Legislature(2011 - 2012)BARNES 124
03/07/2011 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB87 | |
| HB164 | |
| HB155 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 87 | TELECONFERENCED | |
| += | HB 164 | TELECONFERENCED | |
| += | HB 155 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 155-PUBLIC CONSTRUCTION CONTRACTS
4:04:37 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 155, "An Act relating to public construction
contracts."
4:08:03 PM
REPRESENTATIVE JOHNSON made a motion to adopt Amendment 1,
labeled 27-LS0249\B.3, Bannister, 2/22/11, which read as
follows:
Page 1, line 5:
Delete "$75,000"
Insert "$50,000"
Page 4, lines 8 - 9:
Delete ", except for a school district of a
municipality or a regional educational attendance
area"
REPRESENTATIVE HOLMES objected for purpose of discussion.
4:08:44 PM
JENNIFER SENETTE, Staff, Representative Kurt Olson, Alaska State
Legislature, stated that Amendment 1 would reduce the threshold
from $75,000 to $50,000. The second change is in proposed
Section 8, on page 4, lines 8-deleting except for a school
district. Initially, the draft inadvertently exempted school
districts, but it was not the sponsor's intent to exempt school
districts. Thus, Amendment 1 will correct that error and brings
school districts under the umbrella so they are subject to the
provisions of the bill, including the proposed $50,000 cap.
REPRESENTATIVE HOLMES removed her objection.
There being no further objection, Amendment 1, was adopted.
4:10:26 PM
MAX MIELKE, Business Manager, Plumbers & Pipefitters Local 262,
stated that he is a 56 year Juneau resident. He said he is the
Business Manager for the Plumbers and Pipefitters with about 100
members. He stated that he strongly oppose HB 155. He related
that in the 80s and early 90s members had a tough time. He said
that at times a plumber might be laid off for several months and
small contracts helped members survive. He said this is not a
union versus non-union issue. He also said he was glad to see
the amendment added for the school districts. He characterized
the bill as a form of right to work legislation and "is a start
to the race to the bottom."
4:13:03 PM
REPRESENTATIVE MILLER asked whether there was any figure his
organization would feel comfortable with given that the Little
Davis-Bacon applies to contracts over $2,000.
MR. MIELKE answered that several carpenters are working in the
union hall on small projects, probably under $12,000. He stated
that during his career the small projects kept members going.
He expressed concern on the limit.
4:14:28 PM
CHAIR OLSON clarified that the $2,000 figure was set in 1935 and
has not been adjusted since then. He recalled that if the
figure was adjusted for inflation the amount would be about
$32,000.
MR. MIELKE offered that construction work has not changed that
much. He maintained members' work for small projects provides
the "bread and butter" for contractors.
4:15:13 PM
MATHEW MIELKE stated he grew up in Juneau. He said his father
worked in the construction industry but has also worked in the
industry. He agreed with his father's testimony. He further
said small jobs have made a difference to him. He offered his
belief that he often would not have been able to "put food on my
own table if it wasn't for a $5,000 job that my boss got." He
was unsure how low the minimum limit for Little Davis-Bacon
would affect him. He feared he would be unemployed, drawing
unemployment, and someone from out of state would be awarded the
bid on a job. He expressed concern that raising the contract
limit from $2,000 to $75,000 before the Little Davis-Bacon Act
(LDBA) would apply would attract Lower 48 contractors who will
low bid contracts, perform subpar work, and leave. He said,
"They don't really care if they get a bad reputation for it."
The current requirement for LDBA allows local trained and
skilled workers to work on construction jobs. The workers do
good jobs, maintain their reputations, and are proud of the work
they perform in the communities in which they live. He stressed
that this is very important to him. He concluded by saying, "I
look around the room and I don't really fit in here..."
CHAIR OLSON commented that everyone fits in this room. He
remarked that at least one person sitting at the table has
employed union and non-union people.
REPRESENTATIVE CHENAULT agreed.
4:17:37 PM
JON SMITH, Member, Carpenters Local 2247, stated that he was
raised in Dillingham and has lived in Juneau the past 11 years.
