Wisconsin Builder | Forecast 2002

Deep Cuts?

State's building program faces lean year

By Jeremy Harrell

The next year will bring some big changes for the state's building program.

Wisconsin's soaring budget deficit will likely put the screws to investment in state construction projects, and even the makeup of the panel that oversees the building program will undergo some alterations.

"We're going to have to tighten our belts," said state Rep. Dan Vrakas, R-Hartland, a member of the State Building Commission.

"The building program, like everything else, is going to have to be closely scrutinized. Any projects now will really have to be justified."

Gov.-elect Jim Doyle will become the commission's new chairman, and during his campaign he suggested postponing or slashing $300 million in state projects. Despite Doyle's political pronouncements, it's important to remember the biggest budget deficit in a generation is nonpartisan, Vrakas said.

And just as with every other state program, cuts in the building budget are inevitable, he said.

"To say that everything will be sacrificed but the building program is wishful thinking," Vrakas said. "It will be a lean session for everybody, and that will be true of the Building Commission."

For the next two years, the state's general fund shows a negative balance of at least $2.6 billion - depending on who's doing the forecasting. That will eat into the state's ability to pay off the bonds that fund many new projects, said Robert Brandherm, who was the Building Commission's secretary for 10 years under former Gov. Tommy Thompson.

The escalating debt payments on the state's 20-year bonds are part of what's led to the budget deficit, as well as the state's declining bond rating, he said. Since payments on bonds come mostly from the state's general fund, that money will be scarce for building projects, Brandherm said.

"I would suspect the building program would be subject to the same budgetary pressures," he said. "Generally speaking, it's easier to get projects approved when they're not coming from (the general fund)."

Shifting priorities

With the budget showing red, it will be harder for the Building Commission to use its general-fund bonding account to pay for new projects. But putting a greater emphasis on maintaining what's already there might not be so bad, said Mark Kraft, an architect with Vierbicher Associates Inc., Madison, and chairman of the Liaison Committee of the American Institute of Architects-Wisconsin Chapter's Building Commission.

The state has slipped in recent years when it comes to funneling money for maintenance projects, he said. Instead, lawmakers used that money to pay for new buildings, Kraft said.

"For years and years, they've deferred maintenance for newer projects," he said. "The emphasis should be on maintaining stock in a good manner. Every project that's a new bricks-and-mortar project will be highly scrutinized."

State Sen. Fred Risser, D-Madison, a 30-year Building Commission veteran, agreed that there would be "no emphasis" on new buildings. That's in part because maintenance has been deficient and also because Wisconsin's bond rating is low.

And it's possible the state Department of Transportation might compete for some of the state's bonds to pay for its own projects, Risser said.

"We're not going to have a massive building program other than what's already in the pipeline," he said.

Still building

Nonetheless, state government is Wisconsin's largest building developer, and there will always be projects to work on, said Cherie Claussen, vice president of architecture with Hammel, Green & Abrahamson Inc., Milwaukee. But in the next two years, Wisconsin's building program will suffer in the same economic climate that's afflicted private industry, and some bigger projects will likely be put off with the hope of eventual fiscal recovery.

"What we see with the state is what we see in the rest of the economy," Claussen said. "Bigger projects will be few and far between. People used to fight over $50 million jobs. Now people are fighting over $5 million jobs."

"People used to fight over $50 million jobs. Now people are fighting over $5 million jobs."

Cherie Claussen
Vice President of Architecture
HGA

The Building Commission might find itself stalling on projects once the design is finished, she said.

But the cash shortage in the general fund won't bring the entire building program to a halt. Many large projects - including those at state universities and State Fair Park - don't rely on general-fund sources for economic support.

The University of Wisconsin System, for instance, pays for student centers, dormitories and athletic arenas by assessing student and user fees - funding known as program revenue. In next year's budget, the UW System has requested more than $120 million in major projects funded by program revenue.

Overall, including maintenance and utility projects, 58 percent of the UW System's $326 million capital budget request for the next two years comes from program-revenue sources. Other projects rely some on gifts and grants.

Brandherm said projects funded through program-revenue accounts will move to the head of the line since they won't be subject to the same prioritizing system used for general-fund jobs.

A state agency such as the Department of Corrections depends almost entirely on general-fund revenue for its projects. Others such as the Department of Natural Resources and WisDOT tend to use program-revenue and segregated-funding accounts for theirs.

The result - what projects actually get approved - could be a mixed bag, all sources agreed.

In the works

New faces

Seats will shift on Building Commission

The makeup of the State Building Commission has been relatively static for the last decade, but there will be at least four new members when the panel convenes in January.

The governor is the commission's chairman, and he gets to select a citizen member to serve on the panel. Since 1987, a Republican, Tommy Thompson or Scott McCallum, has presided over the monthly meetings and charted a course for the building program.

Appointed by Thompson in 1987, Waukesha County developer and builder Bryce Styza is almost certain not to be back in 2003. Several industry observers agreed the position will be an easy one to fill for the incoming governor, Democrat Jim Doyle.

The Legislature's appointees to the commission are also bound to change. Republicans, soon to be the majority party in the Senate, will get a second member on the commission for the first time in eight years. Either state Sens. Fred Risser, D-Madison, or Mark Meyer, D-La Crosse, will have to step aside to make room for the GOP, although Risser, the longest-serving member of the state Senate, said remaining on the Building Commis-sion is his No. 1 priority.

Republicans in the Asse-mbly will also have to name a new member to the commission since former Rep. Tim Hoven retired in August 2002. Rep. Frank Urban, R-Brookfield, has been filling in for Hoven, but Urban didn't seek re-election in November.

The reshuffling of elected officials won't be the only shakeup for the state building program. The administrator of the state Division of Facilities Development - who also serves as the commission's secretary - is an appointed position. It's possible Doyle could replace Robert Cramer, who has led the DFD since June 2001.

- By Jeremy Harrel

The State Building Commission won't approve a slate of projects until February or March of 2003, and after that the Legislature will take a crack at the list when it examines the larger state budget bill. In the meantime, though, state agencies have begun compiling what's known as their wish lists for the next two years, and they have sent the requests to the state Division of Facilities Development.

What follows are highlights of the state agency requests. Projects that appear below are not sure-fire winners, however:

$12.7 million to renovate the Wild Rose State Fish Hatchery in Waushara County for the DNR;

$12 million to build an agriculture lab at the Hill Farms State Office Building in Madison for the state Department of Administration;

$8 million to remodel UW-Platteville's Ullsvik Center;

$6.3 million to build a Biological Systems Engineering Lab for UW-Madison;

$33 million for a residence hall at UW-La Crosse;

$8.8 million to expand the student union at UW-Green Bay;

$20 million for parking ramps at UW-Madison;

$16 million to expand the UW-Oshkosh student center;

$16.7 million for a renovation and addition to UW-Stevens Point's student center;

$8.6 million to renovate Hovlid Hall at UW-Stout;

$7.5 million for a student center project at UW-Superior;

$7.4 million for an addition and remodel to the UW-Whitewater Connor Center;

$1.9 million for a WisDOT service center in Madison;

$16.2 million to expand the Jackson Correctional Institution in Black River Falls;

$11.5 million to build a parole facility at the Thompson Correctional Center in Deerfield;

$13.2 million for a maximum-security facility expansion in Portage.

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