Currently Reading

State of the state: How state governments are funding construction projects

Justice Facilities

State of the state: How state governments are funding construction projects

State budget shortfalls are making new construction and renovation projects a tough sell, leading lawmakers to seek alternative funding for these jobs.  

By John Caulfield, Senior Editor | March 5, 2015
State of the state: How state governments are funding construction projects

Bonds issued to build or renovate 44 courthouses in California helped pay for the $29.4 million Superior Court for San Benito County, which opened in 2014. The exterior is distinguished by a cantilevered patterned canopy. Photo: Bruce Damonte, courtesy SmithGroupJJR

This article first appeared in the March 2015 issue of BD+C.

It took six years, but in 2013, the Utah State Courts finally got the state legislature to approve a budget for the $34.2 million 2nd District Juvenile Courthouse, in Ogden. When it opens this May, the 85,000-sf, five-story building will include eight courtrooms, offices for judges and their 50-member staff, and space for juvenile probation services and the Weber County Sheriff’s security staff.

Projects like the Utah courthouse are luxuries for many states that, despite improving economies, are struggling to keep their heads above water.

Since the second half of 2013, state tax collections have fluctuated. They were down in the first half of 2014, then rebounded by 4.4% in the third quarter of 2014 over the same period a year earlier, according to the Rockefeller Institute of Government. The institute expects continued revenue growth in the coming quarters, but state tax collections have failed to keep pace with expenditures, especially as more states expand Medicaid coverage under the Affordable Care Act.

At least 16 states are facing serious budget shortfalls, according to the Washington Post. These include Louisiana, which is looking at a $1.6 billion deficit, which ballooned by $400 million as the price of oil—a huge source of state revenue—fell by 50%. Other states with impending deficits include Virginia ($2.4 billion), Pennsylvania ($1.8 billion), Kansas ($1 billion through FY 2016), Alabama ($950 million), and Maryland ($900 million).

The National Association of State Budget Officers (NASBO) notes that all states but Vermont either require their governors to submit or sign a balanced budget, or their legislatures to pass a balance budget. With tax increases mostly off the table, achieving balance means spending cuts. Recent data offer inconclusive clues as to the impact of those cuts on future state-funded construction and renovation work.

One snapshot—NASBO’s “State Expenditure Report 2012-2014”—projected a 5.5% increase, to $17.4 billion, in the states’ capital expenditures in fiscal 2014 for projects in an “all other” category that includes stadiums, public schools, and healthcare.

The Census Bureau’s broader estimates for public state and local construction put in place were less robust. Last year that number stood at $251.5 billion, up 2.2% from 2013, but still the second-lowest spending year since 2006. 

Big-ticket categories were Roads and Bridges, Education, Transportation, and Sewage and Waste Disposal. Amusements and Recreation (which include sports stadiums) jumped 7.7% to $8.7 billion. Office construction was up 3.6% to $5.4 billion; Public Safety projects (jails, firehouses, etc.) fell by 7.9%, to $6.1 billion. Healthcare declined by 10.5%, to $6.3 billion.

Jan Frew, Deputy Administrator for Idaho’s Public Works division, reached out to several of her counterparts in the National Association of State Facilities Administrators on behalf of BD+C. Most of those contacted reported slight increases in tax revenues but only modest state-funded construction activities, she says.

Frew says that, since 2011, Idaho’s appropriations for public works have been “fairly steady,” at around $22.5 million per year. But while appropriations have recently spiked to $36 million, lawmakers aren’t confident that tax revenues will keep growing and are being cautious about adding to the state’s project funding base. Frew says the state is also reluctant to use bonds to fund projects.

Other states are looking for new ways to lower their construction costs. Illinois, Indiana, South Carolina, and West Virginia are among the states debating whether to repeal prevailing wage laws that apply to government-funded projects.

Newly elected Hawaii Governor David Ige, a Democrat, proclaimed that his state would actively seek more federal dollars to help fund state projects for housing, water, and transportation.

On the other hand, a can-do spirit is evident in Maine, where Governor Paul LePage, a Republican, recently unveiled a three-year, $2 billion, 1,900-project public works plan that, in 2015 alone, would include safety improvement projects at 76 locations, and $4 million for improvements at Portland’s International Marine Terminal.

In Michigan, the first stages of a new $88 million Welcome Center and park for the State Capitol have been initiated, even though the project’s funding mechanism isn’t in place. John Truscott, a spokesman for the Michigan State Capitol Commission, says the early work is being paid for through a $3 million allocation established last year for Capitol renovation and upkeep. The commission is seeking bond financing for the Welcome Center that would be repaid with tobacco taxes.

Related Stories

Justice Facilities | Sep 24, 2021

More than justice for all

Public safety buildings are paying greater attention to occupant well-being.

Giants 400 | Aug 30, 2021

2021 Giants 400 Report: Ranking the largest architecture, engineering, and construction firms in the U.S.

The 2021 Giants 400 Report includes more than 130 rankings across 25 building sectors and specialty categories.

Resiliency | Aug 19, 2021

White paper outlines cost-effective flood protection approaches for building owners

A new white paper from Walter P Moore offers an in-depth review of the flood protection process and proven approaches.

Resiliency | Jun 24, 2021

Oceanographer John Englander talks resiliency and buildings [new on HorizonTV]

New on HorizonTV, oceanographer John Englander discusses his latest book, which warns that, regardless of resilience efforts, sea levels will rise by meters in the coming decades. Adaptation, he says, is the key to future building design and construction.

Justice Facilities | Jun 15, 2021

A Philadelphia suburb sees its future in a municipal campus with an expanded courthouse

Versions of this civic project have been in the works since at least 2015.

AEC Tech | May 24, 2021

Digital twin’s value propositions for the built environment, explained

Ernst & Young’s white paper makes its cases for the technology’s myriad benefits.

Market Data | Feb 24, 2021

2021 won’t be a growth year for construction spending, says latest JLL forecast

Predicts second-half improvement toward normalization next year.

Giants 400 | Dec 16, 2020

Download a PDF of all 2020 Giants 400 Rankings

This 70-page PDF features AEC firm rankings across 51 building sectors, disciplines, and specialty services.

Government Buildings | Nov 13, 2020

Tax shortfalls nip government projects in the bud

Federal contracts are proceeding, but states and cities are delaying, deferring, and looking for private investment.

Giants 400 | Aug 28, 2020

2020 Giants 400 Report: Ranking the nation's largest architecture, engineering, and construction firms

The 2020 Giants 400 Report features more than 130 rankings across 25 building sectors and specialty categories.

More In Category

Magazine Subscription

Get our Newsletters

Each day, our editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.


Follow BD+C: