Legislature(2013 - 2014)
04/18/2014 12:01 AM House FIN
| Audio | Topic |
|---|---|
| Start | |
| SB194 | |
| SB193 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 18, 2014
12:00 a.m.
[Note: Continuation of 4/17/14 9:00 p.m. meeting]
12:00:56 AM
MEMBERS PRESENT
Representative Alan Austerman, Co-Chair
Representative Bill Stoltze, Co-Chair
Representative Mark Neuman, Vice-Chair
Representative Mia Costello
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Lindsey Holmes
Representative Cathy Munoz
Representative Steve Thompson
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Senator Peter Micciche; Wojtusik, Staff, Senator Lesil
McGuire; Bill Peddler, Alaska Tourism Association; Roberta
Graham, Assistant Commissioner, Department of Commerce,
Community and Economic Development.
PRESENT VIA TELECONFERENCE
Kathleen Martin, Self, Cooper Landing; Ed Martin, Self,
Cooper Landing; Ed Sniffen, Department Of Law, Anchorage;
Al Nagel, Department Of Labor And Workforce Development,
Anchorage.
SUMMARY
SB 193 CONTRACTORS: BONDS; LICENSING
SB 193 was HEARD and HELD in committee for
further consideration.
CSSB 194(FIN)
TOURISM MARKETING BOARD
HCS CSSB 194(L&C) was REPORTED out of committee
with a "do pass" recommendation and with one new
zero fiscal note from the Department of Commerce,
Community and Economic Development and one
previously published fiscal note: FN2 (LEG).
CS FOR SENATE BILL NO. 194(FIN)
"An Act creating the Alaska Tourism Marketing Board;
and relating to tourism marketing."
12:00:56 AM
BILL PEDDLER, ALASKA TOURISM ASSOCIATION, replied in
response to a question by Representative Wilson related to
a quorum of members from each region of the state. He
stated that the representatives from the legislature or
agency were not counted with the designated regions of the
state. He noted that he had never had a problem achieving a
quorum, as the subject was passionate amongst industry
members.
Representative Wilson stated that she served as a Fairbanks
assembly representative and a board member for the tourism
association. She appreciated the legislation.
12:02:08 AM
Representative Munoz described the similarity to the
marketing board established by the Alaska Travel Industry
Association (ATIA). She wondered about the benefit of
placing the association in statute.
12:02:27 AM
ROBERTA GRAHAM, ASSISTANT COMMISSIONER, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, stated that
the marketing committee of ATIA was affiliated with the
Qualified Trade Association in statute.
Representative Munoz understood that one of the primary
purposes of the organization would be to make
recommendations on the future of the marketing funds.
Ms. Graham concurred, she noted that the relationship
maintained by the state and industry existed for decades.
12:03:38 AM
Representative Gara asked if the board was represented
regionally.
Ms. Graham replied that the bill did have regional
representation. She mentioned the five regions of the state
represented.
Representative Holmes opined that ATIA had done a fantastic
job representing different aspects of the tourism sector.
She credited Ms. Graham with her work. She supported the
legislation.
12:04:56 AM
Representative Thompson appreciated the legislation and the
travel industry.
12:05:21 AM
Co-Chair Austerman noted that the board and the trade
association promoted Alaska. He mentioned the improvement
between other industries and the tourism industry. He
wished to continue funding marketing efforts for Alaska.
Co-Chair Stoltze asked what would be done differently as a
result of the legislation.
12:06:50 AM
Mr. Peddler replied that the industry participated in
sucessful joint-marketing adventures. He stressed the
benefits of collaboration between the state and the
industry.
12:08:10 AM
Representative Costello discussed the two fiscal notes, one
zero note and one indeterminate.
Vice-Chair Neuman MOVED to REPORT HCS CSSB 194(L&C) out of
committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CSSB 194(L&C) was REPORTED out of committee with a "do
pass" recommendation and with one new zero fiscal note from
the Department of Commerce, Community and Economic
Development and one previously published indeterminate
fiscal note: FN2 (LEG).
SENATE BILL NO. 193
"An Act relating to bonds required for contractors."
