Highway contractors poised to resume construction work are balking at late-night legislation that creates roadblocks to recovering their costs due to the state government shutdown.
"It could be millions of dollars ... tens of millions of dollars," said Tim Worke, a top lobbyist for a group representing highway contractors.
The development left some contractors pondering whether to stay off the job while they seek assurances that they'll be paid for their shutdown-related expenses.
Worke said officials of the Minnesota Department of Transportation (MnDOT) on Monday assured his group, Associated General Contractors of Minnesota, that the state would pay shutdown-related claims.
But at 3:23 a.m. Wednesday in the special session, the Legislature passed a state government finance bill that prohibits paying judgments on claims unless shutdown costs were explicitly authorized in a contract.
"There are no contracts that I'm aware of that reference ... a government shutdown," Worke said. "We want to cooperate and trust the department that they are going to honor their word, but now this new language brings that into question."
His group was considering going to court to challenge the restriction as unconstitutional.
MnDOT spokesman Kevin Gutknecht said Thursday that the agency was still assessing the impact of the legislation.
State contracts have long included boilerplate language for paying claims when the state suspends a contract. But the new law denies state payment of a judgment unless a contract "expressly provides for the payment ... arising from or caused by the government shutdown."
Without such an understanding, "no appropriation under this or any other law ... may be used to pay or settle judgments for damages ... related to the government shutdown of July 2011," the legislation said.
MnDOT sent a letter Thursday to county highway engineers alerting them that the new law "means that any claims that are settled through the courts must be paid by local dollars."
Claims settled "through the normal construction processes up to and including mediation may be paid with state aid," the letter added.
'Looks like we're hosing them'
Highway contractors spent money during the 20-day shutdown idling equipment, setting up traffic barriers and incurring other costs not anticipated when the projects were approved.
"It's only right we should pay for that," said Rep. Mike Beard, R-Shakopee, chairman of the House Transportation Policy and Finance Committee. "At first blush, it looks like we're hosing them."
Beard said the provision caught him by surprise.
"We've thrown a provision into the law in the middle of the night, the last provision of a bill that we didn't even see until after 3 o'clock," he said.
Barring state payment of judgments would leave contractors with little leverage to negotiate compensation for shutdown costs, Worke said.
The office of Gov. Mark Dayton did not respond to questions about the impact of the new law but said in a statement, "Our goal is not to legislate contracts. ... It is in the interest of the administration to protect the state from liability, and also to honor the contracts we have with contractors."
The legislation adds more uncertainty to highway construction interrupted by the government shutdown.
Gutknecht said Thursday that it was too early to tell whether the shutdown could delay some projects past their fall completion dates and into next spring.
But he said a major project on Interstate 35E between Interstate 694 and the junction with 35W could be delayed, as could be a major overhaul of Interstate 35 in Duluth.
The resurfacing of Interstate 94 between Minneapolis and St. Paul was delayed before the shutdown and could be set back till next year, Worke said.
Pat Doyle • 612-673-4504