Legislature(2011 - 2012)
03/09/2011 03:46 PM House L&C
| Audio | Topic |
|---|---|
| Start | |
| HB155 | |
| HB122 | |
| 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
3:46:59 PM
CHAIR OLSON announced that the first order of business would be
HOUSE BILL NO. 155, "An Act relating to public construction
contracts."
3:47:21 PM
LARRY SEMMENS, City Manager, City of Soldotna, stated that the
City of Soldotna strongly supports increasing the minimum
threshold for requiring Title 36 wages to apply. He offered his
belief that government has the responsibility to keep costs low,
but the public perception of government is such that government
costs greatly exceed private sector costs. He said everyone in
the business knows that the Little Davis-Bacon Act (LDBA) makes
it impossible for governments in Alaska to be cost effective on
small projects. He stated that prevailing wages are significant
higher in his area. He related a scenario in which a local non-
union contractor quoted labor at $22 per hour, whereas the
prevailing wage quote is $42 per hour. He said he understands
the bill does not concern the prevailing wage, but prevailing
wages significantly impact the cost of small projects. In fact,
some projects would not get built when the LDBA applies. He
related his understanding that LDBA also prohibits volunteer
labor on small projects such as trails, which is unfortunate
since youth groups and other agencies benefit.
MR. SEMMENS offered his belief that significant costs are
associated with LDBA projects for the contractor and owner.
From the owner's perspective, the owner must evaluate the
project to decide if Alaska Statutes Title 36 applies, which
contain the LDBA provision and if so the contractor must adhere
to additional reporting requirements. On smaller projects, a
contractor may be discouraged from submitting a bid due to the
additional costs to comply with the LDBA while using larger
contractors usually results in additional construction costs.
However, the concern that out of state contractors will be
awarded jobs is mitigated in Soldotna due to local bidder
preferences. He assured committee members the City of Soldotna
is diligent in selecting competent contractors. When the LDBA
applies on a project the owner must submit to additional
verification, audits, and other documentation. Municipalities
continue to be affected by declining revenue and increasing
costs. This bill would reduce costs by increasing the threshold
for when the LDBA would apply. He offered his belief that HB
155 would increase the number of small projects available and
will increase the quality of life for Alaskans. He said he
hoped members would pass HB 155 and increase the minimum
threshold to at least $50,000.
3:52:04 PM
REPRESENTATIVE TAMMIE WILSON, Alaska State Legislature stated
that she represents 33 percent of the 109 road service districts
in the Fairbanks North Star Borough (FNSB). She reported that
most of the road service areas (RSAs) in her district are small,
ranging from a half mile to two miles. She explained how the
LDBA process applies in her district. In the event a road
service area wishes to replace a sign, it is categorized as a
capital project and not maintenance project. When three signs
are needed the cost would be $500 and could be performed outside
the LDBA provisions. However, when a road service area also has
a few potholes that need to be repaired the overall cost might
be increased to $1,000. Once again, the project would fall
outside the LDBA provisions. If the RSA decided the culverts
needed cleaning adding culverts to the project would cost
another $1,000. Thus, when the projects are lumped together,
which frequently happens with LDBA projects, the total for the
three projects would be $2,500 and would trigger the LDBA
provisions. Consequently the earlier projects would also be
charged at the LDBA rates. Any new material placed on a road
would be considered construction and not maintenance work. At
this point the RSAs cannot afford to have work done unless they
increase their mill rate. She said she has nothing against the
unions, but most of the projects for the RSAs are not union
projects. She suggested the definitions need to be changed.
She also suggested the threshold be increased from $2,000. She
agreed that the $300 to $400 thousand projects should adhere to
LDBA provisions, but the RSAs need relief from "maintenance
work" that bankrupts them in her region. She concluded by
saying she desperately needs a remedy for her district.
3:54:52 PM
MIKE BOVITZ, Owner, Metalworks, LLC, stated that he is a
contractor in Juneau. He spoke in opposition to HB 155. He
related that much of his work falls under the smaller project
category, ranging from $50,000-$75,000. These projects keep his
two workers employed year round plus an additional four workers
employed for part of the year.
CHAIR OLSON commented that the bill has been amended to a
$50,000 threshold.
MR. BOVITZ stated that some of his work falls in the $10,000-
$20,000 range but even the small projects in the $5,000 range
keep his workers employed throughout the year. He offered his
belief that this bill could adversely impact Alaskans. He said
it is not a union or nonunion issue so all workers may suffer.
It hard to live on $22 per hour, he said. He stressed his
opposition to the bill.
3:57:10 PM
GREG FULGHAM, Owner, Ful Jenn Tree Service, stated that he is
tree cutter in Juneau. He expressed concern that cutting the
wages by increasing the threshold for the LDBA would adversely
impact him and Alaskans. He expressed concern for his workers
who risk bodily harm cutting trees. He explained that most of
his jobs are under $50,000 so this bill would directly affect
him. He concluded by stating he is totally opposed to the bill.
