Nearly two years after a budget impasse halted state government services for three weeks in July 2011, the Minnesota Department of Transportation has paid or is in the process of paying $25.5 million in contractor claims related to the shutdown. (See the full list of contractors' claims here)
The shutdown affected 165 transportation projects. All told, more than 80 projects with a combined value of $1 billion had "compensable" claims, according to information Finance & Commerce requested from MnDOT.
Contractors suffered losses because they had to abruptly shut down their projects at the height of the construction season, taking a hit on everything from idled construction equipment to the cost of demobilized and remobilizing.
George Mattson, president of Shafer Contracting in Shafer, Minn., said his company was "geared up, full bore" on an Interstate 35 project near Moose Lake when the shutdown stopped work in its tracks.
"It was like a freight train going 100 miles per hour and then all of a sudden you stop and have to try to get it started again," Mattson said. "It could not have happened at a worse time in that project."
Mike Leegard, MnDOT's construction support engineer, said about 80 percent of the claims have been resolved to date.
Based on that percentage, the final cost to the taxpayers could be about $30.6 million -- a big chunk of money that could have been used to fix roads and bridges throughout the state.
Put another way, the final cost is $3.7 million less than the $34.3 million highway interchange built for the controversial Elk Run project in Pine Island. Shutdown-related claims for that project have come to nearly $902,000, 50 percent of which have been processed, according to the MnDOT data.
Payment of the claims comes from the department's construction program, which means MnDOT will program fewer new projects during the next several years, according to MnDOT public affairs supervisor Chris Joyce.
That's not sitting well with transportation advocates and contractors.
Tim Worke, director of the Associated General Contractors of Minnesota's highway division, doesn't blame MnDOT for the mess.
But he said of the claim payouts: "We didn't get new infrastructure, we didn't get any additional enhancements to the infrastructure. We simply had to pay the damages, and that is unfortunate."
The $30.6 million projected claims amount is consistent with earlier industry projections. Construction industry sources told Finance & Commerce in November 2011 that the final tally for the claims could be in the "tens of millions" of dollars.
Minnesota's state government went dark on July 1, 2011, after the Legislature and the governor failed to agree on a budget. A deal emerged three weeks later and state government services resumed, but not before transportation projects statewide were interrupted.
The interruption sparked contractor claims for losses related to additional bond costs, idled equipment, home office overhead, cost escalations for labor and material, extended use of traffic control and other expenses.
Joyce said that there are multiple claims associated with each project on the list provided to Finance & Commerce and that not all claims have been settled.
Most notably, claims are still pending for the $130.38 million Lafayette Bridge project, due in part to complications related to steel supply deliveries that affected work on that multiyear job, according to Leegard.
"When you look at each job, each one has a personality unto itself," Leegard said.
Payouts for individual projects range from nothing or a few hundred dollars to more than $2.5 million. Some claims were settled simply by giving the contractor more time to do the work, Joyce noted.
The biggest individual payouts to date include:
$2.765 million for a $22.68 million concrete overlay on Interstate 35 in the Moose Lake area (Shafer Contracting)
$2.5 million for a $5.8 million Highway 220 project near Thief River Falls (Minn-Dak Asphalt Inc.)
$2.49 million for the $119 million Hastings Bridge project (Lunda and Ames Construction)
$2.49 million for the $125.3 million Highway 169/Interstate 494 interchange design-build project (C.S. McCrossan and Edward Kraemer & Sons)
$2 million for a $23.88 million Interstate 94 project in the Twin Cities (Valley Paving)
A November 2011 report from the Minnesota Budget and Management agency said that the state paid about $10 million to prepare for and recover from the overall shutdown and that it lost $49.7 million in "unrecoverable" revenue but that it saved $65 million in payroll costs.
Even so, the costs didn't include the claims from highway contractors.
MnDOT's Leegard said the department is in "that last chapter" of claims payouts.
"We are in the phase where a lot of the money has been paid out and we are grinding through and writing the final agreements and putting them to bed," Leegard said.
Dianne Holte, owner of Ramsey-based Holte Contracting, was working on a $6.8 million Highway 34 project near Park Rapids when the shutdown occurred. Central Specialties was the prime contractor for the project, which has been compensated for $323,000 in claims, according to the MnDOT data.
Holte, a subcontractor on the job, had just under $50,000 in claims. Although Holte has been made whole on her claims, she said the shutdown didn't accomplish anything other than fritter away taxpayer money that could have been spent on infrastructure.
"It's pretty clear and simple," she said. "It's a terrible waste of money."
Sen. Scott Dibble, DFL-Minneapolis, chairman of the Senate Transportation Committee, said the shutdown happened because of folks in the Legislature who "refused to do what they are tasked with doing."
Dibble specifically blamed Republicans for rejecting what he called "good faith offers of compromise" on the budget from the governor. At the time, Republicans controlled both the House and the Senate.
Sen. John Pederson, R-St. Cloud, the ranking Republican on the current Senate Transportation Committee, said Gov. Mark Dayton could have kept road construction going forward as an essential government service.
"The governor chose not to do it," Pederson said. "One man in the state could have prevented that from happening. It was Mark Dayton."
Dayton was out of the country Thursday on a foreign trade mission and unavailable for comment, according to Matt Swenson, a spokesman for Dayton.