State and local officials plus labor leaders and construction workers have turned the first shovels of dirt on the replacement project for Seattle's Alaskan Way Viaduct.

State Transportation Secretary Paula Hammond filled in for Gov. Chris Gregoire on Tuesday afternoon. The governor is on her way to speak to congressmen in Washington, D.C., about federal Medicaid dollars needed to balance the state budget.

As ground on the southern part of the project is broken, Seattle Mayor Mike McGinn and Gov. Gregoire are still fighting over who will pay cost overruns.

The excavators are ready to go just east of the viaduct and west of Qwest Field, where work will start on a side by side roadway parallel to the old viaduct that will run from South Holgate to South King Street before the tunnel begins.

LINK: Simulation Of Southern Mile Of Viaduct Construction Stages

An ongoing issue with the replacement is the cost. While the budget for the project is $2.8 billion, it's unknown how much the project will really cost.

The state wants the city of Seattle on to pay cost overruns. The mayor said it should be the state's responsibility and asked the city council to add language to Seattle's agreement with the state that makes it clear the state is responsible for cost overruns.

“I just kind of think that when you have a big project, when you know it is likely to have cost overruns, you ask the question in advance of who will pay,” said McGinn.

The governor's office said if the agreement is altered, it would delay the project. Some City Council members said they disagree with the mayor and would strike any language from McGinn's proposed contract that could delay or stop the project.

The viaduct along the downtown waterfront is expected to stay open during construction of the new roadway. Officials hope the project -- the south mile of the structure near the stadiums -- will be completed in late 2013.