March 17, 2010
The 79th session of the West Virginia Legislature concluded work at midnight on Saturday, March 13, 2010. The usual last minute rush to get bills passed and conference reports adopted never materialized due to a number of factors. First, this being an election year, fewer and less controversial bills were advanced this session. Second, House and Senate leadership made a concerted effort to move legislation through the process in the prescribed time limits, thus giving time to get bills to the passage stage in the final days of the session.
Legislators did not want to increase taxes or user fees this session so a proposal to raise revenues for highway system construction and maintenance never materialized. The WV Division of Motor Vehicles proposed a series of drivers’ license and registration fee increases which have not been increased since the 1970s and do not cover the cost of issuing licenses. The proposal, which did not gain traction, would have generated about $61 million in new revenue for the State Road Fund (SRF). The Manchin administration and lawmakers addressed transportation funding in a special session last November, passing legislation to stabilize the wholesale gas tax and transferring $27 million from the state’s General Fund to the SRF. The DMV proposals should be on the table for debate during next year’s legislative session.
Speaking of highways, Senate Finance Committee Chairman Walt Helmick, D-Pocahontas, notes that additional funding sources must be developed to fund the highway system. He has put together a special committee to review all facets of the Division of Highways including current and future highway funding needs. The CAWV has been invited to participate in the committee which will meet during this year’s interims. WVDOH officials are on the committee, as are the following legislators: Sen. Larry Edgell, D-Wetzel, Sen. Brooks McCabe, D-Kanawha, Sen. Doug Facemire, D-Braxton, Sen. Donna Boley, R-Pleasants, and Sen. David Sypolt, R-Preston.
Funding for infrastructure projects did receive a lot of attention this session, but mostly in the form of bonds. A number of bills (outlined below) propose to use lottery and other dedicated revenue sources as debt service on future bond issues. The bonds can be sold for higher education projects, school facilities and other capital improvement projects.
Absent from debate this year was labor-related legislation, except H.B. 4387. The bill, known as the Flexible Leave Act, passed the House and was on the agenda in the Senate Judiciary Committee before being relegated to a subcommittee where it eventually died. Bills dealing with mandatory health insurance for contractors working on public works projects, requirements for contractors to complete projects within stated time limits or face mandated liquidated damages, requiring contractors to submit their subcontractors’ list within two hours of bid opening, modifying or exempting projects from prevailing wage rates and legislation dealing with Project Labor Agreements (PLAs) were never seriously debated in committees. These have been perennial bills that, in past sessions, have consumed much of the CAWV’s legislative efforts.
Lawmakers continue to work this week to finalize work on the state’s $3.7 billion budget. Governor Joe Manchin cut $120 million from last year’s revenue estimates due to an anticipated downturn in state revenues.
Precautionary measures seem prudent as West Virginia’s unemployment rose to over 10 percent for the month of January. In 2009, state leaders made adjustments in the funding mechanism for the Unemployment Compensation Fund in order to provide an additional $120 million to the program. Changes included imposition of a temporary wage base increase to $12,000, which remains in effect until the state’s Unemployment Compensation Fund balance reaches $220 million. Workforce West Virginia officials note that the Unemployment Compensation Fund currently contains about $88 million, down from $123 million at the end of December and $232 million at the close of 2008.
Also looming is a $7.8 billion unfunded liability for future retiree health benefits for state employees and school personnel (also known as the “Other Post Employment Benefits” or OPEB liability). The budget should be finalized this week, marking the end of this year’s session. However, Gov. Manchin has indicated he will call a special session in May to deal with education issues.
BILLS OF INTEREST TO CAWV
The CAWV Legislative Committee thanks all members who contacted their legislators during the session to discuss the industry’s position on key legislation affecting contractors. For a listing of all bills passed this session, visit http://www.legis.state.wv.us/ and click on Completed Legislation under the 2010 Session.
