Legislature(1997 - 1998)
04/25/1997 03:30 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 209 - PROJECT LABOR AGREEMENTS ON PUB CONSTR. Number 2380 CHAIRMAN ROKEBERG announced the committee would address HB 209, "An Act regulating the use of pre-hire project labor agreements for public construction projects by the state and political subdivisions of the state." Number 2422 REPRESENTATIVE AL VEZEY, sponsor of HB 209, said he introduced the bill because we are dealing with an area of the labor law that is still evolving in the country and courts. It is a trend that started in the 1980s with a case that became known as the Boston Harbor case. There have been other cases since that time and there are still matters that are being adjudicated in the courts. Representative Vezey said, "In essence, what we saw over the decade since World War II is that labor unions found themselves losing market share. And like all economic institutions, they came to the realization that if they couldn't win in the market place, that it is much easier to compete if you get a legislative grant of limited competition. This is what they succeeded in doing in the Boston Harbor case involving a public work's project. Since this time, this sort of subject of where political subdivisions mandate that work be performed under a...." TAPE 97-49, SIDE B Number 0001 REPRESENTATIVE VEZEY continued, "...bill was put together to address the supreme court's decision in the Boston Harbor case and that is that a political entity may enter into a project labor agreement (PLA). That is an agreement that requires a collective bargaining agreement with a bargaining unit, such as typically referred to as a labor union, if there was a legitimate public purpose." REPRESENTATIVE VEZEY said what he is attempting to do by introducing the bill is to lay out what criteria has to be evaluated to determine that it is in the public's best interest to limit competition in this manner. He explained the bill is very generic and wide open. There are some very simple requirements that an elected or government body would have to show were being met before they could say, "It is in the public's interest to require that this be done under a project labor agreement." He noted the requirements are laid out in the bill and he would be happy to review them if the committee wishes. Number 0105 DONNA C. WILLARD, Attorney, came before the committee to testify on HB 209. She noted she has been involved in matters concerning project labor agreements (PLAs) in Alaska for at least the last four years. Ms. Willard indicated there are both good and bad PLAs. She said one of the good ones was utilized for the building of the Denver International Airport where union and nonunion workers negotiated with the city and county of Denver and produced an agreement where labor lived amicably. Nonunion workers were not forced to join unions in order to hold jobs on that project and nonunion contractors were not forced to sign labor agreements in order to prosecute work on the project. MS. WILLARD said the bad PLAs have been seen surfacing in Alaska over the last five or six years. Basically, what they generally provide is that in order for a nonunion contractor, if he becomes the low bidder, to work on a public construction project in this state he must sign a labor agreement, which is a PLA, with the effective unions. He is generally not allowed to hire his own wealth of employees other than a few top senior managers and he must go to the union hiring halls in order to get his labor for that project. Ms. Willard explained this not only disadvantages the nonunion contractor who is unfamiliar with union labor rules and other aspects of unionism, but also saddles him with an ineffective unknown labor force for the particular project. She said what it does is stifle competition. Number 0212 MS. WILLARD pointed out a case which is currently before the supreme court, which was won in the lower court, is entitled Lampkin v. Fairbanks North Star Borough. In that case, the court ruled that the PLA was unconstitutional as it violates the equal protection clause of the Alaska Constitution and it constituted a taking by requiring nonunion workers to join a union and pay into pension funds from which they would never recoup any benefits. She said such agreements that contain these provisions violate the procurement codes of the state of Alaska and, in this case, the Fairbanks North Star Borough. Ms. Willard explained the whole idea of procurement codes is to ensure that maximum open competition be allowed for public construction projects in order to promote public interest, to get the best bid and lowest bid from the most responsible bidder. When these types of provisions are incorporated into specifications for construction contracts, you generally drive away the nonunion contractor which lowers the level of competition. She said the courts that have considered this from the aspect of the procurement codes in respective states, have generally found that, except in exceptional circumstances, such agreements violate the procurement codes and only in exceptional circumstances should they be allowed to override the procurement code provisions concerning maximum competition. MS. WILLARD said it seems to her that in a state, out of all of the states in the union, we pride ourselves in the right and freedom of the individual to the maximum extent possible. It is absolutely an anathema to say, with respect to the expenditure of public funds, that