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Money crunch hampers Minn. inspections

By Brian Johnson
Dolan Media Newswires

Minneapolis — Minnesota’s electrical-inspection process is being short-circuited by a policy that diverts building permit fees to the state’s general fund.

Critics say the diversion of fees and an overall reduction in revenue streams to the Minnesota Department of Labor and Industry are putting a drag on inspections, resulting in project delays.

The issue has been festering for years and is expected to escalate once the construction economy picks up and there’s more work to inspect.

“It’s frustrating for the inspectors, frustrating for contractors, frustrating for owners and I am sure it is frustrating for the people” at DOLI, said Judi Rubin, president of the Minnesota Electrical Association.

Of particular concern to electrical contractors is a policy in effect since 2007, when the Legislature directed DOLI to transfer some of its revenue to the general fund.

Specifically, the Legislature called for $1.67 million to go to the general fund by June 30, 2008, followed by an additional $1.515 million by June 30, 2009, and $1.5 million “each year thereafter.”

Historically, that $1.5 million, which comes from building permit fees, has been intended as a pre-payment for electrical inspections.

The Legislature’s intent was for the diversion to be temporary, according to James Honerman, a spokesman for the Minnesota DOLI, which oversees code compliance and inspections, among other duties, through its Construction Codes and Services Division.

But it was written into law as an annual, ongoing transfer.

The transfers, combined with reduced permit-fee revenues because of the lack of construction in a soft economy, left the Construction Codes Fund with a shortfall that resulted in the layoff of 11 Construction Codes Licensing Division employees in 2009.

In addition, the department eliminated eight vacant positions, reduced outside electrical-inspector contracts by 5 percent, canceled training and education initiatives and reduced expenses such as out-of-state travel, according to a DOLI document.

“If you take $1.5 million each year, that is going to affect the service Labor and Industry can perform for electrical inspections,” Honerman said.

The Legislature offered some relief last year when it approved a permit-fee surcharge to offset the loss of about $1.2 million of that $1.5 million in diverted money. But unlike the diversion of the permit fees, the surcharge expires at the end of next year.

With the cuts, the department is relying more on its own employees to do inspections that contract inspectors used to do, according to Scott Nutting, an electrical inspector and president of the Contract Electrical Inspectors Association of Minnesota.

In some cases, a contract inspector who lives close to an inspection site in outstate Minnesota may be sitting idle while a state employee drives for hours to get to an inspection, according to Nutting.

All of which puts additional pressures on project schedules.

“It is delaying some jobs that are going on up there now,” Nutting said.

Eric Seanger of Melrose Electric in Melrose said his company works throughout the state and relies on the services of state, city and contract inspectors.

Seanger, who also is mayor of Melrose, agrees that the diversion of permit fees is having a negative effect on inspections, but he’s quick to add that he doesn’t blame the inspectors.

“The inspectors are trying and are frazzled,” he said. “They are understaffed.”

Tom Kopperud, an owner of Norman’s Electric in Rushford, said that when he files an affidavit for inspection, it takes four to eight weeks for that request to get to an inspector in the field. It used to be two weeks maximum, he said.

He likens the process to dealing with the federal government.

“Because of the load they have, and the few people they have because of the cutbacks, you really can’t talk to anyone up there anymore,” he said. “You pretty much have to do e-mail,” and wait for an electronic response.

“Here in the real world, you have to deal with real-time schedules and you don’t have time to wait for that.”

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