He spoke in opposition to HB 155. He shared some quotes he
found. He read, "The proponents of prevailing wage legislation
wanted to prevent government from using its purchasing power to
undermine wages of its citizens. It is believed that government
should set an example by paying the wages prevailing in a
locality for each occupant hired to government contracts and
building code projects." He said that rings true to him since
it sets an example by paying the prevailing wage of the area as
the standard. He related that it is not inexpensive to live in
Alaska. It is especially expensive to live in rural Alaska. He
grew up working construction and liked working the Little Davis-
Bacon jobs because he knew what he'd be paid. It said it was
important to him growing up and working in the construction
industry. He read, "The purpose of the Davis-Bacon Act is to
protect its employees and government contractors from
substandard wages and to promote the hiring of local labor
rather than the cheap labor from distant places." He
characterized the Little Davis-Bacon Act (LDBA) as the "level
playing field." He further related that when out of state
contractors come to Alaska on a Title 36 project, they are aware
of the specific labor costs, whether the labor is union or
nonunion labor. Removing the requirement for Little Davis-Bacon
means an out of state contractor will bring in his own crew and
pay whatever wage he wants to pay. He offered his belief that
most Alaskans cannot afford to work for less. The standard of
living is less in the Lower 48 so the wages are less. In
closing, he said the cost of a $50,000 is just that, but the
Department of Labor & Workforce Development (DLWD) will have a
certified payroll, and wages are set. He said if this bill
passes the same project will cost $50,000, but the DLWD will not
have a certified payroll, and the employees would not be
guaranteed a good wage. The contractor will still bill out
$50,000 but the workers could be set at the minimum wage.
4:21:09 PM
MARVIN YODER, Deputy Administrator, City of Wasilla, asked to
speak in support of HB 155. He recalled prior testimony. He
offered his belief that this bill would affect mostly state and
local government. He reviewed the Governor's proposed budget
and very few projects for his community are listed under
$100,000. He predicted the percentage of people affected would
be low. He acknowledged that an out of state contractor might
mobilize for a $50,000 contract in Anchorage or Fairbanks, but
he did not think it was likely contractors would bid on projects
in Fort Yukon for the same cost. He related he has frequently
worked in bush Alaska on small projects. He pointed out that it
is not just the wages people are concerned about but the
paperwork required. He said it should be good for the small
rural communities to bid on the small projects. He concluded
that this is not a big change, considering it represents 70
years of inflation. It makes it much easier for municipal or
state government to have this threshold and efficiency.
4:23:43 PM
SHANE LINSEY expressed his concern with the language in HB 155.
He asked, "If it's not broke why fix it?" The state has done
well with its finances and has about a $12 billion surplus. He
offered his belief that this bill would not benefit the state,
but would allow lower wages to be paid while lowering the
quality of work. He said, "As the saying goes, you get what you
pay for, and this Davis-Bacon allows an even playing field for
all the contractors when they are bidding on these contracts."
He stated his opposition to HB 155.
4:24:39 PM
LORI DAVEY, Member, Board of Supervisors, South Goldenview Rural
Road Service Area, stated that her rural road service area is
17.5 miles off the Rabbit Creek and Goldenview area of Anchorage
hillside. She offered the South Goldenview Rural Road Service
Area's support for HB 155. She stated her fellow board member,
Robert Johnson, is also with her today. She related the
struggle the road service area has had grappling with
requirements on any project of $2,000 or more when the Little
Davis-Bacon Act (LDBA) "kicks in." She related that $2,000 of
materials is a very low threshold for road improvement projects.
A culvert replacement or pothole material can easily go over
$2,000 and trigger the Davis-Bacon rates, she said. She further
related that the Little Davis-Bacon provisions significantly
raise the cost of any roadwork. The rate has been in place
without any adjustment since 1935, that even the basic rate of
inflation would raise the rate to $32,000, using an average
inflation rate of 3.78 percent. She stated that Little Davis-
Bacon wages are much greater than the prevailing wage. She said
that her road service area pays almost double wages. It
adversely impacts residents since they cannot fix as many roads.
These funds directly impact property taxes. She explained the
residents pay 1.8 mils per hundred thousand dollar valuation on
their homes. These are not just big companies affected by the
Little Davis-Bacon provisions, but homeowners. The increased
threshold and more clearly defining the different between
maintenance and construction, residents will be able to maintain
and improve our roads more cost effectively. The basic buying
power with inflation corrections will double and more roads will
be able to be improved. She urged members to pass HB 155 to
better utilize public monies, create efficiencies, and
accomplish more road work.
