The state Department of Transportation has told contractors on the high-speed rail line between Madison and Milwaukee to stop work on the federally funded project "for a few days," in the wake of rail opponent Scott Walker's victory in the governor's race, Transportation Secretary Frank Busalacchi said Thursday.

But contractors immediately started talking about laying off employees, and Milwaukee Mayor Tom Barrett hinted the city could consider legal action if a permanent shutdown of the line shortens the life of a Spanish-owned train manufacturing plant on the city's north side.

"At the governor's request, I have asked contractors and consultants working on the high speed rail project to temporarily interrupt their work for a few days," Busalacchi said in a written statement, referring to outgoing Democratic Gov. Jim Doyle.

"In light of the election results, our agency will be taking a few days to assess the real-world consequences, including the immediate impacts to people and their livelihoods, if this project were to be stopped."

The move follows Tuesday's election of Walker, the Milwaukee County executive, as governor. During the campaign, Walker, a Republican, repeatedly vowed to kill the planned $810 million train line. He will take office Jan. 3.

Even with the federal government picking up the line's full construction cost, Walker has said he doesn't want state taxpayers to pay operating costs, projected at $7.5 million a year, starting in 2013. A state transportation official has said state taxpayers' share could be as little as $750,000 a year, if federal aid covers 90% of operating costs, as it does for Amtrak's existing Milwaukee-to-Chicago Hiawatha line.

Speaking to reporters at the Capitol on Thursday, Walker said he hadn't received confirmation of the administration's move.

"Certainly, for us, we've been pursuing legal options between now and Jan. 3 that would allow us to try and slow down if not stop the train. Certainly there's some optimism if that turns out to be true," Walker said.

Contractors confirmed they had been told to stop work, and some worried they might have to lay off employees if the job grinds to a permanent halt. Construction employment on the line was projected to peak at 4,732 jobs in 2012, with 55 permanent jobs to operate and maintain trains, stations and tracks.

"They just said, 'We're going to stop it for now and we'll see how it goes,'" said Abdulhamid Ali, president of DAAR Engineering, which has a $2.8 million construction management contract for the railway.

Ali said he was told to stop the work in a one-sentence e-mail from the state Transportation Department.

DAAR "will be laying off at least two people with families" immediately, another company spokesman said.

Pat Goss, executive director of the Wisconsin Transportation Builders Association, said state transportation officials also told contractor Edward Kraemer & Sons to halt work on building a five-mile stretch of track in Jefferson County.

"The department did direct the contractor not to proceed," Goss said. "They were told not to work, and at this point that's as much as we know. Kraemer was told not to proceed yesterday, and they weren't given any timeline or any reason why."

That contract was awarded a week or so ago. Kraemer received an order to proceed, and that order was rescinded on Wednesday, Goss said.

Plant's future derailed

At Talgo, the Spanish train company, the announcement won't mean immediate layoffs, but it casts a pall over the future of the plant on the former Tower Automotive property, said Nora Friend, a Talgo vice president.

Talgo has contracts to build two trains for the Hiawatha and two trains for Oregon. It was hoping to build trains for the Milwaukee-to-Madison line as well but was told the state has put the request for proposals for those trains on hold, Friend said.

The company has already hired about 40 people for its current contracts and plans to have a total of 125 on board by next year, Friend and Barrett said. If it had won contracts to build trains for the Milwaukee-to-Madison line and for other states, it would have kept the plant in operation beyond 2012 and expanded, they said.

"The implication is that a lot of people will be losing their jobs," after the current work is done, Friend said. "For us, it means we won't be able to expand. . . . It's very difficult for us to hire people and tell them it's only for a year and a half or so."

Barrett said the city had invested more than $3 million in buying and renovating the part of the Tower property that Talgo is using, in the belief "this would provide employment for many years."

The mayor, who lost to Walker in Tuesday's election, said he would be consulting with City Attorney Grant Langley about the city's options if the project is halted. But he stopped short of directly threatening a lawsuit.

A source with knowledge of the decision-making process said the state made the final call to suspend the decision, but that federal rail officials had let them know they were not eager to get into a protracted dispute with Walker. The reluctance came from bureaucrats in the Federal Railroad Administration and not the White House, the source said.

Plans call for the rail line to operate as an extension of the Hiawatha, and eventually to be extended to the Twin Cities, as part of a larger Midwestern network of fast, frequent trains.

At the same time Walker won the governor's office, voters handed his fellow Republicans control of both houses of the Legislature. Many of them have been critical of the rail plan, and state Rep. Robin Vos (R-Racine), the Legislature's most vocal opponent of passenger rail, is poised to become Assembly co-chairman of the powerful Joint Finance Committee.

But the weekend before the election, state and federal officials quietly signed a deal to commit the state to spend all of the $810 million in federal stimulus money allocated for the project. Transportation officials did not announce the weekend deal but confirmed it after the Journal Sentinel learned of it.

Walker blasted that deal, and Barrett said the state should have been more transparent in its dealings. The mayor said he supported a temporary delay in the work to allow more public discussion of the impact of a permanent halt.

It is not clear how difficult it would be for Walker to legally extract the state from its commitment. He has said he would urge Congress to let Wisconsin keep the money and spend it on roads and bridges, and he reiterated that stand Thursday.

"The whole reason we made a point of raising our concerns about this is I don't want the taxpayers of this state to be stuck with a bill of $7½ (million) to $10 million a year when we have roads and bridges that need to be fixed," Walker said.

Without an act of Congress, however, federal rules would require the state to repay the federal government for any money already spent on the project and give up all the unspent money if the rail line doesn't go forward. Doyle and his fellow Democrat, Barrett, have said Walker was misleading voters by suggesting Wisconsin could keep the federal money, instead of seeing it redistributed to other states' rail projects.

Barrett repeated those comments Thursday. He said he saw no chance of the money being spent on Wisconsin roads if the train line is halted, and the best alternative to sending it to other states would be to use it to reduce the federal deficit.

Madison Mayor Dave Cieslewicz urged Walker to reconsider his position. Cieslewicz said he saw no chance of the money going to either roads or deficit reduction, adding, "It will go to another state … to create jobs there."

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Stop work order

Construction employment on the line was projected to peak at 4,732 jobs in 2012, with 55 permanent jobs to operate and maintain trains, stations and tracks.

Operating costs are projected at $7.5 million a year.

Larry Sandler reported from Milwaukee and Jason Stein reported from Madison. Patrick Marley of the Journal Sentinel staff contributed to this report from Madison.