Costs for road construction for County Highway 3 rose almost 86 percent in a single year.
Crow Wing County Highway Engineer Lyndon Robjent Tuesday advised the county board to reject bids for the overlay project. The plan was to work on the County Highway 3 from County Highway 16 to County Road 109. All three bids were more than the engineer's estimate. The low bid was $441,147 more than the estimated budget for the project.
Robjent said at $1,391,146, the project's cost per mile is $326,560 compared to $175,848 per mile for the same type of project on a slightly smaller stretch of the same highway in 2007. Cost of the bituminous paving material has gone from $54.53 per ton compared to $30.90 per ton a year ago, Robjent said.
The board voted to reject the bids. Robjent said the county can try again in the winter to see if a better price may be obtained although he said it would be a bit of a gamble since the industry is in flux.
One of the issues for the county is a highway fund balance that has traditionally been without a reserve to cover the fluctuations in timing between the county's ability to collect revenues and when bills are due.
Robjent described it as living on the edge without building a cash fund balance, which makes it difficult to pay for increases in costs for road building even if the county wanted to go forward with the project. Robjent said the department has done a good job of keeping costs down and tried to save money but prices have gone up dramatically.
"When something happens we don't have much leeway in our cash flow," Robjent said. "We are at historic highs in prices. We don't have the money in our budget to do this project right now. We could do it but it would be a stretch on everything else we are doing. I just think it's a bad time to spend this kind of money."
Commissioner Paul Thiede said he didn't disagree with building a fund balance, but at this time people can see that as a cushion for the county they do without in their own budgets.
Administrator Tim Houle said a fund balance isn't a cushion as much as a way to deal with the intermittent cash flow county government lives with as it depends on tax revenues among other sources. Even with the recent addition of gas tax revenues and a transfer of money to the fund last year, Houle said with their costs up by 86 percent the county can't keep up with that with the tax levy. Having funds in the budget helps shave off the peaks and valleys and is a long-term operating strategy to deal with expenses that exceed revenues in the short term, Houle said.
"You need to have reserves so that you can cash flow," Houle said. "We can certainly rob from Peter to pay Paul and that's what we'll do. It's not a good way to run a railroad."
RENEE RICHARDSON may be reached at renee.richardson@brainerddispatch.com or 855-5852.
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