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