there is condition that if you want work on a public construction contract, you must join a union even though you long ago exercised your free choice and decided not to do so. MS. WILLARD said all HB 209 does is level the playing field. It make it fair from both sides. Everyone gets to bid and may the best person win, whether it is a union or nonunion contractor, whether they employ union workers or nonunion workers. It is a uniform set of rules which is in the best interest and uphold the highest standards that we have in Alaska. Number 0360 REPRESENTATIVE COWDERY asked Ms. Willard to define "state and political subdivisions." MS. WILLARD said, "Literally it means the state, the boroughs, the school districts, the public components in this state and it goes no further." Number 391 REPRESENTATIVE COWDERY asked if the legislation has a bearing on the interties. MS. WILLARD said it appears that somehow the municipality of Anchorage has, without public notice or assembly input, just signed a memorandum of understanding with the International Brotherhood of Electrical Workers (IBEW) agreeing, in terms of its rule with respect of the intertie, to have the IBEW as the exclusive union- only contractor. She noted that both the Chugach Electric Association and Matanuska Electric Association have revoked those agreements because they have determined, through their own studies, that if the intertie projects go union only, we are talking about millions of dollars in added expense to get the north and south interties built. Number 0484 REPRESENTATIVE COWDERY asked Ms. Willard that if the municipality's agreement were to be challenged, would it hold up through the system. MS. WILLARD said, "My understanding of the way that the boroughs operate, and I did a fair amount of research in this because of the situation I ran into in Fairbanks, that I don't see where the mayor got the authority under the state statutes with respect to borough powers to without assembly approval enter into such an agreement, but I guess that's going to be litigated." REPRESENTATIVE COWDERY asked if the bill would restrict anybody involved in the construction business from bidding or procuring jobs. MS. WILLARD indicated it wouldn't restrict anybody. She said it sets up a uniform set of standards that everyone will abide by on public construction contracts in Alaska, be it union or nonunion. Number 0539 JOHN BITNEY, Alaska Housing Finance Corporation (AHFC), came before the committee to testify. He said AHFC is brought in under the bill by the definition section where public corporations are included in the definition of "state," on page 3, line 15. MR. BITNEY referred to page 2, lines 2 through 23, and said there are six provisions that requires them to do a findings and analysis section before they do any kind of a project labor agreement. He explained that in projects they do through financing, where they have a private developer or are basically paying for the cost to do an upgrade or construction with the use of AHFC money or housing and urban development (HUD) money on a public housing project, one of the things they've been doing is awarding points during the procurement process for bidders who are coming in with PLAs to provide some job training aspects. For example, AHFC is trying to seek a federal grant to allow a contractor to partner up with the Private Industry Council in Fairbanks to provide job training opportunities for people who are going to be working on a public housing project. He noted they are also doing the same thing in Anchorage with two projects that are financed with a private developer where AHFC has asked them, as part of their financing agreement, to provide that a PLA to team up with the YMCA and the carpenter's union to offer job training placement on a pre- apprenticeship program. Mr. Bitney said AHFC would like to continue to be able to provide these kinds of things with their projects. Number 0659 MR. BITNEY referred to the first provision on page 2, line 8, and said AHFC would be required, before they could do a PLA, to show that the agreement would result in greater employment opportunities. He said they could easily do that for each of the cases, however, in the second provision on line 12, they would be required to show that this would result in significant identifiable cost savings. He stated job training costs money and they believe that with those two items in the bill, it would prohibit or extremely limit AHFC's ability to do those kinds of programs. Number 0690 MR. BITNEY referred to page 2, line 20, item 5, and said they could only do a PLA if the size and complexity of the project is significantly greater than public projects ordinarily constructed by the state, which would be AHFC. He said the language appears to be ambiguous. Mr. Bitney noted their projects regularly and annually range in size from thousands of dollars to millions of dollars. He state that AHFC is opposed to HB 209 as it is currently written. Number 0722 REPRESENTATIVE COWDERY said it would seem to him that the best qualified contractor that gives the state the best benefit, in hard dollars, should be the one that gets the bid, whether or not they have a social program that AHFC's chosen contractor abides to or doesn't abide to. Number 0823 MR. BITNEY said it is his understanding that in terms of the contractor for the projects, they don't necessarily have to be union. He said there is a criteria in AHFC's award process where they receive additional points if they have this job