LB 2001-10
Apr 20, 2001

LEGISLATURE COMMITS NEARLY $1 BILLION TO INFRASTRUCTURE INVESTMENT

The 60-day legislative session ended Saturday, April 14, at midnight without action on Gov. Bob Wise's video lottery machine proposal. A conference committee was close to agreement on Saturday but time ran out when legislators didn't have time to review and debate the committee's report. The governor called a special session to finish work on the bill. In the balance is approximately $200 million in construction bonds for the WV School Authority and $400 million for water, sewer and economic development projects through the WV Infrastructure and Jobs Development Council. The proposal also calls for $90 million for improvements to facilities at higher education institutions and $40 million for state parks. At press time, the House had passed its version of the gray machine bill and the Senate is expected to complete action today.

The bill allocates $25 million annually for the School Building Authority and $19 million for higher education and parks. The bill provides $25 million the first year and $50 million in the following years to the WV Infrastructure Council. Legislative leaders are not exactly sure what funding levels will be generated through the gray machines so they will wait until the revenue stream is firmly defined before they issue bonds. The money could be used for a pay-as-you-go program this year followed by the issuance of bonds. The revenue estimate for the gray machines — and increasing the maximum bets on the video machines at the race tracks from $2 to $5 dollars — is $112 million in Fiscal Year 2002, $216 million in Fiscal Year 2003, jumping to $233 million in Fiscal Year 2005.

If the gray machine bill passes, Gov. Bob Wise and the WV Legislature this year will have committed nearly $1 billion for infrastructure projects!

This is broken down as follows: Road Bonds — $110 million; Regional Jail Funding — $60 million*; School Building Authority Funding — $200 million*; WV Infrastructure Council Funding — $400 million*; Higher Education -- $90 million; State Parks Funding — $40 million*; and Marshall University — $46 million* This funding totals $946 million. If the $55 million from the reauthorization of the nickel gas tax is included, the figure goes over $1 billion. (* — estimated)

GAS TAX AND ROAD BONDS PASS

A bill to reauthorize the nickel gasoline tax was approved by both houses and was on the way to Gov. Wise for his signature when a technical error was discovered. The governor vetoed S.B. 129 and a new bill was introduced during the special session. The bill was passed Wednesday by both houses. The measure provides $55 million annually for road and bridge construction and maintenance. The House approved late Saturday the final $110 million installment of the 1996 $550 million Safe Roads Bond Amendment. Speaker Bob Kiss took to the floor to deliver an eloquent speech on the need for infrastructure development in West Virginia. He said he is proud of his tenure in the Legislature which has provided approximately $9 billion for highway, infrastructure, school and prison construction over the past 10 years. He stated that infrastructure is the only sure way to create economic development in the state. His speech was met with a standing ovation by fellow legislators. The speaker noted he is still committed to providing funding for infrastructure projects.

WV JOBS ACT PASSES AFTER NEARLY NINE YEAR DEBATE

Starting September 1, 2001, contractors on public works projects over $500,000 must hire 75 percent of their workforce from the local labor market. Local labor market is defined as every county in West Virginia and all surrounding states' counties that are 75 miles from West Virginia's border. The bill was culmination of 9 years of work for the ACT Foundation, which has spent hundreds of thousands of dollars promoting the jobs bill.

The final version of S.B. 103 was greatly modified from its original version through intense negotiations by the CAWV, ACT Foundation and legislators. Even though this is only a pilot program, the underlying concerns of the original jobs act remain intact — will surrounding states retaliate against West Virginia construction workers and is the protection bill constitutional. These issues will have to be addressed in future forums.

The major aspects of the bill are as follows:

The bill is a pilot project and applies to projects bid between September 1, 2001 and March 15, 2003.

The bill applies to state projects over $500,000. It specially excludes county and municipal projects and any projects that contain federal funds. A private project funded by loans or bonds from the state Economic Development Authority is also included in the bill.

Contractors and subcontractors must hire 75 percent of their workforce from the local labor market. At least two employees from outside the local labor market is permissible for each employer to assist those specialty contractors that might have a small crew.

Local labor market is defined as every county in West Virginia and all counties bordering West Virginia that fall within 75 miles of the border of West Virginia. (If the border county is within 75 miles of the WV border, every resident in that county is considered in the local labor market, not just those that live within the 75 mile radius). Employees shall have resided in the local labor market for at least six months prior to their application for employment.

Any employer unable to meet the minimum number of the local labor market shall notify the nearest WV Office of the Bureau of Employment Programs of the number of qualified employees needed and provide a job description of the positions to be filled.

If, within three business days, the employment office cannot refer any qualified job applicants or refers less qualified applicants than the number requested, the office shall issue a waiver to the employer stating the unavailability of applicants and the employer can hire outside the local labor market.

The employer will have the discretion of determining whether an applicant is qualified.

