Legislature(2009 - 2010)BELTZ 105 (TSBldg)
04/06/2010 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| 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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