4:26:49 PM
NANCY M. PETERSON, Public Works Director, City of Unalaska,
stated her strong support for HB 155. She stated that she is a
manager of rural public construction projects and supports
raising the threshold for the application of the Little Davis-
Bacon Act. She related that many small projects have increased
in cost to the point the projects are no longer viable and do
not get built due to the wage requirement. She also has worked
with small contractors who chose not to bid on projects due to
the added reporting requirements for the jobs. She has served
on the Alaska Municipal League (AML) public works and
infrastructure legislative subcommittee for the past eight
years. She has listened to small communities and villages
discuss projects that were lost due to the extra wage costs
required. These communities have limited resources. When
project costs increase from $15,000 to $20,000 can affect
whether the project is feasible. Many of the rural projects are
"quality of life projects" rather than the projects driven by
life safety issues. These projects are good projects but cannot
be justified when costs escalate. She recalled testimony from a
prior hearing in which one speaker mentioned the small number of
projects this bill would affect based on the number of state
projects under $75,000 in its database. She asked members to
also consider all the projects that were not built because the
cost of the project increased so communities could no longer
support them. She offered her belief that HB 155 would create
new opportunities for all of Alaska's communities. She strongly
urged members to pass HB 155.
4:29:24 PM
SHIRLEY MARQUARDT, Mayor, City of Unalaska; Vice President,
Alaska Municipal League (AML), offered her strong support for HB
155. She stated that AML is on record with its resolution of
support for the bill including the $50,000 threshold. She
explained at the last AML membership meeting, its membership
voted to increase the threshold for Little Davis-Bacon wages
from $2,000 to $50,000 on public construction projects and an
exclusion for maintenance contracts be added. She said she
thinks this is a reasonable and responsible adjustment after 76
years of the status quo for the wage threshold while the
construction and maintenance costs have maintained a steady
increase. With a long overdue adjustment and the exclusion of
maintenance contracts, the legislature will provide
opportunities to municipalities that currently forego projects
or maintenance due to the cost. She said that this is a
significantly positive change for all communities in rural
Alaska. Jobs and updated infrastructure as smaller projects
become a reality provide a "win-win" with the passage of HB 155,
she also said.
4:30:53 PM
BRET HELMS, Training Director, United Association of Plumbers
and Pipefitters, Local 375, stated his opposition to
modifications to Little Davis-Bacon proposed in HB 155. The
proposal to raise the threshold limit for construction contracts
will not necessarily lower construction costs but may increase
the number of out of state employers who bid on construction
projects. Currently, employers are required to pay Little
Davis-Bacon journeyman prevailing wages unless the employer has
a federally registered apprenticeship program. He predicted
that if HB 155 is passed, employers will not be required to have
a registered apprenticeship program and wages will be subjective
to the employer. He expressed concern that apprentices trained
in programs will not have the opportunity to work on these
projects. These are good jobs and jobs that allow Alaskan men
and women to support their communities, raise families, and
remain in Alaska. He feared they may be replaced by a cheap
nonresident, low skilled work force brought in from the Lower
48. He concluded by stating this proposal would diminish wages
and would also lower the standard of living across Alaska, in
communities that are already suffering in the depressed economy.
He thanked members for listening to his comments.
4:32:21 PM
ZEBULON WOODMAN, Member, Laborers Local 942, said he has lived
in Alaska his entire life. He said, "Leave this law alone." He
offered his belief that exempting the Little Davis-Bacon Act
(LDBA) from jobs up to $50,000 would have affected hundreds of
projects last year. With many projects being awarded to
nonunion contractors, this proposal attacks wages for many
nonunion workers who do not have an advocate. The Little Davis-
Bacon wages provide a level playing field for all bidding
contractors. It helps to ensure a quality wage and is not "a
race to the bottom by contractors who are willing to pay workers
less." This bill would take dollars away from the worker to
allow municipalities to obtain more work for less money. No one
suggested taking "a dime from a contractor or limiting rental
rates on equipment, or limit the profit on the sale of
material." He related he heard considerable discussion on the
onerous paperwork, which was too much for the contractor. He
said, "If we take money out of the workers pocket it will make
life better for the contractor." He expressed concern for the
working family. He said that raising the threshold may not
reduce the cost of bids, since contractors may "pocket more
money" while workers are paid less. He urged members to oppose
HB 155.