The WV Division of Labor will compile the information required and submit it to the Joint Committee on Government and Finance by October 15, 2002 for a legislative audit to be prepared for the December 2002 legislative interim session.

Any employer who violates any provision of this article is subject to a civil penalty of $100 per day of violation.

The Engrossed S.B. 103 is greatly modified from its original version. The original bill contained a permanent hiring requirement, a 90 percent local hire, applied to all projects over $25,000, local labor was defined as everyone in West Virginia and out of state residents that lived 75 miles from the project, the WV unemployment office had seven days in which to respond, employers were guilty of misdemeanors for violating the act, anyone not hired could sue employer with the burden of proof being on the employer and no independent authority to review the data.

The WV Division of Labor will be developing guidelines for state contracting agencies to place in contract proposals beginning September 1, 2001.

CONSTRUCTION MANAGEMENT TAX BILL PASSES LEGISLATURE

S.B. 650 was passed by the House on Friday. The bill now defines construction management as contracting for consumer and sales use tax purposes. The bill was necessary because the state Tax Department rules stated the construction management was a taxable service subject to the state's 6 percent consumer sales tax. Under this bill, construction management services will be taxed as any other general contracting activity.

LEGISLATURE SECURES JUVENILE FACILITIES CONSTRUCTION FUNDING

West Virginia will be able to fund all the remaining juvenile detention facilities through legislation adopted by both houses. H.B. 3156 provides for the permanent financing of a new jail and remaining juvenile detention facilities by the West Virginia Economic Development Authority. Given the current bond market, Regional Jail Director Steve Canterbury estimates $60 million could be available for construction. This would guarantee the completion of juvenile facilities around the state plus have extra for other jail construction projects. The bill must be tested in court to make sure it meets the requirements set forth by the bond market. The jail authority plans to file a test case with the WV Supreme Court as early as possible.

ANTIDEGRADATION COMPROMISE REACHED

On Saturday, the House of Delegates concurred with the Senate on the amendments to the antidegradation policy. Discussions between the Clean Water Coalition, WVDEP and legislators were held right up to the last minute to reach a compromise on the policy. Coalition members compromised on some points but many of the issues raised by the coalition were made part of the final legislation. The WV Division of Highways worked to guarantee the new policy would not be in addition to the environmental activities the DOH already undertakes.

ANNEXATION BILL PASSES

S.B. 202 amends the requirements on how municipalities annex territories. The CAWV inserted amendments into the bill to prevent cities from retroactively charging city Business and Occupation taxes on existing contracts and to prevent cities from annexing a highway solely for the purpose of collecting B&O taxes on any highway construction or maintenance.

RULES BILL PASS LEGISLATURE

The Legislature approved rules bills introduced by various state agencies. Of particular interest to the CAWV are: 1/ Quarry rules; 2/ Crane operator certification rules; 3/ Crane operator practical testing rules; and 4/ Design-Build rules. All rules were approved by the CAWV prior to introduction and were accepted without amendments, except for the quarry rules.

The WV Crushed Aggregates Council sought three amendments to the quarry rules, of which, two were approved and one was modified. The two changes dealt with 8.5 — backfilling — and 9.4.c.4 — construction of spoil piles. The one change the WVCAC requested dealt with blasting warnings — 6.5.b.1. The original rule required that "Each person in the permit area, and each person who resides or regularly works within one half mile of the permit area, shall be notified of the meaning of these signals." The industry wanted one-half mile changed to adjacent, which is what is contained in the quarry legislation. The Judiciary Committees in each house did strike "or regularly works" and replace it with "business establishment" in order to narrowly define who must be notified. The original language made it too nebulous to determine who "regularly works" in an area.

HIRING ILLEGAL ALIENS CAUSE OF DISCIPLINARY ACTION

H.B. 2801 adds knowingly hiring illegal aliens to the list of disciplinary actions the WV Contractors Licensing Board can take against a contractor. The board probably had this authority under existing law but this makes it clear that the licensing board can revoke or suspend a license, censure or reprimand, impose limitations or conditions and take other remedial action against any contractor who knowingly employs any persons who do not have the legal right to be employed in the United States.

MARSHALL CAN BUILD HOUSING, PARKING FACILITIES

Marshall University plans to issue $46 million in bonds for a housing unit and parking garage, now that the WV Legislature approved S.B. 517 which give universities authority to issue bonds for a parking structure. Since the measure passed, Marshall will sell bonds in May for a 1,000-car parking garage estimated at $8 million. Once the garage is completed, work will begin on a $30 million housing project totaling 500 beds in four different structures.