training piece. Mr. Bitney noted it is not a requirement that it necessarily be union, but in these cases that is what is happening. REPRESENTATIVE COWDERY referred to the point process that AHFC uses to evaluate the bids and said it seems to him that is not really a level playing field. Number 0881 REPRESENTATIVE VEZEY said he doesn't believe Mr. Bitney described pre-hire agreement or a PLA. He said there is a training program as part of AHFC's procurement. MR. BITNEY responded, "I will immediately seek legal council if that is indeed the case, but our understanding in reading the bill and looking at it -- just my looking at it was I assumed, and I will check that, that those kinds of things as far as our process coming in and being submitted as part of the application that that would fall under this definition, but I will double check that immediately." Number 0958 CHAIRMAN ROKEBERG said Mr. Bitney indicated that within the financial terms of their lending agreements on particular projects that they will design job training programs. MR. BITNEY indicated that is correct. CHAIRMAN ROKEBERG said, "I'm really rather disturbed to hear that because it seems to me that there is an extraordinary problem for potential abuse if you're going to be inserting any kind of a refinancing requirement -- financing agreement that requires job training. That could really be subject to quite a bit of discussion and it leaves a lending institution an incredible amount to dictate what has to be done as a condition of a loan. Could you expand on that a little bit?" MR. BITNEY explained that Brighten Park in Anchorage is a 80 unit multifamily complex that is being constructed at Bragaw Street and the Glen Highway. He told the committee members that a representative of AHFC went to the community council meetings in the area before the loan was approved. They received a lot of public input. There was concern about adding more multifamily units in the Mountain View area of Anchorage. Mr. Bitney said the agreement to try and provide some job training as part of the project was something that came up and it was taken to the board for approval and was done so per an agreement with the developer. CHAIRMAN ROKEBERG asked if that was the only project where this has been done. MR. BITNEY responded, "Mr. Chairman, in the situation where it's a financing, that is correct." Number 1091 SAM KITO III, Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities (DOT/PF), came before the committee to testify. He said DOT/PF currently is not entered into nor have they worked with any PLAs. The department's interest in HB 209 is to preserve the ability to, in the future, work with PLAs if that becomes a viable option in project contracting for the department. MR. KITO pointed out that a concern DOT/PF has with the legislation is on page 2. As Mr. Bitney commented, the department believes those sections would be extremely subjective and potentially restrictive. It would be difficult to adequately demonstrate greater employment opportunities, significant identifiable cost savings, greater safety, significant labor unrest and items such as size and complexity of a project. He noted the size and complexity is independent. Subsection (a) would make it extremely difficult to ever enter into a project labor agreement. Number 1224 MICHAEL SAMSON, President, Samson Electric, testified via teleconference from Fairbanks in support of HB 209. He informed the committee he has reviewed the bill, it is a well written bill and is very fair. He said the PLAs he has run into up to this point are completely one-sided. They are nothing more than political paybacks for organized labor in this state for their election contributions. They serve nothing more than to line the pockets of the unions and they do not help the union workers. Mr. Samson pointed out that his company is nonunion and employs between 20 to 80 electricians. He said they do not discriminate as they hire union or nonunion. Mr. Samson explained the nonunion workers that he employs have had the opportunity to join the union and chose not to. They choose to deal with their wages as they see fit and the pension money they receive from the Davis-Bacon Act is theirs. If they work one week and leave, they get their money. The only law that would restrict that is if you are a union worker. Number 1372 JEFF ALLING, President, Alcan Builders, Incorporated, testified via teleconference from Fairbanks in support of HB 209. He informed the committee his business happens to be a member of the Associated General Contractors and has been for many years. Mr. Alling explained he supports the bill because he is against bad PLAs altogether as they restrict our constitutional rights of equal access and freedom of association. He said they have a right to do business with whoever they choose to do business with. Mr. Alling stated he is not against or opposed to unions. Unions have a potential to provide a skilled workforce. His firm employed over 99 union employees last year. Mr. Alling said bad PLAs cater a union only group restricting access of the nonunion skilled tax payers. He said bad PLAs are (indisc.) to taxation without representation. Mr. Samson informed the committee that he and his business partner are not willing to give up their employees because of restricted PLA legislation. House Bill 209 would restrict PLAs and allow for a more competitive atmosphere resulting in cost savings in tough budget times to the state of Alaska and local governments. Mr. Alling