Legislature(2011 - 2012)
02/28/2011 03:28 PM House L&C
| Audio | Topic |
|---|---|
| Start | |
| HB122 | |
| HB155 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 155-PUBLIC CONSTRUCTION CONTRACTS
4:22:11 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 155, "An Act relating to public construction
contracts."
4:24:05 PM
COREY BAXTER, District Representative, Operating Engineers Local
302, stated he is a fourth generation Alaskan. He related that
he takes great pride in supporting his state and family by
working in Alaska. He asked to testify against HB 155. He
said, "You don't have to look hard to constantly be reminded at
how much harder it is for people to make ends meet." At a time
when families are struggling to pay for basic living, to put
Alaskans first by buying and working locally, this bill would
take more money out of employees' pockets any time they perform
state construction projects under $75,000. He did not
understand the logic, especially given the state's surplus. He
stated that this bill sends a message that quality workmanship,
quality of life, and potential public safety does not have a
priority. He said, "This law should not be changed."
4:25:28 PM
JONATHAN SMITH, Member, Carpenters Local 227, stated that he is
a lifelong Alaskan. He spoke in opposition to this bill. He
offered his belief that this bill lowers wages for working
people, but particularly for Alaskans. He stated that when a
contractor bids on projects, Alaskans have a level playing
field. Under this bill, employees would work for half the
wages. He offered his belief that nonresidents would "lowball"
the wages without Alaska hire provisions. In Southeast Alaska,
workers rely on small projects to keep busy. He supported
higher wages for Alaskans, especially given the high cost of
fuel prices and heating oil. Initially, some money may be
saved, but in the long run, people will be unemployed.
REPRESENTATIVE MILLER said he seems to be opposing this bill
since outside contractors would have a leg up over local Alaskan
hire.
MR. SMITH offered his belief the prevailing wage is $55 for a
carpenter and under the bill the Alaskan worker would lose out.
4:28:22 PM
REPRESENTATIVE THOMPSON commented in rural areas some employers
cannot comply with reporting under the Little Davis-Bacon Act
(LDBA). That affects many rural contractors, who cannot bid on
projects. The contracts are awarded to larger contractors, who
must fly in, and it adds a whole lot of money on a small project
such as repairs to a school. He related that certain aspects of
the bill could help in rural areas with respect to rural areas.
MR. SMITH related that in his experience in Dillingham that the
LDBA leveled the playing field. He knew he would be paid the
same wage as those coming in from Anchorage. He offered his
belief that without the provision in law, that the employer
could pay any wage. He supported the LDBA wages.
4:29:54 PM
PAUL GROSSI, Lobbyist, Alaska State Pipe Trades UA Local 375,
stated that his organization is concerned with the bill for many
of the same reasons that other testifiers have raised. He
offered his belief that the $75,000 minimum threshold is too
high. He related it would put a lot of jobs outside of LDBA
work. Additionally, he expressed concern about the exemption
from the LDBA for school districts, and the new definition of
maintenance.
CHAIR OLSON explained the school district would have the same
cap, that he anticipated the language being cleared up. He
offered his belief that the national average is $108,000 for
LDBA. He explained that the minimum will not be above the
national average and school district will be included in the
final number. He related that schools would not be built
outside of the LDBA. He pointed out that the language would be
cleaned up. In further response to Mr. Grossi, he clarified the
definition for maintenance would also be reconsidered as part of
the work on the bill.
MR. GROSSI pointed out that LDBA comes with resident hire law.
He expressed concern that exempting any portion of title 36 may
also exempt the requirement for local hire. Currently, the LDBA
requires 90 percent resident hire. In response to
Representative Chenault, he clarified that Little Davis-Bacon
requires 90 percent local hire.
MR. GROSSI related that an argument could be made that this bill
won't affect local hire, but currently the department does not
have any way to track the jobs. In response to Chair Olson, he
advised the department tracks resident hire through the
certified payroll. Thus, whatever portion is exempted would not
filing certified payroll so by law or by de facto resident hire
would not be covered.
4:34:42 PM
MR. GROSSI said he is speaking for the pipe trades, but pointed
out that all construction workers and contractors could lose a
significant amount of work, not just because of a reduction in
pay but due to the resident hire provision. He offered his
belief that hiring local people, also helps the state and local
economy. He pointed out that when hiring outside Alaska, the
people will do their job and leave. They spend little money in
Alaska. If you hire a resident plumber, that person will spend
his/her money locally. He also said he realizes the provision
probably created an unintended consequence but it is a serious
one.
4:35:58 PM
REPRESENTATIVE JOHNSON asked if $75,000 is too high of a
threshold whether the current threshold of $2,000 is too low.
