HomeMy WebLinkAboutCOM 0569.015 2002-2004 HAP1
HAWAII ASPHALT PAVING INDUSTRY
April 6, 2004
COUNTY OF HAWAII ~y~
25 Aupuni ~ ~
Hilo, HI 96721 °"`~'r_~.L~" ~
Gentlemen:
I am speaking on behalf of the Hawaii Asphalt Paving Industry (also known as HAPI) in opposition to Resolution 173-04.
We believe that fuel tax revenues have not been well spent in the past and the proposed increase provides for more
inefficient use of public funds in the future.
At the heart of our opposition to the resolution is the administration's claim that the County saves money by resurfacing its
roads using public workers (See Fuel Tax 2004 -Highlights, page 1 of 5, para. 2, bullet 2). Based on figures presented in
the administration's Highlights, certainly this must be mistaken. On page 5 of Highlights, the administration claims that the
cost of purchasing the asphaltic concrete accounts for 82% of the County's cost in road paving and all other costs only
amount to 18%. Those of us in the industry find this, frankly, hard to believe. While one might expect that the County's
expense ratio might be more weighted toward material costs than industry's, in private industry an expense ratio, material
to all other costs is closer to 50% each. It is difficult to explain such a great variance, even if the County's labor costs are
much lower. One wonders if the administration's accounting of paving cost is in accordance with Generally
Accepted Practices. Have all labor and labor burden costs related to paving been properly allocated as paving expense,
or are these expensed to the general fund? How about the future costs related to public worker retirement and equipment
costs such as maintenance, fuel, oil, and depreciation?
If the County were far more productive than industry, that might explain such a wide variance in the expense ratio.
However, a comparison of productivity between the County in-house paving and industry paving shows that industry is far
more productive. On a typical day, the County places 200 - 250 tons of hot mix. On a State or County Federal Aid
Project, where contract conditions severely restrict productivity, private industry paves 500 - 800 tons a day. On a private
road where there are fewer restrictions, 1000 tons a day or more is common. The difference in productivity between
county in-house paving and private industry strongly suggests that costs are much less when private industry
paves roads than when the County paves their own roads. In addition, the highly competitive bid system ensures that
the contractor's lower costs are passed on to the taxpayers.
The Hawaii Asphalt Paving Industry is also opposed to the resolution because the paving program proposed does not
ensure the result promised. A critical premise in the administration's proposal is the claim that the County "would be able
to resurface roads on a 20-year cycle." While this may be true from a purely fiscal point of view, what will be the condition
of the road 5, 10, or 20 years after a County in-house paving project?
When private industry paves a County road, there are many factors that ensure that the project serves its intended life.
First, a Registered Professional Engineer designs the project to last a given period of time and stamps the plans with his
engineering stamp. A detailed material certification review and approval process ensures the proper materials are used
for construction. During construction, materials are continually sampled and tested for quality. Either County inspectors
specifically trained for the task or privately contracted inspectors inspect the work to ensure all work is performed in
compliance with the plans and specifications. Core samples are taken of the completed product and tested to verify that
required compaction is attained. Incidental work is also performed, such as adjusting of manholes, valve boxes, etc., and
dressing of shoulders to ensure the quality of the overall project. Increasingly, smoothness testing is also required
because the public expects a smooth road and because smooth roads last longer. The County follows none of these
crucially important practices when the County paves in-house. Given that nothing is done to assure the
expected life of the pavement, the expectation that the paving will last 20 years is unfounded. Amore
reasonable expectation is that the pavement will prematurely fail and cost even more to repair and resurface than
it would have cost to properly engineer and construct in the first place. ~
Comm. No. ~ q ' ~ S
Ref, To: ;~ife~bd Ci
1 of 2 Ref. Date
Finally, we are opposed to the resolution because when the County paves in-house, the County obligates itself long after
a project is completed because of the nature of hiring civil service employees. The administration's proposal entails hiring
53 additional personnel. The long-term financial impact of hiring these additional employees will last for decades, long
after the project is completed. When the County contracts out paving work, the County's obligation is complete
when the contract is paid in full. We submit this is a wiser use of public funds.
The Hawaii Asphalt Paving Industry stands ready to properly and economically pave the County's roads. While many of
our County roads certainly need work, We suggest that the County Council require a more accurate accounting of the
costs and benefits of in-house paving before increasing any tax to pay for it.
Thank-you for your consideration.
For~the HAPI Boa/rd of Directors
Les Pedersen, HAPI Member/Director
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