POLITICAL PURSUITS

Should industry circle the wagons?

By Chris Thompson

The construction industry is prepping for its annual legislative charge, but next year's battles might be waged a little closer to home.

Industry observers agree that the upcoming legislative session will surely produce the typical skirmishes over design/build for public work, retainage reduction on public projects, apprenticeship-tax credits, sales-tax exemptions for construction materials on nonprofit projects, risk-transfer clauses and even mud flaps.

But the biggest fight -- and one that could be life or death -- will play out in the state budget, with contractors struggling for project funding, whether it's for school construction, roadwork or the state's building program.

"In some sense, some of the things we'll be working on will be to prevent certain things from happening," said Don Croysdale, executive director of the American Subcontractors Association of Greater Milwaukee. "My hunch is the construction industry is going to have to make our case that we have a lot of jobs, we're one of the strongest areas of the economy and one of the best ways to get a balanced budget is to grow the economy."

The state's two-year budget deficit -- estimated anywhere from $2.6 billion to $4.3 billion -- combined with the vast amounts of funding needed for schools, roads and state projects, leaves little doubt that public construction work will require safeguarding.

"People are kind of coming back home to the basics. If there aren't jobs, everything becomes less important." Jim Boullion Government Affairs Director AGC of Wisconsin

"With the budget shortfall, there's going to be cuts, but we'll make the case that cuts in construction are not good dollar-for-dollar savings," said Jim Boullion, government affairs director for the Associated General Contractors of Wisconsin. "People are kind of coming back home to the basics. If there aren't jobs, everything becomes less important.

"All of the other issues are important, but if you don't get this one solved, the other issues don't matter."

Protecting the roads

Tom Walker, executive director of the Wisconsin Transportation Builders Association, faces a balancing act in the next session.

He said the Marquette Interchange reconstruction in Milwaukee tops his list of legislative priorities, but he has to counter that with a search for funding and attention to other projects around the state.

"I think it's fair to say that there's no choice except to build the Marquette because otherwise it will fall down," he said. "The question then is how to pay for it."

The first hurdle to funding is the state Department of Transportation's $5 billion budget deficit over the next 20 years. Walker said that legislative restrictions prevent money from being funneled to WisDOT, so state leaders are hoping for federal funds to lessen the pressure.

"Everybody likes to dream about getting a golden bucket from Washington, but the golden bucket doesn't exist," he said.

Walker said he doesn't expect legislators from other parts of the state to release their hold on local projects, so he has little hope of legislative action that would free Marquette funding at the expense of other work.

"Obviously, we want the Marquette to go forward, and we want the rest of the projects not to suffer," he said. "That's the primary issue overwhelmingly, and everything else is a footnote."

"In some sense, some of the things we'll be working on will be to prevent certain things from happening." Don Croysdale Executive Director ASA of Greater Milwaukee

Saving school work

Funding for school construction through the state's two-thirds formula, however, might prove to be greater than a footnote. Brian Mitchell, lobbyist for the Associated General Contractors of Greater Milwaukee, and Mike Fabishak, the organization's executive vice president, both said they plan to watch legislators closely when budget cuts focus on schools.

"We see the importance of two-thirds funding for school construction as one of the important issues, and that will probably be revisited with the state deficit," Mitchell said. "But we think you've got to recognize that construction is an important stimulus for the state's economy."

But Croysdale said alterations, if not cuts, to the two-thirds formula might become a necessity during budget negotiations. He said that the way the state works the formula, school districts that build don't necessarily receive two-thirds reimbursement from the state anyway.

When the state kicks in funding for a school construction project, the money goes into a pool, which is then divided based on property tax values in different districts, Croysdale said.

"We could take a whack at the state deficit by saying, 'Stop putting school construction into the two-thirds formula,'" he said.

"Everyone assumes that the state pays two thirds, but, generally, the richer school districts pay to build the building."

Removing school construction from the formula wouldn't necessarily be a huge advantage for the industry, but Croysdale said that if the industry knows it's going to take a hit during budget debates, it may as well dictate the terms of the blow.

"We've created an unintentional transfer from rich to poor that is putting the budget off balance," he said. "At the state level, we need to convince them that construction should not be a whipping boy and at the same time provide an answer as to how to balance the budget."

Future unclear

Croysdale's school-funding idea is simply an example of the overwhelming attitude of industry lobbyists going into the next session.

They each have their own legislative agenda, but the budget and the potential for cuts keep clouding the picture.

And many lobbyist suspect that construction, in one form or another, will suffer when the final budget leaves the governor's desk.

"The state budget is going to be tough, and with campaign pledges for no tax increases, we're going to run into the hard reality of budget cuts, said Bill Babcock, executive director of the American Institute of Architects-Wisconsin Chapter. "I think everybody's going to be taking a hard look at everything, and everybody's going to feel like their ox is getting gored somewhere along the line."

John Mielke, government affairs director for the Associated Builders and Contractors of Wisconsin, agreed.

"If I heard Gov.-elect Doyle correctly, he and both houses say no tax or fee increases," he said. "And, apparently, Gov.-elect Doyle is saying they will hold education complete. But there is a $4 billion deficit, so everything has to be on the table, and that includes road construction."

With that in mind, industry representatives said they plan to push for their issues while trying to protect their home court.

"Our priority is to find creative ways to avoid too severe cuts in construction spending," Boullion said.

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