Legislature(2003 - 2004)
05/05/2003 09:16 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 155
An Act relating to the submission of payroll
information by contractors and subcontractors
performing work on a public construction contract; and
providing for an effective date.
Co-Chair Harris MOVED to ADOPT work draft #23-GH1119\S,
Craver, 5/1/03, as the version of the bill before the
Committee. There being NO OBJECTION, it was adopted.
GREG O'CLARAY, COMMISSIONER, DEPARTMENT OF LABOR AND
WORKFORCE DEVELOPMENT, provided an overview of the
differences between the bills. He pointed out that the only
change had been made to Page 2, Line 26, and that section
was deleted. It addressed "lease hold improvements" and was
controversial.
GRAY MITCHELL, DIRECTOR, DIVISION OF LABOR STANDARDS AND
SAFETY, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT,
offered to answer questions regarding the fiscal note.
Co-Chair Harris noted that the bill would raise revenue for
the State, however, he asked if it would be costing the
State more money for those contracts.
Commissioner O'Claray replied that was correct. There would
be a small increase in costs to cover those contract costs.
Prior to the bill, the State was "eating" that cost through
the general fund budget. He thought that it amounted to
about 1% of the contract price. It will be a "pure revenue
generator" and in the Murkowski Administration terminology,
it acts as a "user fee". Prior to this time, the Department
had not been charging contractors for investigation and
compliance of the certified payroll for the minimum wage
rate. The legislation has those that use the service pay
for the services.
Co-Chair Harris pointed out that the bill places a user fee
on contractors. He questioned if any of those funds would
be available for further training and/or retraining
displaced workers. Commissioner O'Claray replied there was
no money allocated for that concern. The Administration is
not "warm and fuzzy" about program receipt authority. He
referenced other special funds such as the Worker's Comp
Safety Fund.
Representative Croft asked which fiscal note would accompany
the bill.
Commissioner O'Claray responded that the correct fiscal note
indicates a $2.5 million dollar change in revenue with a
total general fund source of $53.9 dollars for
reclassification of a position within that Department, who
will receive the on-line and hard copy certified payroll.
He added that the position would be changed to an
accounting-tech position.
Representative Whitaker referenced the fiscal note in the
amount of $2.5 million general fund dollars generated per
year. He asked if that fee would be paid by contractors or
through the State contracts. He accessed that through the
preparation of the bids, each contractor would include that
cost and would be essentially charging the State more money.
Commissioner O'Claray advised that the money would come from
a larger "pot". There is a cap on each of the fees with no
more than $5,000 per public contract. Representative
Whitaker inquired if the federal dollar amount would be
reduced for the charges. He requested further explanation.
Commissioner O'Claray addressed the "relativity" of that
amount. He used the example of building a road, a project
in the amount of a $20 million dollars, and then adding the
$5,000 fee to that job. Prior to the proposed legislation,
the Legislature was funding positions, which were being used
to investigate and enforce Title 36 laws. That money was
coming directly from the general fund. Through the
legislation, those funds would come from federal
construction dollars.
Co-Chair Harris inquired what the $2.5 million dollars was
intended to be used for. Commissioner O'Claray explained
that it was his plan to replace the entire general fund
budget for the Division of Labor Standards and Safety and
that amount would adequately cover those costs. However,
the Governor has submitted several user fees and position
revenue generating legislation and that HB 155 was included
in those pieces.
Representative Croft MOVED to ADOPT Amendment #1, #23-
GH1119\S.1, Craver, 5/5/03. (Copy on File).
Co-Chair Williams OBJECTED.
Representative Croft acknowledged that there had been "good
work done" dividing up responsibilities of the general
contractors and the sub contractors. The way current
language reads, the Department could withhold an amount
sufficient to pay what needs to compensate for enforcement.
If a one-sub contractor was underpaying their worker, the
difference would be the "hammer that you have", in
opposition stating that they had not properly filed or paid.
Then the entire payment could be withheld until that was
remedied. Representative Croft stated that the entire
payment should be subject but rather that he would like to
see them have the right to withhold against the prime.
Amendment #1 addresses that concern.
Commissioner O'Claray responded that the Department had
dealt with the Associated General Contractors (AGC)
regarding the compromise. He indicated that the Department
would be more comfortable leaving the language as is. He
acknowledged that an "aggressive approach to control would
happen" with some of the changes proposed.
A roll call vote was taken on the motion.
IN FAVOR: Croft, Joule, Moses
OPPOSED: Stoltze, Whitaker, Chenault, Hawker, Meyer,
Williams, Harris
Representative Foster was not present for the vote.
The MOTION FAILED (3-7).
Representative Croft MOVED to ADOPT Amendment #2. (Copy on
File).
Co-Chair Williams OBJECTED.
Representative Croft explained that the amendment would
delete the definition of contractor, as there currently is
an adequate definition in statute. Additionally, it would
give the Commissioner of the Department of Labor & Workforce
Development the authority to receive the money as program
receipts for running that Department. Representative Croft
acknowledged that the Administration does not like the idea
of program receipts, noting that he had spoken to the Cheryl
Frasca, Office of Management and Budget, regarding a reform
of that idea. He added that those fees are as good as "any
other" to have as program receipts.
Commissioner O'Claray reiterated that under the direction of
the Office of Management and Budget and the Governor's
Office, he would not support the amendment.
Representative Croft reiterated that the fee was
appropriate.
A roll call vote was taken on the motion.
IN FAVOR: Croft, Joule, Moses, Harris
OPPOSED: Whitaker, Chenault, Hawker, Meyer, Stoltze,
Williams
Representative Foster was not present for the vote.
The MOTION FAILED (4-6).
Representative Whitaker referenced Page 2, Section 2, asking
how many primary contracts there had been per year, which
would apply to that section. Commissioner O'Claray
responded around 1,000 contracts.
Representative Whitaker commented that if there were that
many, how would the fiscal note work. Mr. Mitchell
explained that they had provided a five-year average with
approximately 1,000 projects per year. The average value of
those projects was roughly $250,000 per project and which is
how the $2.5 million dollar fiscal note came to be.
Co-Chair Harris pointed out that the bill called for a 1%
contract price not to exceed $5,000 dollars. Representative
Whitaker replied that he was now comfortable with the
number.
Vice-Chair Meyer MOVED to report CS HB 155 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so moved.
CS HB 155 (FIN) was reported out of Committee with
"individual recommendations" and with a new fiscal note by
the Department of Labor & Workforce Development.
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