Cutoff in state funding hits contractors hard
CAPITOL Hundreds of construction jobs locally and as many as 37,000 in New York state are on the chopping block as general contractors cope with delayed capital projects funded by the state.
Pressure is mounting on legislators due back in session in Albany today, a week after Gov. David Paterson announced all current and new construction projects not paid for by the federal stimulus funds will be delayed until a budget for the 2010-11 fiscal year is passed or an emergency spending appropriation is agreed upon.
Capital funding must be a priority for any allocated emergency funds, according to contractors.
“I’m laying guys off and [legislators] were on vacation,” said Jeff DiStefano, vice president of Harrison & Burrowes Bridge Constructors, based in Glenmont. “It’s unconscionable to me that these guys go on the unemployment roll when they should be out supporting their families. [Legislators] are playing with people’s lives and their incomes. When does it stop?”
Harrison has shut down four of its bridge projects, most of which are in the Hudson Valley region. As a result, 40 of its employees have had to seek unemployment. The builder is continuing work on the Crown Point bridge replacement project because of its “emergency” status as defined by the state.
“I think some contractors may decide to continue to work for a short period of time, but if this lingers, two or four weeks, you’ll see a bunch of guys who will stop work and suspend their projects,” DiStefano said.
Callanan Industries in Colonie has also delayed some of its projects.
“We are delaying jobs that we do have right now. A few of them that we have we’re not starting them up as long as this occurs,” said senior vice president Charles Stokes.
Around 40 people did not get called back to work because of the delay on a handful of projects, including the Delaware Avenue project, which includes excavation, utility and paving work.
The ripple effect caused by the delay will be felt by subcontractors, vendors and suppliers to the state’s general contractors, something Callanan will feel on another end. “It’s a trickle-down because we’re a large supplier of quarries, black top, concrete and several other materials for contractors in northeastern New York . . . putting us further and further behind. It puts the normal construction season in a tighter time frame,” Stokes said.
Dimension Fabricators CEO Scott Stevens said his company is affected without question as a provider of a wide array of construction products, ranging from welded and wired cages to rebar for highway projects, buildings and mechanical connectors.
About 20 percent of his work in New York will be impacted by the postponements, though he says his business is diversified across several other states, shielding him from a significant loss.
Stevens said the funding delays will be problematic for cash-strapped contractors who will have to go back to the bank to borrow funds to cover payroll, equipment payments and material expenses.
Other contractors may resort to more conservative solutions as uncertainty remains.
“We have to do all the work, all the estimation that leads up to having to bid a job. When it comes to the bidding process, we don’t have a choice. We have to be prepared to put a bid in,” Stokes said. But the two weeks of work needed to put a bid together may be for naught, since “they may not take place,” he explained.
“We’re uncertain as to whether they’re going to have a letting or not or whether they will be scheduled.”
The delay will be expensive for the state as well, because of interest owed on the money due to contractors.
New York’s “Prompt Payment” law, passed a decade ago due to complaints that the state wasn’t paying its bills on time, allows contractors to receive interest on their payments from New York state when the payments are not timely, according to state documents.
The delays affect an industry currently facing double-digit unemployment, even with the influx of stimulus funding. New York lost 56,000 construction jobs from the end of 2008 to the beginning of 2010, a hemorrhage that was stemmed by the federal investment in infrastructure.
“It’s nice to attract a chip fab plant to your town but that takes years. If a bridge falls apart in your town you can get to work on that pretty quick and people go to work,” Stevens said.
Harrison is one of several general contractors that are parties to a class action lawsuit against the state that the New York Association of General Contractors is expected to file today.
“The legislators, the governor’s office — they need to hear from the guys that are usually just boots on the ground hard at work. They need to hear what they’ve done to our industry,” DiStefano said.
Steve Stallmer, a spokesman for the Association of General Contractors, said the delay in funding affects more than 500 projects totaling close to $1 billion in value. Stallmer said as many as 37,000 construction jobs are supported for every $1 billion of government-funded construction activity, by Federal Highway Administration estimates.
The funding delays also come at the worst time — the start of the construction season. A month has been wasted for a season many contractors already try to cram work into, DiStefano said.
“It hurts the employees more. They just spent the last four months on seasonal unemployment. So now they get back to work and they work for maybe two or three weeks and they’re back on unemployment. It disrupts their whole life,” DiStefano said.