4:34:07 PM
JEAN TRAINOR, Member, Alaska Public Employees Association
(APEA), stated she is speaking as an APEA member and also as a
long-term nonunion and union worker in Alaska. She stated she
has lived in Alaska for over 35 years. She urged members to
oppose HB 155. She characterized HB 155 as "a race to the
bottom." She said she has repeatedly heard stories about low
paid workers from the Lower 48 taking Alaskan dollars and
sending outside, which does not help Alaska's communities. She
suggested supporting our communities is accomplished by paying a
fair wage to Alaskans. She said she is especially bothered by
Lower 48 workers driving down wages. She suggested that 1,400
projects were in the $2,000 to $50,000 range. Small "bread and
butter" projects provide wages that bridge the big projects for
workers. Alaska has a boom and bust economy. There are times
when fair wages paid under Little Davis-Bacon projects provide
income that helps see the families through the leaner times.
4:36:31 PM
REPRESENTATIVE THOMPSON asked whether she lived in a road
service area.
MS. TRAINOR answered yes. In response to Representative
Thompson, she said even though she lives in a road service area
in the Goldstream Valley, she still supports HB 155.
REPRESENTATIVE THOMPSON pointed out that Little Davis-Bacon has
the potential to double road service area fees added to her
property taxes.
MR. TRAINOR emphasized she is fully supportive to have the
people grading her road obtain a fair wage.
4:37:43 PM
JIM LAITI, Business Representative, Plumbers and Pipefitters
Local 375, stated he is a lifelong Alaskan. He has worked in
the construction industry since the 1970s. He related that the
work is seasonal and cyclical. He recalled years in which he
worked for eight or so contractors. He worked on day, week, or
monthly jobs, all of which help support local contractors who
must maintain their facility and staff. Additionally, he and
his friends must also maintain their homes during the winter
months as compared to those who live in the Lower 48 and just
work during the construction season. He asked members not to
advance HB 155, which will negatively impact Alaskan workers as
well as contractors. He stated that using a skilled highly
trained worker can make all the difference on a renovation
project or maintenance project in terms of the overall cost over
time.
4:40:20 PM
JASON ALWARD, Business Agent, International Union of Operating
Engineers Local 302, stated that he is a lifelong Alaskan. He
is speaking on behalf of himself. He asked whether a problem
exists in terms of the very old statute pertaining to
construction contracts over $2,000 should be covered under
prevailing wages. He offered his belief that a problem does not
exist with the status quo. Seven or eight states currently have
lower threshold on contracts. This ensures that Alaska Hire is
a priority. He offered his belief that using the Little Davis-
Bacon will "level the playing field" for contractors by
eliminating employers from the ability to "get jobs on the backs
of their employees." He stated that raising the threshold does
not guarantee jobs will cost less. It only guarantees that
workers paid less and even more importantly, the worker may not
be an Alaskan worker. He characterized this bill as a "race to
bottom" which he did not believe is necessary at a time when the
state has $12 billion in surplus funds. He concluded by stating
that diminished wages for Alaskans for mostly seasonal
occupations is not the answer. He said, "I oppose HB 155.
Thank you."
4:42:27 PM
RON AXTELL, Representative, Laborers Union Local 942, stated
that he helps represent over 2,000 Alaskan union laborers in
Southcentral Alaska. He also speaks for small business workers
who are entitled to earning a living wage. He asked how to
stretch workers and improve Alaska when this bill has the
potential to move Alaska backwards. He offered his belief that
by raising the threshold on paying the prevailing wage for
projects it also would lower the standard of many workers who
count on prevailing wage work. He stated that if the wage is
inadequate it is possible jobs will not be available. He
related that a higher ceiling makes it more likely outside
bidders will bid successfully on jobs. There is no guarantee
these contractors will hire Alaskans. The state subsidizes
programs. He asked whether paying less will result in
subsidizing more programs. He urged members not to change the
current limit.
4:44:10 PM
KEITH MONTGOMERY, Business Representative, Carpenters Local
1281, stated he is a 28 year resident of Alaska. He said he is
glad to see the amendment to the bill was adopted. He offered
his belief that HB 155 does not provide a mechanism to develop
the workforce or the standards set forth in prevailing wage
jobs.
