St. Louis County Risks $6.5 Million in Federal Funds Over Labor Agreements

Commissioner Keith Musolf put the choice facing St. Louis County's board without softening it: "either wavering from our own resolution that we use Project Labor Agreements for local workers in our area, or federal funding."

That is $6.5 million on one side of the ledger, spread across five county highway projects already stalled while staff wait for clarity on whether bids can even be advertised.

The tension traces to an email from FHWA Minnesota Division Administrator Wendall L. Meyer, which warned that projects using Project Labor Agreement language without explicit FHWA approval would not be eligible for federal-aid funds. Meyer's message also noted that the agency's approach to PLAs on certain projects remains pending, leaving county staff with no clear timeline for a green light.

St. Louis County has required PLAs on public works contracts exceeding $150,000 under a standing board resolution, a policy Musolf described as "an insurance package" that keeps projects on schedule and on budget while directing tax dollars into the local construction workforce. Stripping that language from pending federal funding applications would mark a significant departure from that policy and reshape how the county's road and bridge contracts are advertised and awarded.

Without PLAs, projects would go to open competitive bid, potentially drawing non-union contractors from outside the region alongside local union firms. That expanded bidder pool could lower initial contract costs but would remove the collective-bargaining, wage, and scheduling provisions that PLAs guarantee. Local trades unions and the contractors who have built relationships under those agreements would lose leverage; contractors previously priced out of PLA-covered work would gain entry.

The alternative math is equally blunt. If the county keeps its PLA language and the FHWA follows through on Meyer's warning, St. Louis County would need to replace $6.5 million from local taxes or borrowing to fund the same five projects.

Neither path is clean, and the clock is already running. Northern Minnesota's construction season compresses into a narrow window each year, and the five projects have been sitting idle because county staff declined to advertise bids on contracts that could later be ruled ineligible for federal reimbursement. Further delay risks pushing work into 2027 and driving up costs through another round of inflation in materials and labor.

The county board had not announced a formal vote on removing PLA requirements from the pending federal applications as of late March.