The following are bills the CAWV tracked closely during the 60-day session. A bill tracking list, which includes all of the bills that the CAWV watched during the session is available on the legislative section of the association’s website, www.cawv.org/legislative.html. For more information on a particular piece of legislation, contact Mike Clowser at (304) 342-1166 or email firstname.lastname@example.org.
LEGISLATURE APPROVES CHANGES TO SCHOOL CONSTRUCTION BOND LAW
S.B. 229, introduced by Gov. Manchin, allows the School Building Authority to have up to $500 million in bonds outstanding at any given time. The current statute gives the SBA authority to issue in the aggregate $500 million. The SBA is nearing the $500 million aggregate amount. This bill gives SBA the authority to continue to sell bonds as old bond issues are retired. The SBA was formed in 1989 and no one recalls why the statute was written to cap school construction bonds at the $500 million level, especially since the SBA has a dedicated revenue source to retire the bonds.
SENATOR UNGER’S CETA LEGISLATION PASSES ON FOURTH TRY
The Community Empowerment Transportation Act (CETA), S.B. 352, allows county commissions to impose user fees to construct and maintain roads, so long as voters approve it. It also allows counties to issue revenue and general obligation bonds for transportation projects. Sen. John Unger, D-Berkeley, chairman of the Senate Transportation and Infrastructure Committee, has pushed the proposal for a number of years as a means to provide additional funding for highway projects. The bill, as passed, is the result of a nearly year-long debate of how to provide additional revenue for highway and bridge construction projects. “We are seeing a decline in traditional highway user fees, particularly gas taxes,” Chairman Unger has often commented. “We must start looking at broadening the state’s ability to generate funds from non-conventional sources. This bill gives the tools, but doesn’t mandate, to local communities to help fund projects in their areas.”
Another bill, S.B. 347, made it out of the Senate Transportation and Infrastructure Committee, but did not pass. It would have established the West Virginia Transportation Finance Commission to provide loans and other financial assistance to government units for transportation infrastructure.
The commission would have been patterned after the WV Infrastructure Council in that it would provide loans to governmental entities at low interest rates. The entities would then pay back their loan, making additional money available for projects.
S.B. 237 PASSES ~ WILL PROVIDE MONEY FOR CAPITAL PROJECTS
S.B. 237, introduced by Sen. Brooks McCabe, D-Kanawha, authorizes county commissions, municipalities and boards of education that receive lottery revenues to issue bonds secured by such lottery revenues to construct public projects. This will allow county commissions, municipalities and boards of education to construct more public projects which creates jobs and stimulates the economy. The bill is patterned after the bill that gave the School Building Authority the ability to use its annual lottery proceeds to pay debt service on bonds. Almost every county and municipality gets some amount of lottery proceeds, but in such small amounts that they can’t fund capital improvement projects. By allowing the annual allocation to be used for bonding, public agencies will be able to sell bonds to construct a major project.
EMPLOYEE VERIFICATION BILL APPROVED
H.B. 3301 gives the West Virginia Division of Labor the authority to issue an order terminating undocumented employees. It goes further by allowing the DOL to issue a separate violation for every day each undocumented employee works following the termination order. The bill is an attempt to remedy issues with getting out of state employers to provide employee documentation. The bill does not change the current statute that gives employers 72 hours to produce employee records, but gives the DOL the ability to fine employers who do not produce the records in the required time.
PARKWAYS AUTHORITY REVAMPED
Gov. Manchin introduced S.B. 427 to expand the powers of the state Parkways Authority to operate additional toll roads in the state. Transportation Secretary Paul Mattox in February told Senate Transportation Committee members he’s hopeful the legislation will allow the authority to sell bonds to complete the final 14.6 mile section of the U.S. 35 upgrade. “It is our hope that we will have legislation that will allow us to look at U.S. 35 and complete it as a toll road,” he said. Sec. Mattox said U.S. 35 is one of only two other highway projects in the state that are expected to produce enough traffic to justify operating them as toll roads. The other is U.S. 522 in Morgan County in the Eastern Panhandle. S.B. 427 also gets the Parkways Authority out of the tourism and economic development business by transferring these activities to other entities.
