HB 155-PUBLIC CONSTRUCTION CONTRACTS  4:15:52 PM CHAIR OLSON announced that the final order of business would be HOUSE BILL NO. 155, "An Act relating to public construction contracts." 4:16:13 PM DON ETHERIDGE, Lobbyist, Alaska State AFL-CIO, stated that the AFL-CIO is opposed to HB 155 in its current form. He related that he has been working with the sponsor's office for solutions. The topic of the threshold has been "hammered on" so he will cover another aspect. He also related that the AFL- CIO's major concern is the definition of "maintenance" since it could be expanded to cover from Fairbanks to anywhere in the country. The rate could be zero but could circumvent the Little Davis-Bacon rates by defining the work as "maintenance." 4:18:10 PM MR. ETHERIDGE recalled Representative Tammie Wilson's testimony with respect to the road service areas (RSAs). He explained he serves on the Juneau Docks and Harbor Board and the process they use to issue a "time and materials" contract is a similar to the ones the RSAs use since the contractor may perform some electrical work today and need plumbing tomorrow. He offered his belief that the issue that has caused the RSA's concern is that the project costs are added together and put it under one contract instead of issuing separate contracts. 4:18:55 PM MR. ETHERIDGE related that he has held conversations with many nonunion contractor friends who are not testifying today because they don't want to lose their jobs. He indicated his friends have related that they are able to work due to the small residential remodels between construction seasons but nonunion workers also count on Little Davis-Bacon (LDB) wages to keep "their heads above water." He also recalled earlier testimony on prevailing wages. He reported the first prevailing wages in Alaska were established in 1960 based on the 1959 changes to law and at the time the average wage was $5 per hour. Currently the prevailing wages average $50 per hour, which is a ten-fold jump. Using those figures, he extrapolated the threshold would be $20,000, based solely on the wage changes. 4:20:40 PM CHAIR OLSON recalled reviewing research on the prevailing wages for 1935 which indicated a range for the prevailing wages from $.50-$1.50 per hour. He reiterated the last time the threshold was changed was in 1935. MR. ETHERIDGE pointed out 1960 was the year when the Alaska prevailing wage went into effect. CHAIR OLSON agreed that his office has been working with a number of the stakeholders, including unions, municipal organization, and sever municipalities. He reported progress is being made. He agreed the crux of the issue is the definition of maintenance. MR. ETHERIDGE agreed. He hoped for a reasonable solution that would work for everyone. 4:22:35 PM REPRESENTATIVE SADDLER inquired as to whether he could give him a rough idea, a "gut feeling" of the amount of construction in Alaska is subject to the LDBA and for the amount performed outside the act. MR. ETHERIDGE offered his belief that the LDBA projects would include a minimum of 65-70 percent of the public construction contracts, but the figure would not include homebuilding or home remodels. 4:23:39 PM REPRESENTATIVE MILLER recalled working construction year round on the East Coast. He asked for an estimate of a long construction season in Alaska. MR. ETHERIDGE pointed out that he worked as the business agent for the laborers union. He indicated the construction period ran from mid-April to the beginning of September. He offered that some work such as high-rise construction could be done year round. He offered his belief that most of the crews were back in the hall by the mid to the end of September and by end of April. REPRESENTATIVE MILLER related his understanding that the construction season lasts about seven months and workers are working to make a year's worth of wages during that time. MR. ETHERIDGE answered yes. 4:25:16 PM BRETT ALLIO, Manager, International Brotherhood of Electrical Workers (IBEW) 1547, agreed it is not a union versus nonunion issue but the issue relates to all of Alaska's workers. He did not think the issue of contractors coming in from Lower 48 would be based on a set dollar amount. He pointed out that contractors come to Alaska to work on big chain stores and since they are already mobilized would be more likely to bid on other jobs. He indicated that the cities, state, and municipalities currently employ maintenance people to perform snow removal, brushing, and street cleaning. He recalled that in Juneau the docks & harbors maintenance work is contracted out. He suggested that the definition of construction includes maintenance it may not be necessary to have a separate definition for maintenance. 