MR. GROSSI said he'd like to keep it at $2,000 but that choice
is the prerogative of the committee. He asserted that $75,000
is too high. He said he realizes that the threshold has been
set at $2,000 for some time but he did "not have a number for
you."
4:36:57 PM
ROCKY DIPPLE, Member, International Brotherhood of Electrical
Workers (IBEW), expressed concern about raising the threshold to
$75,000. He stated that rural Alaska is expensive. He said he
does not want to take wage cut at a time when all other costs
are increasing. He thought the bill would allow contractors to
"low ball" bids and "fly by night" not established shops would
bid on projects. He offered his belief that new companies would
come in, do the jobs cheaply, but ultimately the new shop would
end up going broke. He expressed concern about who would pick
up the costs. He said, "Creating a race for the bottom is never
a good idea because in the end if you 'pay peanuts all you catch
is squirrels.'"
4:39:01 PM
DALE MILLER, Member, Teamsters Local 959, stated this bill would
harm families, benefit employers, but will not guarantee lower
bids. The state is not experiencing financial difficulties yet
this will cause problems for working men and women. He did not
think lowering wages would spur economic growth. He suggested
if the process is a cumbersome filing process to try to change
the filing process and not raise the threshold limit. He
acknowledged the bill was a bill in progress. Still, he said he
does not believe maintenance definition is a good idea, as it
would make the LDBA even more confusing. The LDBA covers
construction projects, which is already defined. He also did
not think it was a good idea to exempt school districts.
Construction projects on these buildings are not less important
than those of other buildings. He urged member to not pass this
bill in its current form. He recalled that even the Alaska
Municipal League resolution did not recommend this high of a
threshold limit.
4:41:58 PM
SERGIO ACUNA stated that he is a laborer. He asked to testify
in opposition to the bill. He said it difficult to provide for
his family. He is a construction worker and he works seasonal
work. He suggested Alaska does not need anti-worker bill. He
thought the bill would protect the big and the powerful. He
said he speaks not only for himself but also for his fellow
workers who were not able to testify today. He said, "Please
leave the bill alone. Thank you."
4:43:10 PM
BERNIE LOOMIS, Member, Alaska Regional Council of Carpenters,
stated that the previous bill on NDs also plays into this bill.
There are pluses and minuses to the bill. He related that
everyone is affected when the standards are removed and people
cannot make a decent living in rural communities or major
communities. Everyone is impacted, especially seniors, when the
value of the working force is diminished. He said it seems that
people do not mind paying $80 or $90 to fix a car that
depreciates daily, yet some people want to pay the lowest wages
instead of paying workers a decent wage to work on projects with
a huge equity growth in gain and value. He predicted that could
ruin the economy. He suggested the value of hiring a
professional instead of an amateur could result in cost savings.
He asked members to consider taking away the negatives that
impact the working class.
4:44:53 PM
REPRESENTATIVE SADDLER asked whether he could identify the
pluses of HB 155.
MR. LOOMIS acknowledged that the $2,000 threshold has been in
place for some time and it probably needs to change a little
bit. One problem he has experienced is the antiquated system
the state uses on Little Davis-Bacon projects that make it
difficult for contractors. He said he deals with certified
payroll issues every day. He offered his belief that the state
is experiencing a huge influx of out of state workers and the
money they earn does not stay in Alaska. This drains the
Alaskan economy. "The more you open the door, the more you
allow it to negate the economy for the rest of us who live here
and have grown up here," he said.
4:46:33 PM
REPRESENTATIVE CHENAULT asked whether the underhanded dealing he
has noticed happens on both sides of the aisle.
MR. LOOMIS answered that he did not think it happens as much
with Alaskan residents. He stated that the lions of the
industry have proven themselves and have track records. Some
issues arise but not to the same degree. He offered his belief
that smaller companies would come in for a smaller piece of the
pie. He said they don't care, but would just "take their money
and run."
4:47:38 PM
VINCE BELTRAMI, President, Alaska AFL-CIO, asked to clarify a
few points. He referred to the sponsor statement, which lists
the average threshold nationwide at $108,000. He pointed out
after reviewing 32 other states that he thought the threshold
seemed to be $40,000 less than that figure. Some states skew
the average since their threshold is extremely high, in the
$400,000 - $500,000 range. He recalled earlier testimony that
raising the threshold by $50,000 would simply adjust the
threshold for inflation. He offered his belief that would
increase inflation by about two-thirds. He suggested that
proposed Section 8, of HB 155 should be removed. He stated that
the changing the terminology and definitions may have unintended
implications and are a bad idea. He also thought that modifying
the threshold invites "low ball" low-quality construction on the
state's public infrastructure, which could compromise safety,
particularly in public buildings such as schools.