said there is one thing missing out of Representatative Vezey's bill as he believes PLAs should be outlawed altogether. Number 1521 RUSS SCHWARTZ, President, Associated General Contractors of Alaska; Senior Manager, Osborne Construction Company, testified via teleconference from Anchorage in support of HB 209. He informed the committee his company currently employs over 700 Alaskans. He read the following statement into the record: "I've been actively engaged in the construction industry for over 35 years. It is my experience that project labor agreements on taxpayer funded projects are bad public policy. However, if a project labor agreement can be shown to be in the best interest of Alaskans, through clear convincing evidence that would be required by this bill, then I would not voice opposition. "Unrestricted open bidding procedures is the best way to serve the public. Project labor agreements, by definition, restrict those who would otherwise be qualified from bidding, and force those with existing collective bargaining agreements to enter into agreements they did not participate in. Individuals who make their living in a construction industry are forced, under restricted PLAs, to give up their constitutional rights of equal protection, the right of freedom from forced association, the due process guarantee and their right of equal access. But if we are to have project labor agreements, lets have them, as limited, under House Bill 209. Thank you, Mr. Chairman." Number 1627 CHAIRMAN ROKEBERG asked Mr. Schwartz if one of the benefits of PLAs is that they can stipulate local hire. MR. SCHWARTZ informed Chairman Rokeberg that as he understands Alaska law, they can't require local hire, but PLAs can be written to show certain restrictions as far as where you live and how long you've been there. Under federal law, Alaska still has designated certain areas as being under employment duress - high areas of unemployment. Number 1707 REPRESENTATIVE COWDERY asked, "How many crafts and what different crafts off the top of your head -- could you name some of them that you employ?" MR. SCHWARTZ responded that they employ operators, carpenters, laborers, teamsters, masons, pipefitters, electricians, et cetera. If it has anything to do with construction, they probably employ them. Number 1760 JUDY MONTGOMERY, Employee, Associated General Contractors of Alaska, testified via teleconference from Anchorage in support of HB 209. She said her organization is a nonprofit trade organization that represents over 600 contractors and associated businesses in Alaska. She stated unrestricted uncompetitive bidding procedures for public works projects are the most prudent way of serving the public's interest in accordance with the state procurement code. Ms. Montgomery said, "A public sector project labor agreement is a government mandate for the job site contractor and subcontractors employ only members of a union on the project. And like most collective bargaining agreements, the PLA is usually negotiated between the unions and the government procurement agency and is forced upon the contractor." MS. MONTGOMERY said government-opposed PLAs limit the competition for public work, increase the cost of public infrastructure and threaten individual rights and freedom. She stated public sector project labor agreements increase the cost of construction, including the private work that manufacturers and other American businesses find necessary to maintain their competitive and world economy. Ms. Montgomery requested the support of the committee. Number 1875 JULIE DUQUETTE, Employee, Osborne Construction, testified via teleconference from Fairbanks in support of HB 209. She stated she has lived in Fairbanks since 1953, and has worked on various construction projects with both union and nonunion contractors. Ms. Duquette said she doesn't feel the state should require a contractor, on a public construction project, to enter into a pre- hire agreement with a labor organization. With a competitive bidding process, all the contractors should be allowed the option to sign a project labor agreement. The state of Alaska has set wages under the Davis-Bacon Act to ensure fair wages are paid and to make contributions on behalf of the employees for a benefits fund. She sees no reason why a public or state project should require a contractor to sign a project labor agreement. Ms. Duquette said she would recommend a favorable vote on HB 209. Number 1953 REPRESENTATIVE COWDERY asked Ms. Duquette to elaborate on the Davis-Bacon Act requirements. MS. DUQUETTE said, "The Davis-Bacon requirements are set on whether it's a high Davis-Bacon project or a low, there is a set wage where when you do competitive bidding, whether you're a union or a nonunion contractor, you're wages is set and you set up a benefit package that you pay into for your employee - similar to what the union packages are." Number 1993 HAROLD SKELTON testified on behalf of himself via teleconference from Fairbanks. He noted he is a senior manager for Osborne Construction. Mr. Skelton urged the committee to pass HB 209 as all Alaskans should be allowed to work on public projects and not just those who choose to be members of a union. Furthermore, he supports the open and competitive bidding process. The past has shown efforts have been made to limit the competitive bidding process by placing PLAs in the bid documents. Mr. Skelton said HB 209 will protect all workers and contractors and stop the waste of public and private funds