4:29:07 PM BENJAMIN STEWART stated that as a retired union employee he feels like he is in the shadow of death among friends. He said that he has been a Teamster, an operator, a laborer, but currently is a road service area (RSA) chairman. He pointed out that his RCA has 92 lots in his service area which collect $24,000 in taxes. The road service area (RSA) saved money to get the road paved, but only one contractor bid under LDBA wages. He would like to see the threshold raised. He did not see many larger local construction companies bidding on the borough service area jobs. He recalled that approximately 107 different service areas exist in Fairbanks. He pointed out that not all are taxed as high as his service area. He offered that he cannot obtain a bid for asphalt or diesel since prices have substantially increased in the past three or four weeks. He recalled that a load of gravel used to run $150 for D-1 gravel, but under LDBA provisions it is costing nearly $500 per load so many service areas do not tax themselves enough to cover maintenance. He said, "We're one of the luckier service areas. At the same time, I don't like to see my brothers here out of work, but when you've got a service area and you need service work done it's not always some new construction, it's maintenance. I think that's where a lot of the problems come in hand." He added he plans to travel to Juneau to personally discuss this issue. 4:32:30 PM SHAWN TUFFORD stated that he is an Alaskan resident and construction worker. He related he researched what happens when LDBA laws are basically "repealed." He cited his source for prevailing wages and government contracting costs from the Institute of Social and Economic Research (ISER) 2008. The report concluded that an overwhelming preponderance of the literature shows that prevailing wage regulations have no effect on the cost to government on contracted public works projects. Workers on prevailing wage contracts tend to be higher skilled, better trained, and are less prone to serious and fatal injuries on the job site. Prevailing wage regulations contribute to enhanced tax revenues and higher wages support consumer spending. Prevailing wage regulations discourage unscrupulous contractors who typically cheat on payroll taxes, employ a low- skilled workers and skirt health and safety requirements on the job site. Prevailing wage regulations also help expand apprenticeship training programs which enrich the community by offering avenues for residents to secure good paying middle class jobs. Removing prevailing regulations and thereby lowering wage and benefit standards shifts substantial costs onto taxpayers by pushing workers into requiring more subsidies in health care, housing, and other social services. It also displaces or diminishes middle class jobs that have traditionally supported local consumer spending which hurts local business. In response to Chair Olson, he stated he would forward copies of the reports to the committee. 4:36:02 PM LINDSEY HILL, Member, Carpenters Local 1243, testified in opposition. 4:36:56 PM ROBIN KELLY, Member, International Brotherhood of Electrical Workers (IBEW) 1547, stated that he is representing himself, his family, and his future. He joined the construction industry since he saw a future in it but that future is unclear with the proposed adjustment to the LDBA's threshold. He thought the effect would be to allow the lowest bidding contractor to bring a labor force from the Lower 48 and pay them a non-competitive wage. He thought to do so would jeopardize not only his future but the future of every hard-working Alaskan. 4:37:35 PM PHILIP ROBERTSON stated he has been employed in the construction industry for over twenty years as a project supervisor. Many of the projects he has overseen under $75,000 have been under LDBA wages. He predicted that lowering the threshold would have the effect of lowering the standard of living, and reducing workers wages would also reduce the amount of taxes they pay. He pointed out that with the short construction season in Alaska that workers need to make as much money in Alaska during the summer. He asked the committee who would benefit from the bill. CHAIR OLSON answered that the municipalities and boroughs have requested the bill. He pointed out that the threshold has been amended down to $50,000, which has not been changed since 1935. The prevailing wage in 1935 was $.50 to $1.50 and the threshold has not been reviewed in 71 years. 4:39:31 PM MR. ROBERTSON was still unsure who would benefit. He asked whether committee members are willing to take a pay cut of 30-40 percent if he is going to be expected to do so if he cannot earn prevailing wages. CHAIR OLSON related that the committee is not in the position to debate but most members took a pay cut when they decided to run for office. 