3:59:10 PM
GARY CONTENTO, Staff, Alaska Laborers Training School, stated
that he is opposed to this bill. He works with local Fairbanks
youth and turns down numerous people due to a lack of jobs. He
expressed concern that lowering wages will bring in out of state
workers.
4:00:33 PM
ALBERTO MORENO, Member, Laborers Local 942, stated he strongly
opposes HB 155. He believes this bill would encourage out of
state companies to bid for work in Alaska which will bring a
lower paid work force in from the Lower 48 to displace Alaskan
workers. The current state law supports a healthy living wage
and changes could adversely affect wages and create the need for
subsidies. Please do not pass HB 155 from the committee.
4:02:20 PM
DAVID LITTLETON, Member, Laborers Local 341, stated he strongly
opposes HB 155. He has been a resident of Alaska for 31 years.
He offered his belief that raising the threshold for prevailing
wages would drive down the wages in the state. It would lead to
crippling Alaska's economy by no longer providing a livable
income to the residents. It would force working families to
barely make a living. It would lower the quality of work by
attracting substandard workers to perform skilled jobs. Please
leave the law along. The proposed changes in HB 155 are
dangerous, unnecessary, and will not save the state money in the
long run.
REPRESENTATIVE SADDLER asked how much of his work has been done
subject to the LDBA.
MR. LITTLETON answered that 60 percent of his work is under the
LDBA and the remainder is based on the prevailing wages.
4:04:11 PM
KEITH MONTGOMERY, on behalf of Mr. LeFebre, stated he is
representing Mr. LeFebre, who is hearing impaired. Mr. LeFebre
asked him to speak in opposition to HB 155. This bill is
unnecessary, would erode the standard of living, and could
compromise the safety on public infrastructure.
4:05:14 PM
MIKE HODSTON, Member, International Brotherhood of Electrical
Workers (IBEW) Local 1547, state that he has lived in Alaska for
51 years. He said he has been an active member of the
community. He has watched the state grow. He has been a member
of IBEW for 30 years. He was trained in an apprenticeship
program and has worked exclusively in Alaska. He has raised a
great family. His father was part of the industry. He
expressed concern that HB 155 would erode the standard of
living. He understood an amendment would change the threshold.
He offered his belief that it will not save money for the state.
He thought this represents a bad precedent. He said, "You get
what you pay for." Spending less by hiring cheaper workers will
have the effect of lowering the wages for the work force. The
employer's profit is not at risk. The quality of work in the
public sector would not be guaranteed and could result in lower
quality public projects. The public deserves a higher quality
of work on projects. This bill is unnecessary as the state has
a large surplus and there is not any rational reason to exempt
out the LDBA jobs. He asked the committee not to vote for this
bill.
CHAIR OLSON commented that the threshold has not been adjusted
for 75 years since it was adopted in 1935.
4:09:35 PM
AMOS HUDSON spoke in opposition to HB 155. He stated that he
supports his family as a fifth year apprentice electrician. He
expressed concern that just as he is ready to finish his
apprenticeship changes could adversely affect his job. He
commented that since the state currently has a surplus this bill
is unnecessary. This bill would take money out of the hands of
Alaskan workers and citizens. He urged members to oppose the
bill.
4:11:30 PM
GARY PIKUS, Member, Piledrivers, Bridge, Dock Builders & Divers
Local 2520, stated that raising the threshold to $75,000 for
LDBA would bring in out of state contractors, who could underbid
union contractors. This would make the union firms non-
competitive with nonunion firms. He expressed concern that the
nonunion contractors would seek exceptions. He thought the
practice of lumping jobs together was a result of too much
government and less government is needed, which would help North
Pole. He recalled earlier testimony and pointed out that
workers need to eat and make house payments. He related that
seasonal workers must save some money earned during the summer
to see them through the winter. He said he is opposed to this
bill. He said, "We need to keep things as they are, support
less government, and things might move along pretty good."
4:14:14 PM
REPRESENTATIVE CHENAULT commented that he did not think the LDBA
is an issue between union and nonunion workers but the testimony
seems to make it an issue. He said he has many friends are both
union and nonunion. He offered his belief that just because
someone is a union worker does not mean he/she is the best
person to do the job or the only people with qualifications to
do the job. He knows people in nonunion trades that could
compete or exceed union workers. He clarified that he is not
drawing a distinction between either one. This bill does not
have anything to do with union versus nonunion labor or pride of
workmanship. He asserted that nonunion people have just as much
pride in their work as any of the union people. He hoped the
discussion could move away from union and nonunion and get to
the crux of the issue. He said that the crux of the problem is
the threshold has not been changed in 75 years yet wages have
changed.
CHAIR OLSON offered that he hopes to provide information on
wages in 1935 for members to consider with respect to this
issue.