and time arguing this issue in court. No government agency should mandate that it's constituents belong to a union to be able to be employed. He said he supports HB 209. Number 2092 TONY FAZIO, Co-owner and Vice President, Slayden Plumbing and Heating, testified via teleconference from Fairbanks in support of HB 209. He said they have had a lot of problems with PLAs. By passing HB 209, it will allow his company to focus more on the work they need to do. He thanked the committee. Number 2154 KEVIN DOUGHERTY, Alaska Laborers Union, testified via teleconference from Anchorage. He said he believes the current law is sufficient. He referred to the Healy coal project and said it was a project that Governor Hickle and Joe Usibelli put together in 1993. That project was voted on unanimously by the Alaska Industrial Development and Export Authority (AIDEA) Board to support the project labor agreement because of what it accomplished for the project. It accomplished harnessing Alaska labor support for the project in terms of the private, federal and state funding, local hire and the owner's ability to negotiate an effective cost savings process as well as having standardized shift work, overtime and terms of employment. Mr. Dougherty said he thinks that the wise business practices of Governor Hickle and Mr. Usibelli can probably speak for themselves in Alaska. He informed the committee of several court cases where PLAs were upheld. Mr. Dougherty said he thinks it is best to look at projects. If you go out there, you'll find there are union and nonunion contractors on the projects and there are union and nonunion members on those projects. He thanked the committee for listening. Number 2360 CHARLES ELWOOD testified on behalf of himself, via teleconference from Fairbanks, in support of HB 209. He indicated he has worked as a superintendent for Osborne Construction Company. He also used to be a member of the Carpenters Union for 33 years and resigned a few years ago. Mr. Elwood said what he sees with the project labor agreements is the union "fat cats" are lining their pockets. He referred to PLA agreements that are adopted and said 95 percent of the people would never see any of the money or revenue. Once the project labor agreement is over, the people will probably be unemployed and their pension funds will probably go right into the general fund of the labor union. He again stated he supports HB 209. TAPE 97-50, SIDE A Number 0002 REPRESENTATIVE JERRY SANDERS questioned who the union "fat cats" are. MR. ELWOOD indicated he is speaking particularly of the union bosses. These people are hired and they work 52 weeks a year at the highest scale the union can pay and he sees very little that they do for their people. Number 0066 KARL HNILICKA was next to testify via teleconference from Fairbanks. He informed the committee he is lived in Alaska for over 18 years. Mr. Hnilicka said although he doesn't believe HB 209 is perfect, it is a better bill than what is presently out there. He said what he sees with PLAs is it eliminates a good portion of the workforce that is available. In the state of Alaska, where we do experience some high unemployment rates, this is kind of detrimental to certain areas as people will be eliminated from working on certain projects. He said anytime there is a tax funded project and you enter into a PLA, it will eliminate a lot of people that should be benefitting from that project if they could work on it. Mr. Hnilicka referred to safety issues and said he thinks it is prudent to all contractors that they have as high of a safety factor that they can possibly have on any project. He referred to unrest on projects and said the only time he has ever seen unrest is if the unions don't get the project. He has seen unions picketing projects more so than a nonunion project. Mr. Hnilicka referred to benefits and said the nonunion workers don't work long enough to receive their full benefits that they do acquire during the project. He said he believes the workers should receive all the benefits they acquire during a project. Number 0256 PAT REILLY, Owner, Rain Proof Roofing Company, testified via teleconference from Anchorage in support of HB 209. He informed the committee that his company is locally owned, has been in business since 1962, and they do work all over the state of Alaska. He said he has been in Alaska all of his life. Mr. Reilly said the PLAs he has run up against have excluded his business from projects. Prior to the mid 1980s, his business did mostly light commercial and residential work. Since then, they do public sector and residential work in all phases. He said the only thing the present PLAs have done is excluded his business from some projects. Mr. Reilly said he supports the passage of HB 209 as it is presently written. Number 0367 JOHN MacKINNON, Deputy Mayor, City and Borough of Juneau, came before the committee to testify. He explained the city has a PLA on the River Bend Elementary School in Juneau. It was put into place for one main reason and that was one of the positive benefits of a PLA is a mechanism that maximizes local hire. Mr. MacKinnon said the city has found in the past, locally, that on a sizable public works project, one in the order of $2 million, it is attractive and large enough to bring in contractors from out of state. Often times, these contractors bring in a significant number of their own workforce. Mr. MacKinnon said, "It's very difficult, as a local elected official, to pass the `red face test' where