4:40:08 PM DAVID RUIZ related that he has been a construction worker for 29 years. He stated he is here to testify in opposition to HB 155 and the effect it will have on Alaska Statutes, Title 36. He asked members to leave this law alone and do not amend it. 4:41:01 PM DIANA RUHL, Member, International Brotherhood of Electrical Workers (IBEW) 1547, stated that she believes this bill will have a negative effect on working families in Alaska whether they are union or nonunion. She offered her belief that this would have a negative effect in communities. She indicated with a lower threshold on the LDBA wages, the state will lose the mechanism that encourages and enforces local hire. She predicted Alaskans will see more money leaving the state for out of state workers. The residents of Alaska would also have less ability to provide for families. This proposed change to the threshold could potentially cost more if lower skilled workers are used to perform the work and the work ends up needing to be redone. She expressed her concern about public safety with the maintenance language changes as part of this bill. 4:42:20 PM LARRY TALBERT, Member, Plumbers & Pipefitters, urged members to oppose this bill. He expressed concerns that this house bill as currently written would have a drastic effect on Alaska's workers. He related a scenario in which the Atwood Building in Anchorage had to undergo a domestic water replacement project. The project would be exempt from the LDBA requirements under the definition of maintenance even though the overall estimate would be in excess of $1 million since it would be considered to bring the structure up to its original condition. He also thought this bill would open the floodgates for out of state contractors to the detriment of Alaskan contractors and workers. He concluded by urging members to oppose the bill. 4:43:59 PM PAT FALON, Member, Laborers Local 341, stated that he is a concerned citizen who has worked in the construction industry for 21 years. He said he has raised his family in Alaska by working in construction. He also felt blessed that wage and safety was important to his employers. He urged members to vote against this bill. He offered his belief that this bill would only invite out of state more out of state contractors who are not familiar with Alaska's construction environment. He suggested that the out of state contractors would have unskilled work force working on projects which could endanger the public, including school children. He urged members not to change the threshold. He stated that this is not a union or nonunion issue. There is not any reason to "reinvent the wheel." He concluded by asking members to leave the bill alone. 4:45:16 PM DAVID MCALLEN Member, International Brotherhood of Electrical Workers (IBEW) 1547; Statewide Training Coordinator; Alaska Joint Electrical Apprenticeship & Training Trust (AJEATT), stated that he is testifying first and foremost as a lifelong Alaskan. He offered that he is the statewide training director for the AJEATT, which is the largest apprenticeship in Alaska. He said, "We hear a lot about fiscal responsibility and we hear about wise use of state resources." He offered his belief that paying a fair prevailed wage is a good use of our resource. He related the 125 employers he represents provide their workers with a decent wage. He pointed out that these employers dedicate $.65 of their prevailing wage rates to training and safety training. In Alaska he represents 400 workers in the electrical trades who receive an education from a self-funded self-reliant program. He indicated his bargaining unit has decided providing this training is an appropriate use of the money. Collectively journeymen and apprenticeship employees have elected to pay for cross training and safety training. He said he thought this was a wise use of our human resources. He summarized testimony earlier in the week from small communities concerned about paying $22 per hour of their finite resources. He emphasized his belief that $22 per hour does not represent a livable wage and workers are also consumers who buy cars and groceries in communities. He highlighted that cheaper is not always better. He did not think the state would be doing the right thing to seek cheaper labor when it is the public entities that should pay a livable wage and reinvest in our communities. He spoke in opposition to HB 155. 4:48:28 PM JOHN SWORTFIGUER, Member, Laborers Local 942, stated his adamant opposition to HB 155. He related the LDBA is a Depression Era piece of legislation, which provided a tool to ensure that workers a fair wage and provide contractors an opportunity to bid competitively on local government projects. He did not understand the motivation to strip wages worker's wages are barely keeping up. He thought that to "tinker" with this in the surplus economy is an affront to workers in Alaska. In response to Representative Miller, he acknowledged the bill originated in the 1930s to prevent outside workers from taking opportunities away from local workers. In further response to Representative Miller, he agreed the current economy does feel depressed. He pointed out the numerous foreclosures. He characterized the times as fairly perilous. Worker invests in their communities and the social integrity of communities should not be toyed with nor should the livelihood of workers. 