When Alaska’s legislative session lasts longer than its construction season, we have big problems. This means that the Legislature is not getting its work done and we, as citizens and businesses, have to bear the brunt of their inaction. The state’s capital budget for fiscal 2020 has not yet been funded, so the construction industry is in serious distress and the immediate impacts are already being felt by hard-working Alaskans. The capital budget must be added to the upcoming special session agenda and passed immediately.
A realistic and timely state capital budget for the construction industry is paramount to Alaska’s success. It creates jobs, builds infrastructure, maintains state assets, promotes economic health and growth, and ensures safety for Alaskans. Procrastination in approving a reasonable capital budget forces construction companies into an expensive and uncertain holding pattern while economic opportunities stall, projects are delayed and the overall economy is negatively impacted. Because many construction projects rely on state funding, companies often delay hiring staff and consider potential layoffs when money is not available. Workers’ incomes, which go toward supporting families, buying goods and services, making house payments and paying taxes, are impacted when the construction industry is delayed or at a standstill.
Alaska's third-largest industry, construction accounts for 20 percent of the state’s economy. As of 2016, construction contributed more than $8.5 billion to the state economy. Our vibrant construction industry has a significant multiplier effect for the entire state and impacts every Alaskan in some way. More than 16,000 workers in this state are employed in the construction industry. When our industry is impacted, so are the other businesses that rely on us.
There are serious consequences to people, businesses and our economy when a capital budget is delayed and/or significantly decreased and matching federal dollars are left on the table. The state cannot afford to lose any substantial portion of federal funding. For each $1 of State construction funding the federal match is $9. These funds from federal highways and aviation pay 90 percent of project costs for roads, marine facilities, and airports, to name just a few. While the proposed capital budget is small in comparison to years past, it still provides Alaska with unparalleled opportunity to bolster the economy with minimal investment from the State. It baffles me why anyone would think that jeopardizing this critical funding, for any reason, would be a responsible approach.
As a small business owner, I can attest to the importance of timely decisions and the ramifications when the approval of the capital budget is extremely prolonged and heavily cut. For example, in 2017, when the Legislature adjourned from both the regular and special sessions without passing a capital budget until late July, many contractors had to delay purchasing assets for projects, resulting in expensive increases, unexpected delays and financial hardships.
The construction industry has patiently stood by during this recession, with a reduction of approximately 90 percent in state funding to our trade during the past few years. Thousands of jobs have been eliminated, unemployment has spiked, businesses have closed and essential projects have been canceled. We can no longer silently watch this devastation occur.
Legislators, elected to represent the people, must meet their obligations and immediately fund the capital budget. Failure to do so will decimate the third leg in the three-legged stool of Alaska’s economy and further harm our hard-working families.
There is a lot of finger pointing in the Legislature, and quite frankly, we don’t care whose fault it is. Alaska’s legislators need to start operating like business owners with financial restraint, economic discipline and timely decisions. We cannot afford for our future to be hobbled by partisan issues that seek political gain over the health of Alaska’s economy. Legislators, please get to work so our people can get back to work. Remember, you serve the people.
Cuauhtemoc Rodriguez is the owner of Coldfoot Environmental, a minority, veteran- owned small business specializing in Asbestos, Demolition and Hazardous Waste. He is President of the Board of Directors for Associated General Contractors of Alaska.
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