IL budget debacle stalls $700M in construction projects

Dive Brief:

Illinois' budget "mess" has resulted in more than $700 million worth of stalled construction projects — and builders are frustrated with the uncertain future of their projects, according to the Belleville News-Democrat.
Gov. Bruce Rauner stopped 419 contracts for 218 job sites — with 95 under construction at the time — this summer due to the lack of a set fiscal plan. Those projects included state parks, universities and prisons.
Officials have said they are uncertain when the budget will ultimately be passed or how much more money they will need to spend for the stalled, and eventually restarted, construction projects.

Dive Insight:

Contractors have shut down job sites, pulled off equipment, stored materials and sent their workers home. "This has not been pleasant," said Ric Krause, president of Chicago-area PATH Construction. Due to the budget crisis, PATH was forced to shut down work on eight projects for the state worth $26 million.

The state agency that oversees construction projects, the Capital Development Board, has said it will consider covering builders' cost overruns. However, according to Dave Semerad of the Associated General Contractors of Minnesota, that promise isn't always fulfilled quickly. After Minnesota's government shut down for nearly a month in 2011, contractors submitted requests for their project cost overruns, and many are still waiting for reimbursement.

Brian Turmail, spokesman for the national AGC, said the situation for Illinois contractors right now "is both frustrating and costly."

And once the budget crisis is resolved, industry experts have warned that the state might have trouble getting construction companies to return. "The private sector is very hot right now," said Brad Benhart, a former contractor and professor at Purdue University's School of Construction Management Technology. "They're going to go find other work, and it's going to be in the private sector, and they're going to be paid promptly. It's going to be very hard for the state to get contractors to come back."