AGREEMENT REACHED ON IF COUNCIL PROJECT THRESHOLD

Municipalities and other political subdivisions using WV Infrastructure Council funds can perform work with their own crews on construction and repair projects not exceeding a total cost of $50,000 by their regular full-time employees in an agreement reached between the association and legislative leaders. The original version of the bill eliminated the existing $25,000 limit to allow force account work on projects of any size. In the agreement S. B.586, introduced by Senate President Earl Ray Tomblin, and H. B. 3056 by various delegates, caps the project size at $50,000 and providing that no more than $50,000 can be expanded on an individual project in a single location in a 12-month period. This provision is intended to prevent a public entity from taking a $200,000 project and dividing it into four sections in order to circumvent the $50,000 threshold. S.B. 586 passed the House on the last day of the session.

DOMESTIC STEEL BILL PASSED EARLY IN SESSION

One of the first bills passed by the Legislature was S.B. 124, which requires the use of domestic steel on state-funded construction projects. The bill mirrors current state statute which requires not only domestic steel be used on state projects, but glass and aluminum as well. This statute has been on the books since 1978 and to our knowledge has been working very well. The CAWV inserted an amendment that eliminates liability for contractors if they receive documentation from the supplier showing the steel is fabricated in the United States. Gov. Wise mentioned this in his State of the State address as a method to help domestic steel producers from unfair steel imports.

SBA CAN SPREAD OUT CONSTRUCTION COSTS

S.B. 676 authorizes the School Building Authority to disperse funds for construction projects over a period of time or years as different phases of the project are completed. Under current law, a construction project must have all of its funding committed prior to the project going out for bid. This would allow SBA to phase the funding as the project progresses so it doesn't have to encumber all the costs upfront.

BILLS THAT DID NOT PASS THIS LEGISLATIVE SESSION

There were a number of bills introduced this session that did not pass the Legislature. In most cases, the CAWV wanted to see the bills defeated. Below are a few of bills of interest.

BILL REQUIRED 25 PERCENT RETAINAGE WITHHELD

H.B. 2593 would have required contractors to notify persons with whom they enter construction contracts that the persons have the right to withhold 25 percent of the amount due on a construction contract until such time that proof is shown that all material persons, suppliers and subcontractors under the contract have been paid in full. The retainage is withheld on the life of the contract and could not be released until the contractor submits sufficient proof that all bills have been paid. The bill's sponsors are Dels. Mark Wills, D-Mercer, Don Perdue, D-Wayne, and Virginia Mahan, D-Summers. It was referred to the Committee on Government Organization then Judiciary.

QUARRY ZONING BILL INTRODUCED AGAIN

Dels. John Doyle, D-Berkeley, and Dale Manuel, D-Jefferson, reintroduced a bill giving growth counties that have adopted zoning ordinances the ability to prohibit quarry operations from locating in the area. The bill is to limit quarry operations under zoning laws. Under current law, quarries are exempt from zoning regulations. Legislators from the Eastern Panhandle attempted to get this language in the Quarry Reclamation Act passed last year. Under the compromise agreement, the legislators agreed to withdraw their demand that zoning be part of the bill. Instead, they would push for a stand alone zoning bill. H.B. 2379 follows through on their commitment to enact a zoning ordinance for quarries. By using growth counties with zoning laws, the Eastern Panhandle counties are about the only area of the state the regulations would apply. The bill was referred to the Committee on Political Subdivisions with a second reference to Judiciary.

BILL CREATED INDEPENDENT TAX APPEAL BOARD

House Speaker Bob Kiss and Senate Finance Chairman Oshel Craigo introduced companion bills to create a state board of tax appeals that would be independent of the state Tax Department. H.B. 2430 and S.B. 470 would replace the current system, which gives the state Tax Department primary authority to resolve disputes that taxpayers have with the department. Instead of having the department act as police officer, prosecutor, judge and jury in disputes with taxpayers, an independent state board of tax appeals would settle cases and determine the taxpayer's liability. H.B. 2430 was pending in the House Government Organization Committee. S.B. 470 was referred to the Judiciary Committee.

HIGHWAY FUND RAIDS THWARTED

There are always a number of bills introduced to raid the highway trust fund. Some bills would have lowered the gas tax while others would have diverted roads funds to other activities. The CAWV always opposes legislation that would requires highway funds to be used for anything other than their intended purpose.

RESIDENT VENDOR PREFERENCE BILL DIES

S.B. 37 would have provided for a preference for West Virginia contractors on municipal and county projects. The CAWV has supported reciprocal vendor preference laws to make sure West Virginia contractors are not placed at a disadvantage when bidding in other states and municipalities. It has not supported bills to provide a direct preference for instate firms due to retaliation by other states of West Virginia vendors.

JOBS IMPACT STATEMENT DEFEATED AGAIN

H.B. 2770 would have allowed legislative leaders to request "Jobs Impact Statements" for legislation to determine how proposed bills would impact jobs and employment in West Virginia. Organized labor opposes the bill, which would allow legislators to determine the impact a certain piece of legislation would have on existing jobs and future jobs creation.