a project that is being paid for out of local tax dollars and a significant amount of labor is out-of-state labor, it becomes difficult for us." Because of those of situations and because of some criticism along those lines, the city put one in place for the River Bend Elementary School and it has worked very well. He said if the legislation is passed, he would ask that the political subdivisions be kept out of it. Whether PLAs are used or not, it should be a municipal or local decision. He noted they don't plan to use PLAs on every project. Number 0527 REPRESENTATIVE COWDERY referred to the school project and said local hire could mean that a local contractor, union or nonunion, could participate. He said, "I don't see as this hindering anybody." Representative Cowdery referred to local hire and asked how the city's agreement with the school solved that kind of an issue. Number 0627 MR. MacKINNON explained the way the local project labor agreement works is the hiring done for the job is done through the local union halls. The hiring hall's rules are set up through a number of tiers - "A" list, "B" list, "C" list, which is based on the number of years or other criteria that the person has been a member. He informed the committee he is also contractor and was the one member on the assembly that brought up the PLA and pushed for it. He said he saw it as a positive benefit. The project labor agreement was tailored a little bit different than just a blanket agreement as it was limited to first tier subcontractors. In looking at the way a project is put up, there are a number of tiers of subcontractors and the further down you get, the smaller you are and often times the more difficult it is for a small operation to be a union operation. For the larger subcontractors in mechanical/electrical trades and some side work, you end up with a lot more opportunities and availability of contractors to bid on a project. Number 0804 REPRESENTATIVE TOM BRICE said, "Trying to meet the requirements 1 through 6, is that a reasonable request of municipalities to go or these -- I mean the six hoops, are they reasonable for you guys in terms of just making sure that if you want to participate in a PLA, are the six factors that you would point to to make the decision of a PLA?" MR. MacKINNON explained there would be six things they would look at. REPRESENTATIVE BRICE asked if they only look at six things. MR. MacKINNON said they look at a wide range of factors such as the timing of a project. The local projects are timed out to get the most competitive advantage on projects. Mr. MacKinnon said he would hate to have too many more hoops to jump through on projects as there are already a number of problems that gives them hoops to jump through. Some include wet lands and permitting problems. Number 0877 CHAIRMAN ROKEBERG asked if the city stipulated in their bidding process that in order to bid, a contractor had to be a union or nonunion contractor. MR. MacKINNON said the bid didn't make that stipulation. There was a stipulation that the hiring on the project will be through the local hiring halls. CHAIRMAN ROKEBERG asked if a nonunion contractor can provide his labor force through the hiring halls. MR. MacKINNON said he believes that the way it worked out legally in the PLA was if a contractor became signatory prior to the bid, then the contractor was able to bring in a certain number of his own forces to do the project such as superintendents. If the agreement took place afterwards, it did limit them. Mr. MacKinnon noted this was totally dependent on which labor organization you were talking to, whether it be the IBEW, laborers or carpenters. Number 0950 CHAIRMAN ROKEBERG asked if that isn't a de facto method of disallowing a nonunion contractor. He asked if signatory means signatory to a collective bargaining agreement. MR. MacKINNON said, "...or a single job only." He informed the committee that as a contractor, you can sign blanket agreements that he believes are good for a year at a time. Contractors may also opt to sign one job agreements, or one particular job - they will sign up and be signatory. CHAIRMAN ROKEBERG asked if they would be subject to the typical prevailing contractual wages in that particular area if they're going through the union hall. MR. MacKINNON explained that as part of the Davis-Bacon requirements for public projects. Number 1008 JASON JACKOVICH, Carpenter, Osborne Construction, was next to testify via teleconference from Fairbanks in support of HB 209. He informed the committee that he feels an employee should be able to work for a nonunion contractor as it is like freedom. Mr. Jackovich said he has worked for unions and he never received any sort of pension as he wasn't there long enough. He now chooses to work for a nonunion organization. He has received the Davis-Bacon pension and it really helps to know that you have money that you can draw at any point. Mr. Jackovich said he believes that PLAs restrict a lot of employees. If there aren't jobs in a town, you could be forced to join a union. Number 0191 JOHN BROWN testified from via teleconference from Fairbanks. He said he a 20-year union member. Mr. Brown said, "In my opinion, what were looking at here is Mr. Vezey trying to dictate to state and municipal and their labor relations policies to the detriment of the state and to municipalities, and to the benefit of himself, a contractor and to his political contributors such as Osborne Construction. Project labor agreements are proven to