Transportation Department estimates 140 jobs created so far from recovery spending on state road projects

2009-08-24T00:15:00Z Transportation Department estimates 140 jobs created so far from recovery spending on state road projectsBy CHARLES S. JOHNSON Gazette State Bureau The Billings Gazette

HELENA - Contracts for $81 million in highway and bridge construction projects funded by federal stimulus money have been awarded in Montana so far, with another $130 million coming down the road.

In a national press conference on stimulus spending last week, Gov. Brian Schweitzer guaranteed reporters that if they visit Montana, they would be hard-pressed not to come across the yellow heavy equipment and orange-clad construction workers on highway projects throughout the state.

"A lot of the money isn't on the ground yet," Schweitzer said.

Unlike some states that were able to put the stimulus money to work earlier this year, Montana wasn't able to do so until the Legislature delivered the stimulus-spending bill to him in late April.

As of July 31, the stimulus spending had created 140 construction jobs in Montana, the state Transportation Department reported.

These direct jobs were calculated using a formula required by the federal government to convert actual hours worked into "full-time equivalent," or FTE, jobs based on someone working 2,080 hours a year or 520 hours a quarter. The department reported 56,207 total hours had been worked on stimulus-funded highway construction projects as of July 31, which amounted to about 140 jobs under the formula.

More jobs on the way

Not calculated yet are the number of indirect jobs for businesses that supply fuel, materials, restaurants and motels to contractors and their employees. These job counts will rise significantly as the current projects proceed and new ones are added, state Transportation Director Jim Lynch said.

"The intent of the bill wasn't just for construction jobs," Lynch said. "It's also all the other jobs associated with construction."

The department has estimated that the stimulus ultimately will create or save 5,866 direct and indirect jobs in Montana. That's based on a national multiplier that estimates that each $1 million spent on highway-related projects creates 27.8 direct and indirect jobs, Lynch said.

The money paying for these projects comes from part of Montana's share of the American Recovery and Reinvestment Act of 2009, which Congress passed at the urging of President Barack Obama. The massive spending bill was enacted in the middle of the economic recession with the goal of helping put Americans back to work.

These funds are commonly referred to as either "stimulus money" or "recovery money."

The Montana Department of Transportation proposed to the Legislature spending its $211 million share of stimulus money on 69 projects.

This money is in addition to the $300 million the state department usually receives every year in federal and state gas tax money to spend on highways, bridges, bikeways and sidewalks as well as those projects designed to improve safety and reduce congestion.

"We have a much larger need for highway infrastructure than we receive in funding," Lynch said. "Now we have $211 million (in stimulus money) over 18 months. That's fabulous."

The influx allowed the department and Transportation Commission, which OKs the projects, to move up projects that otherwise might have not been scheduled for several years.

Lynch said the department submitted 69 projects to the Legislature that were projected to cost more than the total money available.

The director said he anticipated "good competitive pricing and bidding," with bids coming in lower than anticipated. That's what happened, enabling the department to come up with the money to fund all of the projects.

What's more, if some states don't meet deadlines for spending all of their stimulus money on transportation projects, Montana hopes to apply for more federal money, Lynch said.

How effectively the state transportation departments spend this money should provide an important lesson, he said.

"We're going into another highway bill," Lynch said. "Hopefully our state and other states can demonstrate that investing in infrastructure is something that's needed."

From the construction industry side, money has been an important infusion.

"The stimulus projects have certainly been a nice shot in the arm, especially in an otherwise dismal construction season," said Cary Hegreberg, executive director of the Montana Contractors' Association. "There's quite a number of stimulus projects that are being constructed. There's others that have been contracted, but construction hasn't started yet."

Still, Hegreberg said he knows of no Montana contractors who are as busy as they want to be. Few are fully staffed, he said.

"While the stimulus has been a great short-term shot in the arm, it is nowhere near making up the gap in private investment," the trade association official said. "You just don't see the level of activity we had a year or two ago - the subdivisions, the retail developments, the industrial projects that were resulting in a lot of site work, paving and concrete."

Contractors' bids are often coming in lower than projected.

"It's been surprising how competitive the industry is," Hegreberg said. "It's somewhat a function of the market. It's somewhat a function of lower construction costs - asphalt, diesel fuel, steel and cement."

Under law, the Montana Transportation Department "obligates" money for projects once all the right-of-way has been purchased, the project design is completed and all the necessary permits have been obtained.

Projects are advertised and put out for bid. Because of the flurry of activity from the stimulus money, the agency now puts projects up for bid twice a month instead of monthly, Lynch said.

Bids are opened, and the Transportation Commission awards contracts to the winning bidders, provided they meet the criteria. The department then issues a notice to proceed with the project.

The latest report from the Transportation Department showed that as of earlier this month, the department had obligated $121.4 million in stimulus money for projects. Of that, it had awarded $80.99 million in bids.

Lynch said the state intends to have obligated $137.7 million of the stimulus money by Oct. 31, with the remaining $70 million plus to be obligated in the months after that. Under the federal stimulus law, all of the money must be obligated over 18 months.

The department has divided the state into five transportation geographic regions known as districts. The stimulus projects, like those from the gas tax funds, are divided up by district.

Projects are evaluated in the department's asset allocation program. When the stimulus money became available, it enabled the department to bring forward the projects in its system.

As of Aug. 3, the department had advertised 56 of the 69 stimulus projects and awarded 49 of them. It issued notices to proceed to contractors on 44 of them.

So far, 25 prime contractors and 58 subcontractors are working on stimulus jobs.

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