Legislature(2013 - 2014)SENATE FINANCE 532
04/12/2014 10:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB193 | |
| SB209 | |
| SB141 | |
| SB209 | |
| SB220 | |
| HCR15 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 220 | TELECONFERENCED | |
| + | SB 209 | TELECONFERENCED | |
| + | SB 193 | TELECONFERENCED | |
| + | SB 141 | TELECONFERENCED | |
| += | HB 32 | TELECONFERENCED | |
| += | HCR 15 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE BILL NO. 193
"An Act relating to bonds required for contractors."
10:13:54 AM
SENATOR PETER MICCICHE, explained that the legislation
would increase the license bond amounts to the following:
general contractors, $25,000; general contractors who
perform only residential, $20,000; mechanical or specialty
contractors, $10,000; and contractor performing minimal
work, $5,000. The construction industry, which will be
impacted by the legislation, brought forth the
recommendation to make an adjustment in the bond amounts.
given the increase in inflation over the last 30 years, the
industry felt an increase was long overdue. Purchasing a
bond generally costs a small percentage of the total amount
of coverage, thus providing a significant benefit to the
public and other businesses in relation to the small cost
increase as a result of the legislation. He stated that SB
193 also corrected a loophole in the statute. All
professional contractors are required to be licensed and
file a bong. A notable exemption is that the law did not
intend to impose license and bond requirements upon non-
professional contractors such as family members, friends,
or neighbors who get paid for a small amount of work.
Current law allows work under $10,000 to be exempt and this
wording allowed individuals who sell themselves as
professionals to avoid the statutory licensure
requirements. In these cases, the public has no recourse
against unlicensed and un-bonded contractors.
Co-Chair Meyer stated that he has some people online that
would be able to testify about the legislation. Senator
Micciche stated that those testifiers may be able to
explain how the current bond rates hamper the Department of
Law's consumer protection activities. He stated that the
bill was about modernization and fairness.
Co-Chair Meyer wondered how the bill would impact the
handyman. Senator Micciche replied that the bill would not
impact the handyman. If that individual advertises, it
would not affect the individual. The only impact the bill
might have is that it would save the individual
approximately $250 per year, because that person currently
was bonded at the next highest level of contractor.
Senator Micciche stressed that if someone chose to not
follow the current law by not being bonded as a contractor,
that person would still be able to become bonded. The bill
provided savings for the smaller contractors, who were
fully bonded, licensed and insured.
10:18:07 AM
Senator Dunleavy remarked that he had many questions, but
would not know how to approach the topic without seeing how
the legislation was implemented. He wondered how the bill
would affect someone who was providing $5000 worth of work.
Senator Micciche asked if that person would be advertising
that work.
Senator Dunleavy stated that the individual would not be
advertising their work. Senator Micciche stated that the
legislation would change the bonding for the few people
that were not advertisement.
Senator Dunleavy queried the requirement. Senator Micciche
responded that the legislation changed the requirement at
the $5000 level, and would add about $250 per year to that
person's business cost.
Senator Dunleavy wondered how the legislation would affect
a person who advertised. Senator Micciche replied that
nothing would change for the person who advertised.
Senator Bishop felt that the legislation held a universal
benefit, based on the number of letters of support. He felt
that the legislation would be of benefit to the smaller
contractors, because the creditors may have improved
confidence that the contractor will complete a project or
receive funding to initiate a project.
Senator Bishop queried the Department of Labor and
Workforce Development's (DLWF) position on the legislation.
JAMES NAGEL, MECHANICAL INSPECTION MANAGER, DEPARTMENT OF
LABOR AND WORKFORCE DEVELOPMENT, ANCHORAGE (via
teleconference), stated that DLWF was neutral on the bill.
He stated that the legislation provided some benefit to the
consumer and to the current group of business people that
were operating under the current handyman law. Those
individuals were currently prohibited from advertising that
would lead a reasonable person to believe that they are a
contractor. By requiring bonding, that handyman would be a
licensed contractor. The legislation would open up their
opportunities for business and advertising.
Senator Dunleavy queried the groups that could be
negatively impacted by the bill. Mr. Nagel felt that the
bill would only increase the cost by about $250 per year
for the individuals who were operating solely under a
business license, but were not a licensed contractor. Under
current law, if that individual embarked on a project that
was valued at $2500 or more, that individual already had to
carry the same liability insurance as a general contractor,
which was the largest expense.
10:23:50 AM
Senator Olson wondered how the bill would affect owner
builders. Senator Micciche replied that the bill would not
affect owner builders, unless there was a hired contractor.
JOHN MACKINNON, EXECUTIVE DIRECTOR, ASSOCIATED GENERAL
CONTRACTORS, ANCHORAGE (via teleconference), testified in
support of the legislation. He stated that he began work on
the legislation four years prior, and engaged other trade
associations. At that time, the home building market was
not very robust, so there was not a strong effort to move
the legislation. The home market had recently improved, so
the organizations felt the pressure to promote the
legislation. He stated that there was a focus on ensuring
that the levels were beneficial to all involved. The level
was ultimately agreed upon, and the level was close to what
the 1983 levels would have been, if they had been adjusted
for inflation. He stressed that SB 193 was about increased
bond amounts for contractors, to ensure that the
individuals in the contracting business receive a license
and a bond. He stressed that neighbors, friends, etc.,
could assist in building, but if they begin to advertise,
they must obtain a bond.
Co-Chair Meyer CLOSED public testimony.
Co-Chair Meyer wondered why the fiscal notes were
considered indeterminate. Senator Micciche replied that
DLWF was not sure how the finances would be impacted. He
stressed that the effects would be negligible, if any.
Co-Chair Kelly MOVED to REPORT SB 193 out of committee with
individual recommendations and the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
SB 193 was REPORTED out of committee with a "do pass"
recommendation and with previously published indeterminate
fiscal notes: F1(CED) and F2(LWF).
10:29:00 AM
AT EASE
10:33:47 AM
RECONVENED