By 0. T. BANTON
Engaged in newspaper work 52 years, he was legislative writer for Lindsay-Schaub newspapers for 18 years prior to his semi-retirement in 1962, and for first 15 years on Journal and Sentinel in Milwaukee. Served as chairman and public member of the old Illinois Highway Study Commission.
Although gas saving and shift to smaller cars cut funds, highway building not in bind
EDITOR'S NOTE:
The biggest share of the State's appropriations for fiscal 1975 — more than $1.8 billion or 21.8 per cent of the budget — is allocated to the Department of Transportation, an organization with 7,778 employees (Sept. 1974) whose major activity is the construction and maintenance of State highways and the administration of highway grants to local governments.
Other sectors of State government must compete for a share of the dollars generated by the sales and income taxes, hut the highway agency is supported by earmarked funds — the motor fuel lax and vehicle registration fees — which by law must be used. after tax collection costs, for highway construction and highway-related purposes, e.g., slate police, traffic courts, etc. These funds are supplemented by federal matching funds on a generous scale. A monumental building on the southeast outskirts of Springfield attests to the agency's prosperity. But the gasoline shortage last winter and continuing talk of cutting down on energy usage suggest that these revenues may decline, and Illinois issues asked O.T. Banton to find out how the Department is being affected. Materials' shortages and inflated prices are causing more concern, he found, than tax losses.
ILLINOIS is faring better than some states in dealing with the effects of rising energy and material costs on highway construction programs.
There is some decline in the State's highway revenues because of diminished consumption of motor fuels and a shift to smaller passenger cars, but Langhorne Bond, secretary of the Illinois Department of Transportation, sees "no serious funding constraints through fiscal 1976."
On August 31, Bond said the State DOT had a cash balance of $165.9 million in its Road Fund. This compared with $90 million al the same time in 1973 and between $20 and $30 million a year before that.
The revenue decline, which Bond estimates at not more than 15 per cent (the national figure is reported to be near 20 per cent), has been offset, he explained, by delays on road projects "due to wet weather in the early months of the 1974 construction program and a statewide teamster strike. The result, Bond said, is that "we have more unfinished highway projects than at any other time in the department's history and an accumulation of road building funds."
By November 22, the Road Fund cash balance was $50.7 million, reflecting project progress on road construction.
Contractors seek relief
Illinois has been experiencing shortages in steel and asphalt and other road building materials, Bond said, and because of inflation "is getting much less construction per dollar." It has been very difficult, he reported, "to keep cost estimates on projects in line with materials costs and wage boosts."
Thus far the State DOT chief has resisted pleas by some of the paving contractors to include escalator clauses in road project contracts to protect them against increasing material costs during the construction period. Under such a clause, which is being used in several states, if the price of an item goes up during work on a project the Slate pays the contractor an amount equal to the increase; if the price goes down the contractor's payment is lowered accordingly.
The drive for relief is being pushed by representatives of the Associated * General Contractors of Illinois, the Illinois Asphalt Association, and the Illinois Road Builders. Spokesmen for the three groups say that 120 contractors who were surveyed report they will have to spend $17 million more for supplies and paving materials than they put in their bids. Some of the firms caught in this crunch, the State DOT was warned, face bankruptcy in completing their contracts while others will face reductions in their ability to bid on future projects.
Access to contractor's records
Bond describes the altitude of his department as "sympathetic to the plight of the paving contractors, but we don't believe it justifies drastic action." He and other members of his staff, Bond said, have met with the contractors frequently and "made adjustments in other areas than escalator clauses in new contracts and renegotiations of old contracts."
The Associated General Contractors of America, with which the AGC of Illinois is affiliated, is opposed to escalation clauses and renegotiations, Bond pointed out, and some important Illinois paving contractor firms also are opposed.
"The reason for this attitude," Bond ' said, "is that the firms would have to . give the State access to their bookkeeping records on materials prices, profits 'and losses on projects, and other
54 /Illinois Issues/February 1975
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