4:45:38 PM
JOHN GARRETT, Member, Sheet Metal Workers Local 23, stated he is
an 18 year Alaskan. He spoke in opposition to HB 155. He
recalled prior testimony and commented with respect to raising
thresholds. He said that jobs can be divided into phases. A
person could have large jobs divided into many phases, which is
just one way to game the system. He agreed with the comments
that this bill is a "race to the bottom." He thought it might
lead to the situation in which people cannot afford to live in
the state. He reminded members that health care and utility
costs have increased exponentially. He said, "This is not a
union or nonunion issue. This is a worker issue." He did not
understand why the burden is placed on the worker. He
understood that costs need to be considered but this is not the
way to do it. He thought the approach attacked workers.
4:47:28 PM
BRONSON FRYE, Member, Painters and Allied Trades Union, Local
1959, stated that he is a lifelong Alaskan and is a journeyman
drywall, finisher, and painter by trade. He has worked union
and nonunion jobs. He currently represents painters, drywall
finishers, floor coverers, and glaziers. He has been in
commercial construction for ten years. The Davis-Bacon or
prevailing wage jobs provide the financial lifeblood for many
construction workers in Alaska. He said he bases this on his
experience and comments by many others in the construction
industry. He emphasized that this is not a union versus
nonunion issue. The wages paid to union and nonunion workers on
Davis-Bacon projects promotes the growth of the middle class and
boosts the state's overall economy. Since the state has a $12
billion surplus, it would be a travesty to pass a bill that
would devastate the income of thousands of construction workers
in Alaska. He explained that "race to the bottom" has a real
and tangible meaning. When a contractor bids on a project, the
three main variables in construction are material cost,
overhead, and labor cost. Of those, the material cost and
overhead are approximately the same, but the labor cost is the
only real variable. Construction contracts are awarded to the
lowest bidder. Having a standard, such as Little Davis-Bacon
helps the worker. It also ensures the construction contract is
awarded to a responsible contractor and is not a "race to the
bottom." He urged members to please oppose HB 155.
4:50:58 PM
LARRY BELL, Representative, International Brotherhood of
Electrical Workers (IBEW) Local 1547, stated he has three kids
and is a second generation Alaskan. He is a resident of
Wasilla. He represents almost 8,000 active and retired members
of the IBEW. He stated his opposition to HB 155. He said that
this bill is not good as a measure of the "floor" wage for
Alaskans. It is not good for local hire. It is not good for
seasonal workers in Alaska. It is not good for the quality or
ensuring quality of construction on state-funded projects. He
implored members to leave this bill alone. He offered his
belief that HB 155 ensures employment on public funded jobs will
focus on efficiency and the ability to do the job right and
effectively.
4:52:01 PM
SHAWN CROSS, Apprentice, International Brotherhood of Electrical
Workers (IBEW) Local 1547, stated that he was testifying in
support of his local union. He asked committee members to
oppose HB 155.
[HB 155 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB87 Supporting Documents - Civil Penalties Other States.pdf |
HL&C 3/7/2011 3:15:00 PM |
HB 87 |
| HB164 Draft Amendment to CS ver M.pdf |
HL&C 3/7/2011 3:15:00 PM |
HB 164 |
| HB164 Draft Proposed CS ver M.pdf |
HL&C 3/7/2011 3:15:00 PM |
HB 164 |
| HB164 Sectional Analysis ver M.pdf |
HL&C 3/7/2011 3:15:00 PM |
HB 164 |
| HB164 Opposing Documents - Letter NAPSLO 3-4-2011.pdf |
HL&C 3/7/2011 3:15:00 PM |
HB 164 |
| HB155 Opposing Documents - Email Steve Hennessey 3-4-2011.pdf |
HL&C 3/7/2011 3:15:00 PM |
HB 155 |
| HB155 Opposing Documents - Fax Zeb Woodman 3-1-2011.pdf |
HL&C 3/7/2011 3:15:00 PM SFIN 4/17/2011 10:00:00 AM |
HB 155 |
| HB155 Supporting Documents - Fax City of Wasilla 3-1-2011.pdf |
HL&C 3/7/2011 3:15:00 PM |
HB 155 |