04/16/2024 03:00 PM House STATE AFFAIRS

        HB 173-PUBLIC CONSTRUCTION CONTRACTS WAGE RATES                                                                     
                                                                                                                                
4:30:52 PM                                                                                                                    
                                                                                                                                
CHAIR SHAW  announced that  the next order  of business  would be                                                               
HOUSE  BILL NO.  173,  "An Act  relating  to public  construction                                                               
contracts; and providing for an effective date."                                                                                
                                                                                                                                
4:31:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KEVIN  MCCABE, Alaska State Legislature,  as prime                                                               
sponsor, presented HB 173.   He paraphrased the sponsor statement                                                               
[included  in  the  committee  packet],  which  read  as  follows                                                               
[original punctuation provided]:                                                                                                
                                                                                                                                
     House Bill  173 seeks to modernize  an outdated statute                                                                    
     to   better   address   the  specific   challenges   of                                                                    
     construction  in Alaska.  Specifically, it  updates the                                                                    
     Little  Davis  Bacon  Act  (LDBA)  public  construction                                                                    
     contract   thresholds  in   our   state.  The   current                                                                    
     threshold  of  $25,000  is deemed  inefficient  due  to                                                                    
     various   Alaska-specific   factors  and   inflationary                                                                    
     pressures  over the  past 11  years.  Many states  have                                                                    
     either eliminated thresholds  altogether or raised them                                                                    
     to $1 million.                                                                                                             
                                                                                                                                
     This bill  proposes raising  the threshold  to $150,000                                                                    
     to  better  reflect   inflation  and  current  industry                                                                    
     costs.  This  adjustment  would  streamline  processes,                                                                    
     reduce administrative  burdens, and  enhance efficiency                                                                    
     in  public construction  projects statewide.  Moreover,                                                                    
     it  would  encourage  smaller  contractors  to  bid  on                                                                    
     contracts and  help address the  labor shortage  in the                                                                    
     construction industry in Alaska.                                                                                           
                                                                                                                                
     Furthermore,  the  increased  threshold  would  address                                                                    
     unique  challenges  faced  in   Alaska,  such  as  high                                                                    
     transportation  costs in  rural areas.  Currently, even                                                                    
     minor  projects,   like  repairing  20   potholes,  may                                                                    
     necessitate  compliance with  LDBA  regulations due  to                                                                    
     exceeding the threshold.                                                                                                   
                                                                                                                                
     Support  for House  Bill 173  is  crucial for  adapting                                                                    
     regulations,   ensuring  equitable   participation  for                                                                    
     local contractors,  and fostering  economic development                                                                    
     in  the  face  of inflation  and  workforce  shortages.                                                                    
     Let's  modernize our  approach  to public  construction                                                                    
     contracts and propel Alaska forward.                                                                                       
                                                                                                                                
     Thank you for your attention to this important matter.                                                                     
                                                                                                                                
4:33:51 PM                                                                                                                    
                                                                                                                                
CHAIR SHAW opened public testimony on HB 176.                                                                                   
                                                                                                                                
4:34:36 PM                                                                                                                    
                                                                                                                                
DON ETHRIDGE,  Lobbyist, Alaska AFL-CIO, testified  in opposition                                                               
to HB 173 on behalf of  himself and his organization, Alaska AFL-                                                               
CIO.   He stated his  main concern  was that the  employees would                                                               
"pay the price," not the contractor.   He noted abuse of projects                                                               
to "bid them out."                                                                                                              
                                                                                                                                
4:35:53 PM                                                                                                                    
                                                                                                                                
CHRIS  DIMOND,  Western  States Carpenters  Union,  testified  in                                                               
opposition to HB  173.  He said that he  agreed with the previous                                                               
testifier  and  added  that increasing  the  threshold  would  do                                                               
nothing to  save the  state money  but would  [negatively] impact                                                               
Alaska construction workers.                                                                                                    
                                                                                                                                
4:37:23 PM                                                                                                                    
                                                                                                                                
SCOTT  DAVIS, representing  self, provided  a brief  professional                                                               
background and  testified in opposition to  HB 173.  He  said the                                                               
threshold gets  abused and it is  a "race to the  bottom" for the                                                               
workers and unfair to responsible  contractors who pay prevailing                                                               
wages.   He  opined  that  it could  make  it  more difficult  to                                                               
attract workers and would guarantee  lower wages for the workers.                                                               
He said  it is  not the  time for  this type  of bill  and Alaska                                                               
families deserve better.                                                                                                        
                                                                                                                                
4:39:17 PM                                                                                                                    
                                                                                                                                
RUSTIN  KRAFFT, Purchasing  Director, Matanuska-Susitna  Borough,                                                               
noted  the  current labor  shortage  in  Alaska, and  that  small                                                               
companies  could  be  more  competitive  without  the  additional                                                               
administrative costs  and filing fees associated  with the Little                                                               
Davis-Bacon Act  while still paying competitive  market rates for                                                               
jobs.  The  fees, he said, are passed directly  to the taxpayers,                                                               
not taken  out of  the pockets  of the workers.   He  thanked the                                                               
committee for the opportunity to testify.                                                                                       
                                                                                                                                
4:40:40 PM                                                                                                                    
                                                                                                                                
CHAIR SHAW,  after ascertaining  no one  else wished  to testify,                                                               
closed public testimony on HB 173.                                                                                              
                                                                                                                                
4:40:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WRIGHT  moved to  report HB  173 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.                                                                                                                          
                                                                                                                                
REPRESENTATIVE STORY objected.                                                                                                  
                                                                                                                                
4:41:06 PM                                                                                                                    
                                                                                                                                
A roll call  vote was taken.   Representatives Wright, Carpenter,                                                               
C. Johnson, Allard, and Shaw voted  in favor of moving HB 173 out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying fiscal  notes.  Representatives Story  voted against                                                               
it.   Therefore,  HB  173 was  reported out  of  the House  State                                                               
Affairs Standing Committee by a vote of 5-1.