save money for owners. They do this through insurance of quality work, stable labor relations, (indisc.) completion of the work and they also effectively provide local hire. (Indisc.) legal challenges association with other types of local hire provisions. This is another blatant attack by Mr. Vezey on union workers. I would say to any legislator supporting this bill that unless you carved out your own district as Mr. Vezey did, I would think twice before I vote. He won the election by a very very narrow margin." Number 1173 FLOYD SHEESLEY, Project Engineer, Osborne Construction, testified in favor of HB 209 via teleconference from Fairbanks. He said, "In reading it (HB 209), the understanding I get is if in fact it can be proved that something is beneficial or something is beneficial out of it and (indisc.). I think we've heard statements that stated it is bad, we've heard statements that it's good. I think if we've got an option here to support it and that the wording (indisc.) give us a consideration for the PLA. Thank you." Number 1224 HOWARD WILSON was next to testify via teleconference from Fairbanks. He noted he is a project manager for Osborne Construction, but would be testifying on behalf of himself. Mr. Wilson stated that because of the wide varieties of PLAs, both good and bad, and because of the inconsistencies in PLAs, he is in favor of HB 209. He said he believes it will bring continuity to the process by establishing fair and consistent guidelines that will benefit the state, its construction workforce and the rest of the people that live in Alaska. Number 1230 GARY DONOFRIO, Project Engineer, Osborne Construction, testified via teleconference from Fairbanks. He said he believes that no organization, be it the state or other organizations, should have any control over which qualified contractor gets a bid on a public construction project. He stated he is in favor of HB 209, but noted he has a problem with Section 36.90.300 (5). Mr. Donofrio said he believes the legislation will help keep the free and open market free and open. Number 1314 GARY NIESE testified via teleconference from Fairbanks. He informed the committee he is testifying on behalf of himself, but noted he works out of the labor union. He has been in Alaska since 1973. Mr. Niese informed the committee he is raising a handicapped child and has spent $1.5 million in medical bills, which have been covered by organized labor. Less than 10 percent of the $1.5 million has been paid for by the federal government or the state. Mr. Niese said, "My back is against the wall here and if I lose much more I'm going to be bankrupt. I'll be back working for one of these nonunion companies that have the insurance plans that have all these preexisting causes and I'm going to be putting the burden of my burden back on the people of this state. Now do you want organized labor to pay for some of these major medical bills or do you want to put it back on the community? I need your help and I'll be in your front yard with my kid asking for it and that's just the way it's going to be. My back is against the wall. I've lost as much as I can lose here. Thank you." CHAIRMAN ROKEBERG asked Mr. Niese which union he belongs to. MR. NIESE responded, "Operating Engineers, Local 302." He added that it has been very difficult raising a handicapped child and the community has been very supportive, both union and nonunion. Mr. Niese said the recent attack on the laborers unions impacts a lot of longtime residents. He said he is against HB 209. Number 1489 STEVE HOVENDEN testified via teleconference from Fairbanks. He informed the committee he is a surveyor and truck driver by trade. Mr. Hovenden said he has read HB 209 and said it outlaws PLAs. It is a discriminatory set of standards and nobody can meet the specifications in the bill. He said it is his personal opinion that this is political payback to those people that Representative Vezey perceives as his enemies. He state HB 209 is not in the best interest of the state and it is an anti-union bill and is union busting. The bill particularly discriminates against workers who have organized. Mr. Hovenden said project labor agreements are the only way to guarantee local resident hire. Mr. Hovenden said, "The public money that comes into these PLAs are Davis-Bacon wages and those wages are established by union negotiated contracts. When PLAs and unions are outlawed, as House Bill 209 is the sure (indisc.), there won't be Davis-Bacon jobs." Number 1628 DON ETHERIDGE, Representative, Alaska State District Council Laborers, came before the committee to testify. He said he wanted to make the comment that as one of the "fat cat" union guys, he didn't put one dime from the Juneau PLA project into his pocket. He said, "We worked with city for almost three months putting that project together and we worked out agreements with everybody that was involved that if it did go to a nonunion contractor, that we would work with them to put their folks on the jobs. We had a lot of concessions that we made from the unions that would help this project along and make it work out fine for them." Number 1672 REPRESENTATIVE COWDERY asked Mr. Etheridge if he believes the bill discriminates. MR. ETHERIDGE stated he doesn't feel that HB 209 discriminates. He said he believes that the different entities should be able to do what they want to without having to go through all the hoops. Number 1707 ED FLANAGAN, Deputy Commissioner, Department of Labor, came before the committee to