12:10:09 AM
SENATOR PETER MICCICHE, SPONSOR, testified that the purpose
of the construction surety bonds was to provide consumer
protection. The bonds amounts remained the same since 1982,
while material costs and wages had quadrupled. The bond
rates remained the same at $10 thousand for general
contractors and $5 thousand for specialty. The majority of
contractors took pride in their work. The bill modernized
the surety bond protection level, which would provide
additional protection. The legislation increased the rate
for general contractors to $25 thousand, added a new
residential-only endorsement for $20 thousand, a mechanical
or specialty contractor bond for $10 thousand and a
handyman category for those performing small projects.
Senator Micciche pointed out that the bill ignored those
people attempting projects costing $2500 or less. The
definition of a contractor remained the same. He provided
an example about cost increases. He mentioned a list of
supporters. He estimated that the cost of increasing the
bond would fall between $125 and $500 per year for
contractors. The additional cost included a great deal of
protection to the consumer.
12:13:34 AM
Co-Chair Stoltze OPENED public testimony.
KATHLEEN MARTIN, SELF, COOPER LANDING (via teleconference),
(via teleconference) reported to the committee that she
found out about the legislation relatively late in the
session. She contacted other contractors on the Kenai
Peninsula who were also unaware of the proposed changes to
Alaska's bonding requirements. She expressed concern about
the lack of information provided to contractors and
wondered if polls were taken prior to introducing the bill.
She suggested a method of punishment for those contractors
acting in a less than professional manner. She stated that
small claims court provided necessary recourse for those
consumers that were poorly served. She expressed concern
that the higher costs would be passed on to the consumer.
Co-Chair Stoltze apologized for the late hour of public
testimony.
12:18:38 AM
Representative Wilson asked how much Ms. Martin paid now
and what the increase would mean to the business.
Ms. Martin replied that the inception of her business in
2008 as a specialty contractor required $500, but with the
upgrade to general contractor the price increased to $1000.
She stated that she did not contact her bond company for
the precise increase, but she predicted a $1250 cost.
Representative Wilson asked about her annual business
earnings.
Ms. Martin replied that her business earned between $250
thousand and $400 thousand annually.
Representative Wilson appreciated the information.
Co-Chair Stoltze appreciated the patience of the testifier.
12:20:31 AM
ED MARTIN, SELF, COOPER LANDING (via teleconference)
testified with concern about the legislation's impact. He
had difficulty believing that the additional cost to the
consumer was beneficial. He noted that he was a member of
the Associated General Contractors (AGC) while many
contractors were not. He hoped that the committee would
hold the bill to obtain further testimony from Alaskan
contractors. He reminded that AGC represented approximately
350 contractors in the state. He stated that many small
contractors could not afford the small dues for the
membership at $1800 to $2500 per year. He anticipated that
the insurance companies would be the only entities to
benefit from the bond increases. He believed that the
handyman provision was valid.
12:25:08 AM
Co-Chair Stoltze CLOSED public testimony.
Vice-Chair Neuman discussed fees and definitions related to
the business of contracting. He stated that he did not like
the legislation and wondered how so few testifiers opposed
the bill. He asked if only one contractor opposed the bill.
12:27:25 AM
Senator Micciche replied yes. He believed that Vice-Chair
Neuman misunderstood the definition of a contractor. He
quoted that a contractor was "a person who in the pursuit
of an independent business undertakes or offers to perform
or claims to have the capacity to perform or submits a bid
for a project to construct, alter, repair, move or demolish
a building, highway, road, railroad or any type of fixed
structure including excavation."
Vice-Chair Neuman stated that the installation would incur
similar bonding issues as a result of the bill.
Senator Micciche reported to the committee that the bill
would not change the definition of contractor.
12:28:47 AM
Representative Wilson wondered what prompted the
legislation. She asked if some consumers had not been able
to recoup their costs following a lawsuit or was it the
lack of update since 1982.
Senator Micciche replied that both reasons prompted the
introduction of the bill. He stated that the Martins in
Cooper Landing were the only testifiers to oppose the
legislation. He stated that he tried to return their calls
for most of the day. He pointed out that all other costs
had been updated, but inadequate coverage existed for the
bonding levels. He noted support from AGS of Alaska along
with many other letters of support that had been received
by his office. He stated that people could continue to
operate without licenses, bonding or insurance. He stated
that the bill's intent was that of basic consumer
protection. He mentioned the annual cost for a $10 thousand
surety bond of $500 per year.