STATE’S VENDOR PREFERENCE ALTERED
Revisions were made to the state’s preference law for resident West Virginia vendors supplying commodities and printing. H.B. 4582 creates reciprocity for West Virginia small, women and minority-owned businesses who receive preferences in other states. Small business is defined as a company with 250 or fewer employees or average gross receipts of $10 million or less over the previous three years. Del. Tom Campbell, D-Greenbrier, introduced the bill in response to the state of Virginia’s recent decision to not let West Virginia firms bid on Virginia work due to West Virginia’s five percent vendors preference. The CAWV is reviewing the legislation to determine how it will impact the current vendors preference requirement. The CAWV has always opposed vendor preference laws for construction projects since surrounding states have reciprocal laws.
JOBS ACT REVISIONS ACCEPTED
H.B. 4359 amends the West Virginia Jobs Act for the first time since the act passed a number of years ago. The Jobs Act is included on all government-funded construction contracts. Its purpose is to hire local labor on projects funded with taxpayer dollars. H.B. 4359 reduces the dollar amount for an applicable construction project from $1 million to $500,000. It also reduces the definition of local labor market from 75 miles of the border of West Virginia to 50 miles. The Jobs Act was the subject of much debate and controversy when first proposed in the late 1980s. After much discussion, an agreement was reached which established the limits contained in the current statute. The statute has worked fairly well over the past decade and the CAWV did not oppose the revisions. The changes will be adopted in future government contracts over $500,000.
STATE HIGHWAY FUND RESOLUTIONS
The Senate approved the following resolutions relating to the state highway fund. If the House and Senate leadership approve the resolutions, they will be discussed during this year’s interim meetings:
SENATE CONCURRENT RESOLUTION NO. 68 - Requests the Joint Committee on Government and Finance to study and examine alternative “green” road and highway paving processes and construction. The resolution states that “emerging technologies and techniques with respect to paving and road construction could better protect the environment and is more economical,” landfill usage can be favorably reduced by using recycled materials, the numerous potholes due to the freeze/thaw cycles “could be a thing of the past as researchers at Northwestern University are currently studying how to apply Nanotechnology to concrete, thus making it less porous,” and “revolutionary green technology was used in Western New York, known to the industry as low emission asphalt, that used sequential mixing process that requires up to fifty percent less energy to produce and greatly reduces pollution.”
SENATE CONCURRENT RESOLUTION No. 69 - Requests the Joint Committee on Government and Finance to study the number, mileage, conditions and fiscal burden of roads in the state of West Virginia that are not eligible for federal matching dollars and alternative funding sources for road design, construction and maintenance. The resolution notes that secondary roads need to be adequately maintained for safety of drivers and to attract business. It also states that additional funding may be identified for secondary road repair and maintenance.
BILLS THAT DID NOT PASS THIS LEGISLATIVE SESSION
The following bills either never made it onto a committee’s agenda or were not advanced by one house or the other:
H.B. 4338 WOULD HAVE REQUIRED FIRE MARSHAL APPROVAL FOR BLASTING
State Fire Marshal approval of all blasting projects before those projects can proceed was the basis for H.B. 4338. The bill would have required all contractors, subcontractors and their respective agents and employees to provide the State Fire Marshal and local property owners with 30 days notice prior to any proposed explosive blasting. The bill would have also provided, at all times, the right to seek injunctive relief. It also would have given the State Fire Commission the right to propose rules for legislative approval to “safeguard life and property through the adoption of a state blasting code.” The bill did not make it out of the House Energy, Industry and Labor, Economic Development and Small Business Committee.