LABOR RELATED BILLS INTRODUCED

A number of labor related bills were introduced in the first week of the session. Del. Warren McGraw, D-Raleigh, introduced H. B. 2077 which increases all permanent total disability awards to be increased by 20 percent; H. B. 2085, by Del. John Overington, R-Berkeley, exempted school construction projects from prevailing wage rates; H. B. 2086, also by Del. Overington, required the WV Division of Labor to base the determination of prevailing wage rates on statistics made available by the U. S. Department of Labor, Bureau of Labor Statistics; H. B. 2318 by Delegates Tom Coleman, D-Taylor, Sam Cann, D- Harrison, and Del. Rusty Webb, R-Kanawha, allowed the WV Division of Natural Resources to create their own in-house construction sections to build recreational facilities at state parks; and H. B. 2344, by Dels. Caputo, Prunty, Manchin, Hubbard, Hatfield, Boggs and Marshall, prohibited mandatory overtime after 40 hours in the workweek.

Although the mandatory prohibition of overtime did not pass, the Legislature did approve a resolution to study the effects of mandatory overtime on workers.

BILL STATUS

The status of all bills is available on the WV Legislature web site. Go to the CAWV web site at www.cawv.org, click on Legislative, and click on "contact your legislators." This will take you to the Legislature's web site.

THANKS TO ALL MEMBERS FOR TREMENDOUS EFFORTS !!!!!!!

Again, thanks to all CAWV members who spent time contacting your delegates and senators on issues affecting the contracting industry. Most of the bills the CAWV dealt with this session were resolved in the association's favor. This would not have been possible without your efforts.

If you have questions regarding any bill, please contact Mike Clowser at 304-342-1166 or email at mclowser@cawv.org.

** LEGISLATIVE ALERT **
LEGISLATIVE ALERT

CONTACT YOUR HOUSE MEMBERS ON GAS TAX REAUTHORIZATION BILL

Please start contacting your House of Delegates members urging them to vote fro reauthorization of the nickel gasoline tax. Leadership hopes to put this bill on the agenda the week of February 26. Some House members have been vocal in their opposition to the tax in light of a recent announcement by Administration officials that $94 million in engineering contracts have been canceled. Republican House members seem reluctant at this point to vote for reauthorization. Many of you supported Republicans in their House races. You will want to contact those legislators personally.

Below are talking points that you can use in your conversations with your delegates. Please use any or all in your discussions.

You can contact your legislators in a variety of ways. The most effective is to call them in their office. The easiest way is to click on the email address below. This will take you to the legislative email site. Just type in the delegates' names you want to send your message to. Type in the message you would like to convey and hit the send button.

cglagola@mail.wvnet.edu

If you want a specific delegate's phone number, go to the CAWV's home page at www.cawv.org, go to the Legislative page and click "Members' Capitol Addresses." This will give you addresses and office phone numbers.

TIME IS CRITICAL. PLEASE CONTACT YOUR DELEGATES IN THE NEXT FEW DAYS. THANKS FOR YOUR HELP.

TALKING POINTS FOR NICKEL GAS TAX REAUTHORIZATION

West Virginia maintains the sixth largest highway system in the nation

West Virginia is only one of four states that maintains both state and county roads

Road and bridge condition have improved since passage of the 1993 gas tax

40% of bridges need repair or replaced, down from 46%

32% of roads are in poor or mediocre condition, down from 37%

Loss of the nickel tax would mean loss of the entire state resurfacing program, of loss of the entire small bridge program or one fourth of the DOH's maintenance program

Loss of revenue would devastate the state's construction industry and result in thousands of layoffs

19 States now have a gas tax over 20 cents per gallon

A penny of gas tax produces $11 million in West Virginia compared to $50 million in Ohio and $70 million in Pennsylvania

If the tax is not extended, WV will be unable to resurface 6,000 lane miles from now through 2003.

L E G I S L A T I V E ......A L E R T

TO: CAWV MEMBERS

FROM: MIKE CLOWSER

RE: S.B. 103, THE WEST VIRGINIA JOBS ACT — CONTACT YOUR SENATORS

The Senate Committee on Small Business will conduct a public hearing on Friday, March 9 at 10:00 a.m. on S.B. 103, the West Virginia Jobs Act. Members are asked to contact their senators and urge them to vote NO on the bill, which would require contractors working on state funded construction projects to hire 90 percent of their workforce from West Virginia or a "local labor market." The definition of local labor market in the bill is all West Virginia residents or any one located 75 miles from the project. Below are questions to give you a better understanding of the legislation. Following that is talking points on the bill. Members are invited to attend the public hearing next Friday. If you want to email your Senator with your opposition, click on:

cglagola@mail.wvnet.edu

SYNOPSIS OF S.B. 103, THE WV JOBS ACT