03/05/2024 03:00 PM House STATE AFFAIRS

        HB 173-PUBLIC CONSTRUCTION CONTRACTS WAGE RATES                                                                     
                                                                                                                                
3:10:32 PM                                                                                                                    
                                                                                                                                
CHAIR SHAW announced that the next order of business would be                                                                   
HOUSE BILL NO. 173, "An Act relating to public construction                                                                     
contracts; and providing for an effective date."                                                                                
                                                                                                                                
3:11:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KEVIN MCCABE, as prime sponsor, presented HB 173.                                                                
He paraphrased from the sponsor statement, which read as follows                                                                
[original punctuation provided]:                                                                                                
                                                                                                                                
     House Bill  173 seeks to modernize  an outdated statute                                                                    
     to   better   address   the  specific   challenges   of                                                                    
     construction  in Alaska.  Specifically, it  updates the                                                                    
     Little  Davis  Bacon  Act  (LDBA)  public  construction                                                                    
     contract   thresholds  in   our   state.  The   current                                                                    
     threshold  of  $25,000  is deemed  inefficient  due  to                                                                    
     various   Alaska-specific   factors  and   inflationary                                                                    
     pressures  over the  past 11  years.  Many states  have                                                                    
     either eliminated thresholds  altogether or raised them                                                                    
     to $1 million.                                                                                                             
                                                                                                                                
     This bill  proposes raising  the threshold  to $150,000                                                                    
     to  better  reflect   inflation  and  current  industry                                                                    
     costs.  This  adjustment  would  streamline  processes,                                                                    
     reduce administrative  burdens, and  enhance efficiency                                                                    
     in  public construction  projects statewide.  Moreover,                                                                    
     it  would  encourage  smaller  contractors  to  bid  on                                                                    
     contracts and  help address the  labor shortage  in the                                                                    
     construction industry in Alaska.                                                                                           
                                                                                                                                
     Furthermore,  the  increased  threshold  would  address                                                                    
     unique  challenges  faced  in   Alaska,  such  as  high                                                                    
     transportation  costs in  rural areas.  Currently, even                                                                    
     minor  projects,   like  repairing  20   potholes,  may                                                                    
     necessitate  compliance with  LDBA  regulations due  to                                                                    
     exceeding the threshold.                                                                                                   
                                                                                                                                
     Support  for House  Bill 173  is  crucial for  adapting                                                                    
     regulations,   ensuring  equitable   participation  for                                                                    
     local contractors,  and fostering  economic development                                                                    
     in  the  face  of inflation  and  workforce  shortages.                                                                    
     Let's  modernize our  approach  to public  construction                                                                    
     contracts and propel Alaska forward.                                                                                       
                                                                                                                                
     Thank you for your attention to this important matter.                                                                     
                                                                                                                                
REPRESENTATIVE MCCABE  stated that  HB 173  creates opportunities                                                               
for smaller  enterprises, which  could lead  to job  creation and                                                               
community  development.   The bill  acknowledges the  need for  a                                                               
more   streamlined  process   for  smaller   public  construction                                                               
contracts.   Projects under $150,000 would  move projects forward                                                               
more  efficiently and  facilitate  timely  improvements to  local                                                               
infrastructure without unnecessary bureaucratic hurdles.                                                                        
                                                                                                                                
3:12:43 PM                                                                                                                    
                                                                                                                                
JULIE MORRIS,  Staff, Representative  Kevin McCabe,  Alaska State                                                               
Legislature, on  behalf of Representative Kevin  McCabe, provided                                                               
the  sectional analysis  for HB  173 [included  in the  committee                                                               
packet], which read as follows [original punctuation provided]:                                                                 
                                                                                                                                
     Section 1:  Amends §AS 36.05.005  to raise  the minimum                                                                    
     dollar threshold  for which  the requirements  of Title                                                                    
     36  (Public  Contracts)  apply to  public  construction                                                                    
     contracts from $25,000 to $150,000.                                                                                        
                                                                                                                                
3:13:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STORY asked about the limit of $150,000.                                                                         
                                                                                                                                
3:13:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MCCABE  answered that  local contractors  from his                                                               
district  informed  him that  they  were  struggling to  complete                                                               
simple projects  like laying gravel on  a mile of road  under the                                                               
$25,000 currently  in statute.   This  meant that  an engineering                                                               
process  needed   to  be  completed,  which   costs  construction                                                               
projects a minimum of an additional $70,000.                                                                                    
                                                                                                                                
3:15:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CARRICK  asked how many states  have eliminated or                                                               
raised thresholds to $1 million.                                                                                                
                                                                                                                                
3:15:30 PM                                                                                                                    
                                                                                                                                
MS. MORRIS offered  to follow up with  specific information after                                                               
the meeting.                                                                                                                    
                                                                                                                                
3:16:48 PM                                                                                                                    
                                                                                                                                
CHAIR SHAW announced that HB 178 would be held over.