JOINT AND SEVERAL LEGISLATION DOESN’T ADVANCE
S.B. 198, introduced by Sen. Don Caruth, R-Mercer, is a bill that attempted to properly apportion the percentage of fault to all defendants whose conduct caused an incident, injury or damages at issue in a case. The bill is in response to a court case in which a contractor was brought into a lawsuit due to a truck driver hitting a stopped vehicle on the interstate, resulting in two fatalities. The contractor was working on the interstate but the traffic was stopped about two miles from the construction zone. While the trucking company’s insurance paid out $1 million to the family’s estate and there was no evidence the construction project had any impact on the traffic backup, the insurance companies of the contractors paid out over $2.4 million. The Manchin administration and Legislature addressed tort legislation in 2005 to address the apportionment of damages among the various parties in a civil action by establishing standards for several liability. S.B. 198 attempted to close a loophole not addressed in the 2005 legislation. Trial lawyers expressed concern over the bill and it was never placed on the Senate Judiciary Committee agenda.
GREEN BUILDINGS STANDARDS POSTPONED
S.B. 474 and H.B. 4008 would have created the “Green Buildings Act.” The bills would have adopted green building standards for the construction and renovation of public buildings over 50,000 square feet (5,000 square feet in the House version). It would have required that all public buildings be constructed and designed to meet standards of the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system, with the LEED silver standard being the goal where “practical and financially affordable.” All major facility projects of a public school district would also have had to be designed to LEED standards. The association questioned why only one certification entity was identified and what the cost would be to design and build public facilities to LEED standards. Proponents cited increased costs due to green standards at 2 percent while CAWV members noted costs would range between 7 percent and 20 percent, depending on the type of project. The bills did not advance past either the House or Senate finance committee.
SCHOOL LEASE PURCHASE BILLS INTRODUCED
A number of bills were introduced that give county boards of education the ability to enter public/private partnerships to finance, build and lease school facilities. S B. 613, introduced by Sen. Joe Minard, D-Harrison; S.B. 630, introduced by Senators Minard, David Sypolt, R-Preston, Bob Williams, D-Taylor, and Doug Facemire, D-Braxton; and S.B. 637, introduced by Sen. Sypolt, all appear to accomplish the same goal. The bills would have created the Facility Design-Build-Finance-Lease-Purchase Act which expands the current West Virginia Design-Build Board’s authority to include approval of lease-purchase agreements. The bills were referred to the Committee on Education with a second reference to Finance. None of the bills made it out of the Education Committee.
The premise has been debated over the past year. The stated purpose is to give county boards of education additional funding options, especially if county voters are unwilling to pass bond issues. The CAWV’s position has been that public entities that enter into lease-purchase agreements should be required to adopt rules that provide complete transparency to the process.
BILLS TO REDUCE FUNDING FOR STATE ROAD FUND DO NOT ADVANCE
Despite the expressed need for funding for highways, there are always bills introduced that attempt to change the state’s wholesale gas tax system. There are exemptions for the retail gas tax and refunds available when gas tax is paid on fuel used in off-road vehicles, including boats. There are not exemptions, however, for the wholesale gas tax. H.B. 4358 was just one of a number of bills that were introduced this session to exempt certain entities from paying the wholesale gas tax. This bill would have exempted propane gas that is used for home heating purposes. Other bills have attempted to exempt entities such as churches, non-profit organizations and barge operations from paying the wholesale tax. To date, these bills have not received much attention due to the fact that it would be hard to administer the exemptions and the road fund is in need of all available dollars.
H.B. 4270 would have transferred money from the State Road Fund to the Public Service Commission’s weight enforcement division. Currently, vehicles transporting coal over certain public highways, designated as Coal Resource Transportation Roads, pay a special permit fee in addition to any state registration fee, user fee or other decal fee. The permit fees are deposited in the State Road Fund. H.B. 4270 would have allocated this money to the PSC to conduct weight enforcement. Gov. Joe Manchin and the Legislature eliminated the diversion of state highway funds to the PSC for weight enforcement a few years ago. If this bill had passed, about $800,000 would be diverted from the road program. The bill did not pass out of the House Judiciary Committee.