4:51:01 PM ERIC SLAY stated that he is a second generation Alaska Native. His parents moved to Fairbanks in 1955. He predicted that if this bill passes wages will plummet for union and nonunion workers and he may not be able to afford the high cost of living in this state. He did not think nonunion bids would drop significantly, just enough to win the bid. He offered his belief that workers will receive half the pay. The extra money would be kept by the contractor. He thought out of state contractors would win bids. He questioned whether some would even be American citizens. He emphasized that the funds should stay in Alaska, noting Alaska has resisted the effects of the recession since the money stays in the state. He said, "Our state is strong because of our labor and our state is strong because we keep our money in our state." He asked if anyone in the legislature is against hiring Alaskan workers or having a strong economy and if so voiced that if anyone does they do not belong in this position. 4:52:45 PM JUSTIN JACKSON, Member, Carpenters Local 1281, spoke in opposition to HB 155. He stated that opponents have developed many arguments against the Davis-Bacon Act including increasing the dollar threshold claiming it is harder to administer, expensive, and unnecessary. He offered his belief that these arguments are false. He said that paying workers a prevailing wage is not expensive but paying workers a low wage is expensive. He stated that low-wage low-skilled workers often take longer to perform work and are not as skilled because they usually have not been trained as well as higher paid workers whose work often may need to be redone. Low-wage workers must sometimes rely on government assistance to provide for their families. They also contribute less to the economy since they purchase less and pay less in taxes to local and state government. He asked how a law could be unnecessary when it requires contractors to pay their workers that are prevailing in the local area. He quoted U.S. Senator Robert L. Bacon, Republican, New York, when he proposed his first prevailing wage bill in 1927 as saying: "It is highly desirable, of course, that the federal and state building program should not tend to have the effect of upsetting labor wages and labor conditions in any community." He related his understanding that this is what HB 155 would do. The LDBA fulfills the intent to protect local labor standards by helping to ensure the preservation of a community's general welfare. He related these are the reasons for his opposition to HB 155. In response to Representative Saddler, he answered that he researched U.S. Senator Bacon on the Internet. 4:55:09 PM RAYMOND DELL, Member, Carpenters Local 2247, stated that the effects of HB 155 would adversely affect the quality of life for all Alaskans and their families actively involved in the construction trade. He predicted that this bill would allow cheap outsourced labor to be earned in Alaska and spent elsewhere. He offered his belief that Alaskan carpenters are skilled whether they are union or nonunion workers and demand a high wage to offset the higher cost of living in Alaska. It also provides the basis for providing the wage scale for nonunion workers. The prevailing wage laws are a testament to those who provide the knowledge and skill that built the state's infrastructure, including schools, government, and highways. Additionally, the LDBA wages offset the lack of insurance and retirement for nonunion workers. He also stated that the LDBA encourages hiring skilled laborers and encourages youth to become skilled-trades workers. He further stated that construction workers average wages are $578 week, $30,058 per year. He pointed out that people claim the Davis-Bacon results in discriminatory hiring practices and lower wages. The University of Utah studied nine states that repealed its LDBA laws, which showed a major decrease in minority enrollment for apprenticeship programs from 20 to 12.5 percent. The same study showed a 15 percent increase in serious injuries after the LDBA was repealed. Additionally, the study showed a 12 percent increase in "lost work" days which is magnified in Alaska due to its shorter construction season. Higher wages translates to higher production and lower costs. He concluded by saying that higher wage states with LDBA built highways for 18 percent less than low-wage states. 4:58:48 PM CHAIR OLSON, after first determining no one else wished to testify, closed public testimony on HB 155. [HB 155 was held over.]