Legislature(2009 - 2010)BELTZ 105 (TSBldg)
04/06/2010 01:30 PM Senate LABOR & COMMERCE
Audio | Topic |
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Start | |
HB354 | |
HB253 | |
HB287 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+ | HB 253 | TELECONFERENCED | |
+ | HB 287 | TELECONFERENCED | |
+ | HB 354 | TELECONFERENCED | |
+ | TELECONFERENCED |
HB 253-MECHANIC/MATERIALMEN LIENS CHAIR PASKVAN announced HB 253 to be up for consideration. 1:40:04 PM REPRESENTATIVE JAY RAMRAS, sponsor of HB 253, said this bill is from one of the chair's constituents, Rocky Paby, a Fairbanks boiler technician and that he has taken lengthy testimony from small contractors, an overhead door company, and a couple of boiler technicians on it. He said that communities often organize regular maintenance, but many times workmen are called on after hours or for emergencies. Presently they are subject to a 90-day lean period. Once the first 30 days goes by because they don't have a regular accounts payable relationship, these bills often get shuffled to the bottom of their paper pile. As such, these tradesmen are losing their position and their ability to lien jobs. So, HB 253 merely extends the time within which to file a lien from 90 days to 120 days. This will give an additional 30 days to work with property owners to secure payment or to negotiate a reasonable payment plan. SENATOR BUNDE said he assumed you have to be 30 days in arrears before any concern comes to the vendor's attention, and then they have two more months to place a lien. Why isn't that two months adequate? REPRESENTATIVE RAMRAS answered that reasonable people don't anticipate that the bill is due when it is mailed to them, because they see on the bottom of the billing statement that it's due in 30 days. As a result the contractors in this class of small business people find themselves in a position where they don't send a bill until time has passed and then people that they are billing don't often pay upon receipt of an invoice until the next billing cycle. In a community like Fairbanks that still uses diesel, often people get into situations like today where the price of oil has reached $87/barrel and the price of home heating oil is over $3/gallon. Families are seeing $1100 in fuel bills for a monthly period; they call out to get their boiler man to do a repair late at night when they have lost their heat for their home and then that bill takes a seat behind the regular cycle of paying for their fuel. As a result, they see the business owner being punished passively simply because the person for whom they did the work in a distressed time doesn't have the money to pay. So, if the clock doesn't start running until after 30 days and then they only have a 60-day window with which to file a lien, a number of contractors have said that simply isn't an adequate period of time. He said he has heard a criticism that perhaps when the service man shows up at the house they should present to the person that they are doing work for a right to waive lien, but then you would be accusing the person of having bad credit at the moment you're there to service them and that isn't a good business practice. This is an excellent compromise to help households and not berate customers at the time of service. 1:45:42 PM CHAIR PASKVAN clarified that it's not the date of the bill that is important to the lien statute, but the date of the completion of the service. So if the furnace man comes in and doesn't give you the bill on the day that he does the job and gets the bill to the customer two weeks later, it has already been maybe 30-50 from the time of the completion of the work. You have one more cycle and then you are almost up against the 90 days from the completion of the work. So the billing cycle is distinct from the completion of the work trigger date. SENATOR THOMAS asked if the small businesses he spoke to thought the 120 days was a good number. He knew that invoicing is often delayed because shops are small and people are busy. REPRESENTATIVE RAMRAS replied that sometimes these small business people are drawn into work because they have a passion for it. Sadly some of his closest friends who have a passion for repairing your stuff show less of an interest in billing you for it promptly and even less of an interest in collecting it. They are excellent trades people but not such great business people. This would be an extra buffer, an opportunity for them to not suffer so much from their own procrastination. 1:48:27 PM GRACE RUDY, owner, Overhead Door Co., Fairbanks, AK, testified that a lot of times when she tries to collect bills after the 30 days is passed - which is really when the bill is due - she gets anything from the people just don't have the money and want to make payments to maybe you can't get hold of them at all for 60 days and after you get a hold of them, they let you know that they have been on vacation for a month and now they don't have any more money. By the time the 90 days is up you're trying to work with them, because you don't want to alienate your customers, but 90 days often is not enough time. Another 30 days would be very valuable for the customers and the business people for many reasons. 1:50:13 PM SANDRA HEMBREE, Alaska Best Plumbing and Heating, Fairbanks, Co., added that one situation that comes up quite a bit, especially in the winter time, is when they are dealing with insurance claims for expensive damage. In most of those situations they are dealing with tens of thousands of dollars rather than hundreds of dollars, and it takes at least 90 days before they even consider processing payments. She knows of several instances where the home owner gets the check and the business never sees the money because they decide to take off with it. Businesses don't have any recourse because they have to wait for the insurance adjusters to do their fractions, then they submit that to the mortgage company; the mortgage company wants to do their own inspections. It's a very time consuming process. MS. HEMBREE said they don't have problems with their customers, but they do have cases where they set up a payment plan, and then the people don't pay and then they have to track them down. By the time they realize they are just not going to pay it's past that 90 day mark. CHAIR PASKVAN asked if the insurance company doesn't make the check out as dual payee. MS. HEMBREE answered they are supposed to but in a lot of cases they don't. In most cases they make it out to the mortgage company and the home owner, so then they have to send the checks to the mortgage company and get an inspection. Then the mortgage company will release the money to the homeowner. They are outside that chain in most cases. The dual check is very rare. SENATOR BUNDE said he wanted businesses to be paid for their services and promptly and asked if there is any danger that the word will go out that someone can drag their feet for another 30 days. MS. HEMBREE answered no; she has found if you're going to pay your bill you will. MS. RUDY agreed 100 percent. SENATOR BUNDE asked if they can begin the lien process sooner if they felt these were scofflaws. REPRESENTATIVE RAMRAS answered that you can file a lien right away, but probably not on repeat customers. CHAIR PASKVAN closed public testimony. 1:55:20 PM SENATOR THOMAS moved to report HB 253 from committee with individual recommendations and attached zero fiscal note(s). There were no objections and it was so ordered.
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