Economic stagnation on horizon for firms as impasse continues

By ALAN J. ORTBALS
    Engineering and architecture firms often act as canaries in the coal mine when it comes to an economic slowdown. Without plans and specifications drawn by engineers and architects, building doesn’t occur, impacting contractors and laborers.
    According to David Bender, executive director of the American Council of Engineering Companies of Illinois, “it rolls like a wave.”
    That’s what’s occurring in Illinois due to the budget impasse between the governor and the legislature, Bender said.
    “There’s about a $12 billion backlog in deferred maintenance for all state buildings,” Bender said. “That was an estimate about 18 months ago. It’s probably higher now. It’s going to take a long time to catch up if we can ever catch up with that. That definitely is having an impact — not just on engineering firms — but also on the citizens who utilize those facilities whether it be in education or any other state facility.”
    The lack of a capital development program is of even greater concern to Bender. He said that even though the Illinois Department of Transportation has a slightly bigger budget than last year, very little of it has to do with design. It’s basically just repaving roads and refurbishing roads — not addressing long term stability or new capacity.
    “It’s just putting a Band-Aid on the problem,” Bender said. “We must have a comprehensive capital plan and quickly. The problem we’re going to be facing in a little less than a year from a construction industry standpoint, is that without a capital program that gets engineers designing projects, you’re going to see contractors suffer. You’ll see tradespeople laid off. IDOT has no plans on the shelf. They’ve used everything they had. They’re just looking at patching things, cleaning up, repainting and that’s about it. Right now, as people drive down the roads they see a lot of construction but what they don’t realize is there is nothing coming after this unless there’s a capital plan passed.”
    Bender doesn’t hold out much hope that the budget impasse will be broken or that a capital program will be adopted — at least before November.
    “You have a governor who says there needs to be a capital plan,” Bender said. “He understands that without a huge investment in our infrastructure that our state is going to lag and get further and further behind in economic growth. You’re going to see schools deteriorate rapidly. You’re going to see unemployment numbers rise. Right now, people are spending an extra $400 per year just on maintenance on their cars because of the condition of our roads.
    “The governor is for it,” he added. “The Speaker has indicated he’s for it. The Senate President has indicated he’s for a capital bill. It’s just trying to get them all together after the election and figuring out who’s going to blink first.”
    Mike Widman is president of Quality Testing and Engineering, headquartered in O’Fallon, Ill. He said that his firm has been busy working on schools, medical facilities and fire and police stations.
    “A lot of the public works projects continued through most of the budget impasse in Springfield,” Widman said. “But it’s gotten to the point where a lot of those jobs have been finished. The budget problem has not affected us too much yet but it’s going to start hurting in the not-too-distant future.”
    Widman is not alone.
    “I’ve been in business 10 years and this is probably my toughest year,” said Geri Boyer, president of Kaskaskia Engineering Group.  
    Boyer said that she has offices in Indiana and Minnesota and most of the firm’s work is coming from those other states. The lack of a budget in Illinois means that she can’t plan ahead here in her home state.
    “What that does to companies like mine and many other companies is it just puts you in a survival mode,” Boyer said. “You can’t depend on whether they’re actually going to fund transportation so we can’t expand our business here in Illinois.  So I’m expanding in other states because they have strong state budgets and strong markets but I can’t expand here in Illinois until the state becomes more stable.”

    Bill Reichert, president of EWR Architects in Fairview Heights, said that there are really two impacts. One is the direct impact of the lack of state building projects that hurt the construction industry including those involved in the planning and design of those projects.
    “I can remember in years past it was close to half a billion dollars and then one year it was almost a billion dollars’ worth of work going on,” Reichert said. “So it’s a huge deficit to the construction industry in general, architects, engineers and contractors.”  
    The second impact on the construction industry is indirect due to non-governmental businesses (both for-profit and nonprofit) not receiving payments from the state for services provided.
    “Various social service agencies, programs for the handicapped and the various workshops have been talking about closing up as a result of not being compensated for their efforts to help those people,” Reichert said. “We had three of those kinds of projects going on that all got kyboshed. It’s a whole ripple effect game tumbling down and I think it’s been more than challenging to a lot of folks.  
    “And, don’t forget the fact they’re not having an election until November,” Reichert added, “so nobody is going to give the other guy the upper hand between now and then.”