12:30:44 AM
Representative Wilson stated that she also received a call
from the Martins in Cooper Landing earlier in the day. She
wanted to better understand their concerns. She wished to
avoid misrepresentations by contractors that would leave
the consumer without recourse. She also understood the need
to update the statute. She wondered if the handyman clause
was applicable to any consumer with the limit of $2500.
12:31:38 AM
Representative Wilson asked why one fee was increased while
the other was decreased.
Senator Micciche stated that he did not wish to increase
costs for business unless the basic level of protection was
not available for consumers. He agreed that the prices that
a handyman would charge were much less than a contractor.
He believed that the bill addressed the protection of each
level of consumer. He opined that the cost of bonding for a
handyman was relatively low at $125 to $200. He noted that
general liability insurance cost $3 thousand to $6 thousand
annually. The cost of the bond was much less. He believed
that the small increase in cost was advantageous to the
consumer. He deferred to the Department of Law.
12:34:03 AM
ED SNIFFEN, DEPARTMENT OF LAW, ANCHORAGE (via
teleconference) provided his position. He noted that he
worked in the consumer protection unit. He stated that the
department supported the legislation. He mentioned 57
complaints against contractors since 2010. Some of the
complaints led to lawsuits where collections were
impossible due to the low bonds. He believed that
increasing the bonding amounts would provide some level of
consumer protection. He spoke to the handyman issue and
noted that the majority of complaints stemmed from the
issue.
Representative Wilson asked how many contractors had been
sued because of insufficient bonding.
12:36:48 AM
Mr. Sniffen replied that he did not have the requested
number of contractors. He noted that 3 consumers in 2013
were unable to collect against contractors without
sufficient bonding. He pointed out one additional case
where a contractor was sued without sufficient bonding to
pay the creditors.
Representative Wilson wondered if criminal charges would be
filed against a contractor or handyman operating without a
bond.
12:37:43 AM
Mr. Sniffen replied that the contractor may be reported to
the criminal division and to the Department of Labor and
Workforce Development. In the past, following a criminal
report, the same people were discovered performing similar
tasks under different business names. He mentioned the
benefits of hiding behind the corporate structure of a
Limited Liability Corporation. He opined that the problem
regarding unlicensed contractors would continue despite the
passage of SB 193.
12:38:49 AM
Representative Edgmon asked about section 3, "the applicant
may file with the commissioner a cash deposit or other
negotiable security." He requested a definition of
negotiable security.
Mr. Sniffen replied that he was unsure about the parameters
of the negotiable security. He offered to present the
information to the committee.
Senator Micciche replied that a person could post a cash
bond rather than a surety bond for the same amount.
Representative Edgmon noted that the bonding capability
might not represent cash out-of-pocket to pay the
additional fee.
Senator Micciche replied yes. He stated that various prices
were listed for different work.
12:40:53 AM
AL NAGEL, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT,
ANCHORAGE (via teleconference) was available to answer
questions.
Representative Thompson addressed Mr. Nagel.
Mr. Nagel responded to Representative Wilson's question
about unlicensed individuals and criminal sanctions. He
stated that the crime mentioned was a Class B misdemeanor.
In 2006, the legislature passed a statute allowing the
department a civil or administrative fine authority. He
addressed Representative Wilson's additional question
related to the number of claims exceeding $10 thousand. He
stated that most claims were private litigation, so he was
unable to provide an answer. He stated that research
contractor licensing provided a number of contractors that
held a $10 thousand bond with a $100 thousand claim against
them. He noted that the person at fault might be a
supplier, contractor or subcontractor. He stated that the
problem was sizable for the consumer.
12:43:23 AM
Co-Chair Stoltze informed the committee that he would
further address the handyman provision of the bill in the
morning.
Representative Costello stated that the bill weighed the
value of the public protection. She wondered about a way to
quantify public protection versus a cost incurred by a
business person resulting from an increased bond
requirement. She wondered if the value of public protection
could be quantified.
Senator Micciche replied that the level of damage to the
consumer in addition to the money owed to the supplier or
equipment company contributed to the amount owed. He opined
that a reputable contractor would go out of their way to
protect their bond. The bill merely modernized the level of
protection for consumers.
SB 193 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
12:48:17 AM
The meeting was adjourned at 12:48 a.m.
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