Legislature(2011 - 2012)BELTZ 105 (TSBldg)
04/13/2011 05:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB155 | |
| HB87 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 155 | TELECONFERENCED | |
| += | HB 87 | TELECONFERENCED | |
HB 155-PUBLIC CONSTRUCTION CONTRACTS
5:03:08 PM
CHAIR EGAN announced the first order of business to be HB 155,
sponsored by the House Labor and Commerce Committee.
SENATOR PASKVAN joined the committee.
5:04:05 PM
JENNIFER SENETTE, staff to Representative Olson, chair of the
House Labor and Commerce Committee, briefed the committee that
during the Great Depression, Congress enacted a federal statute,
the Davis Bacon Act, which prescribed that minimum wages must be
paid to construction workers when they worked on federal public
construction contracts. Subsequently state legislatures enacted
similar laws, which came to be known as little Davis Bacon Acts
(LDB). Alaska's LDB is found in Title 36 and it applies to
public construction contracts under $2,000. This limit was
modeled after the limit of the federal Davis Bacon Act that was
set in 1935. Currently, if a public construction contract is
over $2,000, workers must be paid at the prevailing wages for
that job. A project under $2000 would not be subject to LDB
requirements.
She said the reason there is a threshold at all for LDB projects
is due to the recognition that some projects are simply too
small to justify the substantial administrative burden that is
associated with LDB compliance. Right now, if a project is under
$2,000 it can be completed without jumping through the hoops
like certified payroll, reporting requirements and filing with
the Department of Labor. The problem is that in Alaska,
especially rural Alaska, it's hard to find a public construction
project that is under $2,000. The federal $2,000 limit was based
on a workforce that was highly mobile and on communities that
are easily accessible. In Alaska, transporting materials and
mobilizing a workforce is costly and logistically challenging.
So, even if you have what everyone else would consider a small
project, like filling pot holes or repairing a guard rail, it
would probably cost more than $2,000 in rural Alaska - making it
the equivalent of not having a threshold at all.
Raising the threshold can also be seen as an economic
development issue, because the rigidity of LDB compliance often
discourages smaller local firms from even submitting bids. In
rural areas, this often means that workers have to be imported
from around the states to do a job that could have been done
locally. Raising the threshold will open opportunities to
smaller contractors who otherwise might not have the experience
or the wherewithal to deal with LDB compliance. Inflationary
pressures would also justify a significant increase, she added.
5:07:56 PM
MS. SENETTE said 19 other states have thresholds that are much
higher than $2,000 and of these states the average is about
$108,000.
She said this bill has been in the works for two years and this
$25,000 trigger was the result of a collaborative effort between
several unions, the state and the Alaska Municipal League (AML).
This is the amount the affected parties have indicated that they
can all live with. The sponsor has never believed this to be an
anti-union issue, but rather an antiquated statute issue and
raising the threshold to $25,000 largely addresses that.
5:09:18 PM
MS. SENETTE said that section 1 has the $25,000 limit and the
remaining sections can be described as slightly more technical
and making everything consistent with the title.
5:10:28 PM
SENATOR MENARD remarked that if $108,000 is the average, what
can you get done for $25,000! And said she is tired of doing
legislation that doesn't make the difference it needs to make.
MS. SENETTE responded that they started out hearing at the
beginning of session from municipalities throughout the state,
and they came up with a large number of $300,000 that probably
would have topped all of the other threshold amounts.
Representative Olson knew such a large jump may not get the
support it needs to move forward. That's how they arrived at the
original number which was $75,000. Subsequently, the affected
parties came to this compromise. Although no one is especially
pleased with this number, they have heard that some people have
said the $25,000 will help. Fairbanks, for instance, can do
projects for under $25,000.
5:13:13 PM
REPRESENTATIVE OLSON clarified that the $108,000 was skewed by
one state that was at $500,000 and he could make a valid
argument on everything from $25,000 up to $108,000, but
basically, AML wanted $50,000. A couple of weeks after the bill
came out he was approached by the AML and two union
representatives who wanted to work on a compromise and this is
what they thought everyone could live with. This figure meets
and exceeds inflation. There is also less involvement with the
Department of Labor and Workforce Development (DOLWD) that has a
trigger for projects above $25,000.
SENATOR PASKVAN asked on page 3, line 1, the change from "shall"
to "must", is that a different standard?
MS. SENETTE responded that a drafter said this change was
necessary, but it doesn't change the standard.
SENATOR PASKVAN said that was interesting - as long as it
doesn't change the standard.
SENATOR GIESSEL asked if he heard from any non-profits that also
do projects about the $25,000 limit.
REPRESENTATIVE OLSON responded that the bill will only apply to
governmental subdivisions - boroughs and the State of Alaska.
SENATOR GIESSEL asked if this would not apply to non-profits at
Eaglecrest or building a playground at a municipal park with
volunteers.
REPRESENTATIVE OLSON replied the only volunteer situations like
that would have been that a couple of municipalities that have
built playgrounds with volunteers, which is not paid labor, so
it wouldn't be accounted into the limit.
SENATOR GIESSEL said that is true, but a non-profit might be
raising funds to do something. Is he saying that a non-profit
would not be affected?
REPRESENTATIVE OLSON replied that non-profits are not affected.
SENATOR PASKVAN said he always understood LDB applied to the
state and the political subdivisions created by the state,
meaning the municipalities.
REPRESENTATIVE OLSON added that Fairbanks is perfect example
where they have 108 road service areas down from 140. They have
small jobs that are over $2,000 and under $25,000. This can work
in other parts of the state, but Fairbanks has notable volume.
5:19:50 PM
KATHY WASSERMAN, Executive Director, Alaska Municipal League,
agreed that they started with a goal of $50,000, but got a lot
of push back from the unions, and it didn't seem to be going
anywhere. The two union representatives approached her and they
discussed what they could all live with. They all walked out of
the room at the end equally unhappy, so they felt they had come
up with something that would work.
5:21:26 PM
BARBARA HUFF-TUCKNESS, Director, Governmental and Legislative
Affairs, Teamsters Local 959, said they supported HB 155. She
said she is one of the two union representatives who discussed
this issue. She added, however, some comments on the impacts to
workers who were worried about where the money for these
construction projects will come from. Theoretically, it is
coming out of the workers pockets and that was part of the
discussion. The inflation issue became the important factor in
actually establishing the new figure. They will continue to
monitor the effects to see if it does anything different with
respect to the economy. It was a tough round of negotiations,
she said.
SENATOR MENARD asked how long the $2,000 has been in place.
MS. HUFF-TUCKNESS replied since 1935.
5:24:09 PM
DON ETHERIDGE, Alaska AFL-CIO, said they had a lot of
negotiations over this, but supported HB 155. He was curious
about the "shall" and the "must" and contacted their attorneys
who were "happy with it." He talked to the Department of Labor
and Workforce Development (DOLWD) and they said it didn't change
anything, too. He said they have all taken a "pretty good
whipping" from their constituents along the way.
5:25:32 PM
SENATOR PASKVAN moved to report HB 155 [CSHB 155(L&C)], version
D, from committee with individual recommendations and attached
fiscal note(s). There were no objections and it was so ordered.
5:26:11 PM
At ease from 5:26:11 PM to 5:28:22 PM.
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