Building Nevada - May 2006

NDOT Director Challenged by Growth

Think your company has budgeting problems? As director of the Nevada Department of Transportation (NDOT), Jeff Fontaine is forced to deal with dollar amounts that would boggle the minds of most business owners. "We’re currently planning and designing 10 new super- and mega-projects," he said. "The budget for two of these jobs in Southern Nevada will be over $1 billion each." NDOT defines a super-project as one that costs more than $100 million, and a mega-project tops the scales at more than $1 billion. Each year, NDOT spends approximately $400 million on construction projects to build, expand and maintain roadways and bridges in Nevada.

NDOT’s budget is authorized by the Legislature. Funds come from federal highway aid, which averages between $230 million and $240 million a year, as well as state revenue money – chiefly gas taxes, diesel taxes and certain DMV fees. "We are authorized to bond against those revenue sources, both state and federal," Fontaine explained. "We are in the midst of a $1 billion bonding program. This has allowed us to accelerate the progress of our six ongoing super-projects."

Officials at NDOT made the decision to issue bonds and begin work instead of doing the projects on a pay-as-you-go basis, due to several factors, including the current low interest-rate environment. "We were able to bond at interest rates that were below the general rate of inflation – rates as low as 2.7 percent," said Fontaine. "When you factor in the added user benefits to getting projects completed sooner, there’s no doubt that was absolutely the right thing to do. Costs of highway construction are increasing rapidly, with a 15 percent cost increase last year alone. And the land we have to purchase for rights-of-way is also more expensive than it was."

There’s only one problem with making plans for these multi-million dollar projects. Said Fontaine, "We don’t have the money. We are proceeding with plans even though we know we don’t have them funded, because we want to have them ready to advertise for construction as soon as funding is available. These projects take a lot of time. You have to do corridor planning, traffic projections, environmental analysis and community outreach, and then acquire rights-of-way."

Fontaine pointed out, "The increased demand for road projects isn’t based on population growth; it’s based on growth in travel. Not only are more people driving, but per capita vehicle miles are increasing."

And as Nevadans are driving more miles, navigating through a sea of orange cones and traffic barricades, Fontaine is busy finding the funds to build the next billion-dollar project.