testify. He said the department is opposed to HB 209 in that it removes an option from political subdivisions and state agencies. He said he doesn't believe there has been any PLAs formally entered into by any state agencies. Mr. Flanagan said there was the decision by AIDEA on the Healy project to allow a PLA and then one was not successfully negotiated with the agency and the building trade. He said, "The requirement for a finding of resident hire in the PLA is almost a poison pill. It has come out in the testimony on the Fairbanks and the Juneau PLAs that while resident hire is a goal and a - best be described as a welcome side effect because that can undermine the validity of the project labor agreement in court. They have been upheld, as was said, and Boston Harbor - Ms. Willard's comments notwithstanding, Boston Harbor -- the Massachusetts Water Resources Authority versus the ABC, the Associate Building Contractors, did go all the way to the supreme court and the issue was whether project labor agreements in the public sector were legal. It found that they were." MR. FLANAGAN continued, "Republican governors such as Patackie (ph), not to get partisan, but Governor Patackie and Governor Whitman have utilized or promoted project labor agreements on certain projects in their states, where appropriate. It can accomplish, as seems to be the case in Fairbanks and Juneau, some valid public policy purposes. And while they differ from one to the next -- I'm aware of accommodations that were made and many nonunion workers have gone to work through the project labor agreement on the Fairbanks project and I believe the Juneau project as well. So basically, it certainly isn't appropriate for every project, but it's maybe one more tool in the arsenal of the political subdivisions and possibly at some point of the state agencies that would effectively, we feel, be precluded by this bill. And I also just want to correct one other thing. The Superior Court Judge Bisline (ph), in the case of the Fairbanks project labor agreement in case Ms. Willard gave the impression, did uphold that the PLA was legal. He did find some things problematic such as the use of the hiring hall - the exclusive use of the hiring hall and the borough adjusted the terms of the PLA to accommodate Judge Bisline's concerns. And I believe it is Ms. Willard actually who is appealing and her plaintiffs is appealing to the supreme court as the project is underway, under the project labor agreement, with so far from what we hear of good results." Number 1853 REPRESENTATIVE SANDERS asked Mr. Flanagan if he feels that there is more local hire under a PLA agreement than there is without a PLA agreement. MR. FLANAGAN said he believes there is more local hire. He said there is a very limited universe of PLAs in the public sector that have been utilized. He said, "I was the resident hire enforcement for the Alaska Power Authority on the Bradley Lake project which had an `after the fact' project labor agreement. The low bidder was a signatory contractor. There was a project labor agreement so that all subcontractors came under it and we have over 90 percent Alaska hire on a project that was massive and had a lot of specialized skill work. And the local hire law had an affect too, I got to say. I was associated with probably what was the first public sector PLA, although we didn't even call it that at the time, with Nome school district in 1990. At the time, I was working for the laborers training school and the school board president in Nome and laborers representative up there called up and said, `We've got a asbestos contract coming up here and if the union comes up and trains people, we'll make sure whoever gets the job signs the union agreement and uses the local people to go to work. This was before Boston Harbor and I said, `I don't know if you can do that, guys.' And they said `Don't worry about it, this is Nome. We'll take care of it, you get up here.' And we went up, we trained probably 3 union members and 12 or 13 people that weren't - have never been in the union. A nonunion contractor got the job and signed a one job agreement, brought in three or four of his own people and used local people exclusively for three seasons on that project. And it led to other work, other contractors that went up there, the local community was able to say, `We've got local people here.' And a lot of those people have since gone on to work in hazardous waste and work on the environmental cleanups for IT. By now, well they are not vested yet, although I believe unions are changing their vesting requirements to five years." Number 1966 REPRESENTATIVE COWDERY explained he has worked both union and nonunion and he has found that it was to his benefit to hire all the local qualified people wherever he was as he wouldn't have camp expenses. He said they probably hired 75 percent to 80 percent locally. He didn't want to transport people from Anchorage if the jobs could be done by local people. MR. FLANAGAN said it certainly does seem counter-intuitive to not hire locals, but unfortunately that does seem to be what happens. It kind of defies logic, but it does seem to be a problem throughout the state. CHAIRMAN ROKEBERG said he has other questions, but would contact Mr. Flanagan. He said HB 209 is extraordinarily interesting and controversial. Chairman Rokeberg stated the bill deserves additional review by the committee and, as a result, he said will hold HB 209 over.
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