Legislature(2003 - 2004)
05/05/2003 09:16 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 155 An Act relating to the submission of payroll information by contractors and subcontractors performing work on a public construction contract; and providing for an effective date. Co-Chair Harris MOVED to ADOPT work draft #23-GH1119\S, Craver, 5/1/03, as the version of the bill before the Committee. There being NO OBJECTION, it was adopted. GREG O'CLARAY, COMMISSIONER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, provided an overview of the differences between the bills. He pointed out that the only change had been made to Page 2, Line 26, and that section was deleted. It addressed "lease hold improvements" and was controversial. GRAY MITCHELL, DIRECTOR, DIVISION OF LABOR STANDARDS AND SAFETY, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, offered to answer questions regarding the fiscal note. Co-Chair Harris noted that the bill would raise revenue for the State, however, he asked if it would be costing the State more money for those contracts. Commissioner O'Claray replied that was correct. There would be a small increase in costs to cover those contract costs. Prior to the bill, the State was "eating" that cost through the general fund budget. He thought that it amounted to about 1% of the contract price. It will be a "pure revenue generator" and in the Murkowski Administration terminology, it acts as a "user fee". Prior to this time, the Department had not been charging contractors for investigation and compliance of the certified payroll for the minimum wage rate. The legislation has those that use the service pay for the services. Co-Chair Harris pointed out that the bill places a user fee on contractors. He questioned if any of those funds would be available for further training and/or retraining displaced workers. Commissioner O'Claray replied there was no money allocated for that concern. The Administration is not "warm and fuzzy" about program receipt authority. He referenced other special funds such as the Worker's Comp Safety Fund. Representative Croft asked which fiscal note would accompany the bill. Commissioner O'Claray responded that the correct fiscal note indicates a $2.5 million dollar change in revenue with a total general fund source of $53.9 dollars for reclassification of a position within that Department, who will receive the on-line and hard copy certified payroll. He added that the position would be changed to an accounting-tech position. Representative Whitaker referenced the fiscal note in the amount of $2.5 million general fund dollars generated per year. He asked if that fee would be paid by contractors or through the State contracts. He accessed that through the preparation of the bids, each contractor would include that cost and would be essentially charging the State more money. Commissioner O'Claray advised that the money would come from a larger "pot". There is a cap on each of the fees with no more than $5,000 per public contract. Representative Whitaker inquired if the federal dollar amount would be reduced for the charges. He requested further explanation. Commissioner O'Claray addressed the "relativity" of that amount. He used the example of building a road, a project in the amount of a $20 million dollars, and then adding the $5,000 fee to that job. Prior to the proposed legislation, the Legislature was funding positions, which were being used to investigate and enforce Title 36 laws. That money was coming directly from the general fund. Through the legislation, those funds would come from federal construction dollars. Co-Chair Harris inquired what the $2.5 million dollars was intended to be used for. Commissioner O'Claray explained that it was his plan to replace the entire general fund budget for the Division of Labor Standards and Safety and that amount would adequately cover those costs. However, the Governor has submitted several user fees and position revenue generating legislation and that HB 155 was included in those pieces. Representative Croft MOVED to ADOPT Amendment #1, #23- GH1119\S.1, Craver, 5/5/03. (Copy on File). Co-Chair Williams OBJECTED. Representative Croft acknowledged that there had been "good work done" dividing up responsibilities of the general contractors and the sub contractors. The way current language reads, the Department could withhold an amount sufficient to pay what needs to compensate for enforcement. If a one-sub contractor was underpaying their worker, the difference would be the "hammer that you have", in opposition stating that they had not properly filed or paid. Then the entire payment could be withheld until that was remedied. Representative Croft stated that the entire payment should be subject but rather that he would like to see them have the right to withhold against the prime. Amendment #1 addresses that concern. Commissioner O'Claray responded that the Department had dealt with the Associated General Contractors (AGC) regarding the compromise. He indicated that the Department would be more comfortable leaving the language as is. He acknowledged that an "aggressive approach to control would happen" with some of the changes proposed. A roll call vote was taken on the motion. IN FAVOR: Croft, Joule, Moses OPPOSED: Stoltze, Whitaker, Chenault, Hawker, Meyer, Williams, Harris Representative Foster was not present for the vote. The MOTION FAILED (3-7). Representative Croft MOVED to ADOPT Amendment #2. (Copy on File). Co-Chair Williams OBJECTED. Representative Croft explained that the amendment would delete the definition of contractor, as there currently is an adequate definition in statute. Additionally, it would give the Commissioner of the Department of Labor & Workforce Development the authority to receive the money as program receipts for running that Department. Representative Croft acknowledged that the Administration does not like the idea of program receipts, noting that he had spoken to the Cheryl Frasca, Office of Management and Budget, regarding a reform of that idea. He added that those fees are as good as "any other" to have as program receipts. Commissioner O'Claray reiterated that under the direction of the Office of Management and Budget and the Governor's Office, he would not support the amendment. Representative Croft reiterated that the fee was appropriate. A roll call vote was taken on the motion. IN FAVOR: Croft, Joule, Moses, Harris OPPOSED: Whitaker, Chenault, Hawker, Meyer, Stoltze, Williams Representative Foster was not present for the vote. The MOTION FAILED (4-6). Representative Whitaker referenced Page 2, Section 2, asking how many primary contracts there had been per year, which would apply to that section. Commissioner O'Claray responded around 1,000 contracts. Representative Whitaker commented that if there were that many, how would the fiscal note work. Mr. Mitchell explained that they had provided a five-year average with approximately 1,000 projects per year. The average value of those projects was roughly $250,000 per project and which is how the $2.5 million dollar fiscal note came to be. Co-Chair Harris pointed out that the bill called for a 1% contract price not to exceed $5,000 dollars. Representative Whitaker replied that he was now comfortable with the number. Vice-Chair Meyer MOVED to report CS HB 155 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so moved. CS HB 155 (FIN) was reported out of Committee with "individual recommendations" and with a new fiscal note by the Department of Labor & Workforce Development.