4:16:33 PM
PATRICK MCDONALD, Apprentice, International Brotherhood of
Electrical Workers (IBEW) Local 1547, stated he is an apprentice
electrician. He testified in opposition to HB 155. He offered
his belief that movements in the Lower 48 states such as
Illinois, Wisconsin, and Ohio would lower the standard of living
for all working men and women in this country, whether they are
union or nonunion. He thought the sponsor missed something,
that if the LDBA threshold is raised, wages will fall. He
remarked that if it happens he would not have money to buy goods
and services, such as gas and diesel fuel. Everyone would pay
less in federal taxes. Ultimately, the money to fund public
projects and services is derived from union and nonunion
workers, he said. He stated his opposition to HB 155.
4:18:44 PM
REPRESENTATIVE T. WILSON asked whether he was familiar with road
service areas in the Fairbanks area.
MR. MCDONALD answered yes, noting that his road was not plowed
once this year.
REPRESENTATIVE T. WILSON asked whether he thought workers
putting gravel on roads should be paid LDB wages. People in
road service areas essentially tax themselves. The subdivision
taxes itself to maintain its roads. She asked whether it is
fair for the subdivision to pay LDB wages to have gravel put on
a mile of road since it would cost more than $2,000 to do so.
MR. MCDONALD answered he thought it was fair because the workers
deserve to make a living wage. He said not everyone can go into
public service or make millions of dollars by being a speaker.
REPRESENTATIVE CHENAULT clarified for the record that he makes
$500 more per year over other legislators.
4:20:33 PM
WILLIAM CLAY, Member, International Brotherhood of Electrical
Workers (IBEW) Local 1547, stated that he is a wireman. He
spoke against HB 155 since makes it hard for local contractors,
union and nonunion, to competitively bid these jobs. He thought
it might result in unsafe conditions. He also thought this bill
would hurt the local economy.
4:21:33 PM
ROBERT MITCHELL stated he is a construction worker. He offered
his belief that the changes being considered to the LDB
threshold are an attack on himself, union, and nonunion workers
that are Alaska residents. He thought this bill would open the
flood gates for out of state workers to take Alaskan jobs and
perform them at minimum wage. He also thought the LDBA
provisions level the playing field for contractors to bid on
projects and receive the prevailing wage. He said, "It has
worked and will continue to work. That's why I oppose this
bill. Thank you."
4:22:31 PM
GARY SANDERSON, International Brotherhood of Electrical Workers
(IBEW) Local 1547, stated that he is a union electrician. He
said he strongly opposes raising the threshold from $2,000 to
$75,000. He offered his belief that the effect is to take money
out of the pocket of the worker and shifts it to the owner. He
stated that given the high cost of living it makes no sense to
lower wages of workers who are trying to make ends meet. It
would also import less qualified and less knowledgeable workers
from other states and areas with lower cost of living who are
willing to take a lower paying job. He thought it would drive
down Alaska's economy.
REPRESENTATIVE SADDLER recalled testimony that expanding wages
would bring in out of state workers who would do a poorer job.
He asked for clarification on how much construction work is
being done at LDB wages and how much at non-LDB wages.
MR. SANDERSON answered that he did not know.
REPRESENTATIVE SADDLER asked how much non-LDB work is being done
by out of state workers. Essentially, he said he is trying to
determine how real the threat is to Alaskan LDB contractors.
MR. SANDERSON responded that he thought the threat was
significant.
CHAIR OLSON answered that he would obtain the information from
the Department of Labor for members.
REPRESENTATIVE SADDLER stated that he was not trying to put
someone on the spot but had heard the argument from several
people and he wanted to get a better sense of the concern.
4:25:00 PM
TOM ALEXANDER, Retired, International Brotherhood of Electrical
Workers (IBEW) Local 1547, spoke in opposition to HB 155. He
related that the LDBA promotes fair wage competition and works
to prevent undercutting. He recalled earlier testimony with
respect to lower paid people coming in from the Lower 48. He
said, "You get what you pay for and if you pay a substandard
wage, very likely you're going to get a substandard quality and
possibly an unsafe product." He mentioned the electrical and
plumbing trades require licensing. Licensing must be enforced
so it raises the question of who will enforce the laws. Several
years ago, he monitored certified payrolls. He observed many
violations of unscrupulous employers. Many employers complied
but the unscrupulous ones would hired non-licensed or non-
citizens, and would overuse apprentices. He pointed out that
the Department of Labor & Workforce Development, Wage and Hour
personnel did not have enough staff to enforce and oversee the
issues. He surmised less staff would be available to oversee
compliance now. He experienced contractors paying cash to
employees and undercut certified payroll jobs. These
contractors did not pay any benefits or withhold taxes so they
pocketed huge profits. It is difficult for good contractors to
compete against that type of person. He agreed it is not a
union versus nonunion issue. The nonunion person does not have
an advocate. "It is a matter of a fair standard wage for the
living standard of Alaska to be maintained and be able to afford
and live in this great state," he said.
4:28:23 PM
CHAIR OLSON announced that he would keep open public testimony
on HB 155.
[HB 155 was held over.]
| Document Name | Date/Time | Subjects |
|---|