MR. BELTRAMI recalled earlier testimony on the language that
would eliminate the local hire provision. Approximately 1,400
projects fell under $75,000 last year, not taking into
consideration the schools. He recalled Representative
Chenault's has a construction background. Adjusting the
threshold won't necessarily translate to reduced bid costs.
Instead, it would invite contractors to lower the bid, and
pocket more of the money and pay workers less. The federal
Davis-Bacon Act sets a standard of living. He pointed out the
state may potentially have a $12 billion surplus this year so he
did not understand the economic driver that makes it necessary
to lower the standard of living for construction workers. He
referred to the fiscal note of $400,000 per year which means it
will cost our state general fund monies. He reported that of
the 25 or 30 people at the Fairbanks Legislative Information
Office (LIO), a strong majority are in their 20s. These folks
want to work in construction industry and earn a decent wage.
Under this bill contractors could slice their pay by whatever
amount they deemed as appropriate. The bottom line is that the
state has a $12 billion surplus and a law has worked well since
statehood. He did not see "pushing this" bill. He said, "Good
paying jobs serve to improve a stagnant economy. It just seems
like an unnecessary bill that helps employers, small employers,
at the expense of the workers they'd be hiring." He spoke in
opposition to HB 155.
4:53:08 PM
KIRK JACKSON, Member, United Association Plumbers & Pipefitters
Local 375, also serves on the Supplemental Unemployment
Committee for the UA Plumbers and Pipefitters. He stated that
he is speaking on behalf of its member today. He stated that
raising the threshold to $75,000 is too high. He did not think
cutting hourly wages is the answer to save money on public
construction projects. Contractors can best serve their
communities by paying workers a decent wage so they can support
their families. The cost of living in Alaska, especially in
rural communities is high. Fuel costs are significantly higher
and cutting a "working man's wages" is not appropriate in
today's economy. He spoke in opposition to HB 155, as written.
4:54:17 PM
JAY QUACKENBUSH, Assistant Business Manager, International
Brotherhood of Electrical Workers (IBEW); President, Fairbanks
Building Trades, stressed his opposition to HB 155. He related
his understanding that change takes place in the process.
However, this is not the time to make a change to LDBA, which
protects the prevailing wage. He said, "It doesn't matter to me
or the people I represent, or the people who put their blood and
sweat into the jobs. It doesn't matter what your skill is, if
you are a construction worker you have a skill and there is a
prevailed wage for that skill." The wages may vary for sheet
metal worker, operating engineers, or bricklayers. However, the
skills are valuable and wages are based on the economy, the
skill, and the training. He expressed concern that the proposed
changes would bring in workers from the Lower 48. He pointed
out that the out of state workers have a lower cost of living,
but will come to Alaska and undercut the market and Alaskan
workers' ability to make a good living. He hoped this bill
would not go any farther in the process.
4:56:17 PM
DENNIS TRAILER, Member, International Brotherhood of Electrical
Workers (IBEW), stated he is a member of the IBEW and is
speaking on behalf of himself. This issue is not a union or
non-union issue. This is about Alaskans who would lose out.
The prevailing wage was set in place to prevent other states'
workers from coming in and undercutting Alaska's contractors.
He said, "This is going to be a Pandora's Box. If we open this
up, we're going to get contractors coming from the Lower 48.
They're going to bring low paid workers into our area. They're
going to undercut all of our contractors. It's going to give
economic harm to a lot of our workers, both union and non-
union." He spoke in opposition to HB 155. He hoped the
committee would see that this bill would damage Alaskans.
REPRESENTATIVE CHENAULT commended the gentlemen who just spoke.
He agreed this is not union or non-union issue. He said, "It's
a dollar issue."
4:58:23 PM
JOHN BROWN stated that he is retired. Many of the issues have
already been raised so he asked to provide a brief history. The
LDBA is based on the federal Davis-Bacon Act, which was
initiated in the 1920s and was passed in 1935. He related that
the Davis-Bacon Act was initiated because two Republican
Congressmen from Illinois were tired of Mississippi contractors
bidding on Illinois projects, bringing in Mississippi workers,
and taking their earnings out of the state of Illinois. He
agreed this issue is not a union or non-union issue. Instead,
the issue is about our economy and keeping our economy strong.
The only way that can happen is for contractors to obtain as
fair a chance as possible to keep the dollars spent in Alaska.
He spoke in opposition to HB 155. He urged members to "leave it
alone."
[HB 155 was held over.]
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