been restored. “We had a bid in on another project and were the low bidder, but they canceled it due to lack of funding. They’ll probably save 15 percent, but get 30 percent less in results.” Folster said that the MaineDOT project list “bounces around some” from year to year, but it has been years since it was this meager. Sargent Corp. monitors the list of available work it might be interested in bidding on over the next nine months, and in just two months this summer, the prospects have shrunk from $100 million in June to $67 million in August. The state anticipated advertising in August for contracts on the new international crossing at Calais, Sargent said, but that, too, has been delayed.
The state has been paving roads this summer, particularly since MaineDOT has concluded that numerous reconstruction projects are just not feasible at the moment or in the nearterm future. Yet even there, the cost of materials has driven down what can be accomplished. In less than four years, the price of asphalt has escalated from $30 a ton to more than $60. At those prices, it is not hard to see why the MaineDOT budget doesn’t go as far. The extra $5 million the department decided to commit from the $30 million provided by the Legislature in June is certainly welcome, and “a big help,” according to Scott Leach, Maine district manager for The Lane Construction Corporation and current MBTA president. “We recognize that it has to come from other areas of the budget and represents a shift in priorities,” he said. Yet he also said that, “There isn’t any question that paving is down significantly, and is not what we’ve seen in the past.” The mileage covered is at least 20 to 25 percent less than in previous years, and other contractors he has talked to are even more concerned about next year.
While gasoline prices have eased in recent weeks, there hasn’t been any similar shift in asphalt prices that are also petroleumdependent. With major state paving projects winding up by Oct. 15 — with additional final coats by Nov. 15 — it’s probably too late to see record costs decline this year, Leach said. Compared with prices his firm used in bids as recently as February, current levels are at least 33 percent higher.
Municipal road projects have tracked the state’s in terms of higher costs and fewer miles. Bangor City Engineer Jim Ring recently reported that his city faced paving costs 55 percent higher than the previous year. While paving contractors have at least some public business to do — unlike many design firms and excavation contractors — there’s no question that they’ve taken a hit. Private customers, by and large, have gulped hard and paid the higher prices. “They need the work to get done,” said Leach, “so they’re willing to dig a little deeper.” With state and municipal contracts, though, there hasn’t been much give. “The budget isn’t there to cope with higher prices, so they’ve just cut back,” he said.
Things need to change
While the immediate situation is indeed grim, Leach is slightly more optimistic about prospects for the next session of the Legislature. “We are getting the word out to the public about what this means, not only for Maine’s own businesses, but for the state of the roads and the economy,” he said. “We do think people are listening, and that should lead to better results.”
At MaineDOT, Greg Nadeau emphasizes that the state will have to do things differently, and that the public will have to be involved for things to change. “The federal gas tax hasn’t been raised in almost 15 years, and that means its purchasing power has been cut in half,” he said. “You just can’t keep doing that without cutting into your previous investments, let alone make new ones,” he said. While Maine has indexed its motor fuel taxes, Nadeau notes that the standard being used — the Consumer Price Index — has lagged far behind construction cost increases in recent years. In the short term, borrowing probably will be the main tool, he said. A general obligation transportation bond is traditionally on the agenda for odd-numbered years like 2007, and Nadeau hopes it will be a “robust” proposal to fill at least part of the looming funding gap. He also thinks lawmakers could look favorably on a GARVEE bond that anticipates future federal funds that are “backloaded” in the current federal authorization statute that runs through 2009. With prices increasing at current rates, “You can get dollars now that will go significantly farther than they will in just a year or two,” he said. While not exactly a jump-start on new transportation improvements, such actions could at least keep the construction program from falling further behind its goals. Sebago Technics’ Sawyer said it is critical that MaineDOT be able to restart the process and get projects back into the pipeline that, depending on their size and complexity, can take five to 10 years to bring to fruition. Of the slowdown that occurred well before the current crisis, he said, “For a while, MaineDOT was able to take projects off the shelf that had been in the design phase. From what I can see, they’ve pretty well burned through those and there’s not much left.” Sawyer predicts that companies involved in any phase of construction will have to plan more carefully, now that a housing slowdown shows signs of cooling off the private market as well. “It’s a fickle thing,” he said. “In our business, diversity is the key.”
Douglas Rooks writes, edits and consults for numerous publications and non-profit organizations.