Kentucky's road projects taking bumpy path

July 26, 2004|HERB BROCK

Jim Morris has been in the road contracting business a long time and constructed, reconstructed, widened and resurfaced a lot of highways for the state. In all that time, the assistant vice president of The Allen Co. has never seen a state contract like the one developed not long ago by the state Transportation Cabinet.

"There is this new clause in the state road resurfacing contract that seems to show the financial bind the state is in regarding road projects," Morris said in a recent interview from his Danville office.

According to Morris, the clause states that a successful bidder on a resurfacing project begun in 2004 must "complete the project 100 percent" by November. However, the clause further states that the contractor will be paid only 50 percent of the amount due under the contract through March 1, 2005. After March 1, 2005, the contractor is to receive the other 50 percent, the clause says.


However, the clause goes on to state that if a contractor who has won a bid this year to do a resurfacing job decides to put off the project until spring 2005, the company would be paid 100 percent of the amount due under the contract.

But, according to Morris, the carrot may be hard to nibble on in this apparent carrot-and-stick incentive.

"On the one hand, it seems the state is indicating in this clause that it may have more money in the spring and can do as it has in the past and pay the full amount for resurfacing projects to contractors," he said. "But there is what appears to be a catch: the clause goes on to say you will get the full amount - as long as the project is completed by June 1 (2005).

"Given the fact that weather is bad in March, the only months of the spring we can work are April and May, so essentially we would have only two months in which to complete a resurfacing project and get paid the full amount upon its completion," he said.

"This clause and the short windows of work it establishes and the 50 percent payments and all of the rest of it present us with a dilemma. We have to buy asphalt and pay laborers. If we decide to get paid half now and half later, that puts us in a bind paying for materials and labor. If we decide to delay our work till later and get paid the full contract amount, that forces us to work as hard and fast as we can and pray the weather stays good for as long as possible."

Contract clause reflects big problem

The little contract clause that has caused Morris a dilemma reflects a big problem facing the whole state, especially the Transportation Cabinet, contractors who regularly do business with the state, and local officials and their constituents.

The 2004 General Assembly left Frankfort in April without approving a state budget. However, Gov. Ernie Fletcher, repeating a move by former Gov. Paul Patton when the 2002 legislature failed to approve a budget, late last month put in place a contingency budget. While Fletcher's budget has money for several on-going projects as well as highway maintenance, it does not have the bonding authority to pay for many major projects because that authority belongs to the legislature.

Before the legislature adjourned, the House and Senate had agreed to authorize up to $200 million in revenue bonds for state highway projects in the Transportation Cabinet's six-year highway plan, along with another $116 million for improvements to interstates 64, 65 and 75. Because the legislature did not pass a budget, the $316 million was not officially authorized, and thus none of it is in Fletcher's budget.

Some of that bond money was to fund area projects in the six-year plan beginning this fiscal year (2005). There are six major projects in the plan for highways in Boyle, Casey, Lincoln, Marion and Rockcastle counties, including the $25.7 million reconstruction of U.S. 150 from Crab Orchard to Brodhead.

"Following the current state government no-budget course of action means a year of highway construction, that could have been done with the $316 million in bonds, will be lost," said Jack Fish, president of Kentuckians for Better Transportation.

He also indicated that projects scheduled in the later years of the state highway plan likely will be delayed or even erased from the plan because of the "ripple effect" of the current financial situation.

"Not getting a budget until sometime next year will result in lost economic opportunity," Fish said. "Jobs will be lost, and lives will be lost because of the inability to correct highway hazards."

Transportation Cabinet spokesman Mike Goins declined to go into the specifics of the effect of the current budget situation, citing a lawsuit that is challenging Fletcher's authority to implement his contingency budget. However, he offered a few brief remarks. He also characterized Fish's strong language in assessing the situation as "that of a lobbyist."

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