2015 KANSAS SESSION PASSES HALFWAY POINT
The February 27 “turnaround” deadline in Kansas has now passed and bills that have not been “blessed” by being introduced by or referred to one of the relative few “deadline-exempt” committees in each house and were not passed in their “house of origin” prior to the turnaround deadline are now considered dead as bills. Language from “dead” bills can be amended into other germane legislation still going through the legislative process however. The deadline for consideration of bills in the opposite house is March 25. Following are brief summaries of several bills of interest to the construction industry in Kansas.
70% KANSAS WORKFORCE PREFERENCE PROPOSAL BACK AGAIN
While Senate Bill 210 failed to meet the February 27 turnaround deadline and has died, its companion bill in the House, House Bill2317, is still alive. The Builders’ Association and Kansas City Chapter, AGC have actively opposed this legislation for several years now and it is important to note that a similar Missouri law was recently found to be unconstitutional. HB 2317 would require all contractors entering into a contract with a state agency for a project with an annual cost of $100,000 or more or performing work on a STAR bond project, to have their workforces, and their subcontractors’ workforces, made up of at least 70% Kansans. We have advised legislators that adoption of such a preference would restrict competition for such work and even bar Kansas contractors located near state lines who may not have at least a 70% Kansas workforce from competing for such work in their own state. In addition, it would not only bar most qualified out-of-state contractors from competing for such work in Kansas, it would also hurt Kansas contractors and subcontractors who would like to compete for similar work in neighboring states. That is because preference laws in one state are generally countered by other states’ “reciprocal” preference laws which impose the same or similar restrictions in favor of their residents. We have historically opposed preference laws wherever they are proposed because open competition across state lines and across the boundary lines of political subdivisions within a state is essential to the building construction industry and other industries as well.
STATE ENFORCEMENT OF OSHA STANDARDS
Having been originally introduced by the deadline-exempt House Appropriations Committee, House Bill 2299remains a live bill in the House Commerce, Labor and Economic Development Committee. HB 2299 would require the Kansas Department of Labor to write and submit a state plan to the federal government that provides for safe and healthful employment that is at least as effective as the standards set by the Occupational Safety and Health Administration (OSHA) by September 1, 2015. The Kansas Secretary of Labor would be required to submit a report to the Senate President and the Speaker of the Kansas House on or before January 11, 2016. The report would include the proposed state plan, a list of changes in statutes and rules and regulations required by the federal government, a list of additional staff and positions required to implement the proposed state plan, and a projected date that the cooperative agreement could be executed. Concerns regarding startup costs to the state together with conflicting testimony regarding the value and effectiveness of state-run OSHA plans may result in an interim study of this proposal, but that remains to be seen.
ALTERNATIVE DELIVERY PROPOSALS
Two bills of interest dealing with alternative delivery have been introduced in the House. House Bill 2267was passed (123-0) on February 26 and received a hearing in Senate Commerce on March 10. This bill would revise the notice requirements and the evaluation of construction projects involving alternatives to the standard competitive bidding procedures for school districts, state agencies, and the Board of Regents. The respective board, or the Director of Facilities Management in the case of the State, would be required to give notice of a request for qualifications (RFQ) or a request for proposal (RFP) to all active general contractor industry associations in Kansas at least 15 days prior to a hearing or the commencement of a request. Local boards of education also would be required to give notice to the Associated General Contractors of Kansas. Notice must also be published at least 15 days prior to a hearing or commencement in either the official school district newspaper or the Kansas Register, as applicable. If a construction firm has been prequalified through an RFQ process, the firm would submit a list of proposed fees directly and only to the Secretary of Administration. The Secretary would score and rank the submitted proposals for the best value and report the findings and make a recommendation to the appropriate body charged with selecting a firm. The scores on fees and profits would not account for more than 25 percent of the total possible score. The bill would clarify that a prequalified building design-builder would be eligible to be paid a stipend for a proposal which was substantially responsive to the request but not accepted by the state agency. A construction manager or general contractors would be allowed to self-perform construction services on Board of Regents projects if the firm’s bid proposal is submitted prior to the receipt of all other bids.
House Bill 2395would raise the total construction cost of a building or for major repairs to $1 million before the Secretary of Administration must convene a meeting of the State Building Advisory Commission to prepare a list of three to five qualified firms for selection of architectural and engineering services. Under current law, the Secretary convenes a meeting if the construction or repairs to a building exceed $750,000 when architectural services are desired or $500,000 when engineering services are desired. As currently written, the bill would also eliminate the requirement for publishing a notice in the Kansas Register and for the holding of a public hearing of the State Building Advisory Commission for projects requesting alternative delivery procurement, but indications are that these provisions will not be stricken from current law.
PREFERENCE FOR PUBLIC SECTOR PERFORMANCE OF STATE CONTRACTS
The Builders’ Association and Kansas City Chapter, AGC strongly oppose House Bill 2153 which currently remains in the House Appropriations Committee. Among other things, this so-called “ taxpayer empowerment, accountability and transparency in state contracting act” would apply to “agencies” (i.e., state agencies, authorities or local political subdivisions of the state and local governments) and would establish myriad new reporting and record-keeping requirements for agencies and contractors and impose contract cancellation for failure to comply. Incredibly, the bill provides that there shall be no contract between agencies and private contractors unless it could be demonstrated that there would be overall cost savings of at least 10% less than the projected cost of performance by public employees. The bill provides that wages and benefits are required to be comparable to wages for public employees performing similar work or the average private sector wage. An analysis of the impact of awarding a private contract would be required and, if an in-house bid meets the cost and performance requirements of the project, it shall be deemed most qualified.
EXEMPTING GENERAL CONTRACTORS FROM ROOFING REGISTRATION
House Bill 2254 was approved (112-9) by the House on February 25 and received a hearing in the Senate Commerce Committee on March 9. Builders’ and KC/AGC staff has advised legislators of our support for the bill. This measure would clarify that general contractors are generally not required to register as roofing contractors pursuant to the Kansas Roofing Contractor Registration Act. The bill provides a limited exemption for general contractors who are in compliance with all requirements to do business in Kansas, who do not perform roofing services that constitute more than 50% of a project’s total cost and who do not engage in door-to-door sales. The bill further provides that a general contractor who contracts with a separate roofing subcontractor for roofing services on a project shall be exempt provided that it is shown that the general contractor does not directly supervise the roofing subcontractor’s employees or agents, does not perform any of the roofing services with such general contractor’s own employees or agents, secures and makes a copy of the roofing subcontractor’s active and valid roofing registration certificate available for inspection, and provides in the subcontract agreement that the roofing subcontractor shall perform and be responsible for all roofing services and shall notify the general contractor if such subcontractor’s registration certificate is suspended or becomes invalid.
EMPLOYMENT SECURITY BILLS
Senate Bill 154, as amended, was approved (35-4) by the Senate on February 26 and was scheduled for hearing in the House Commerce, Labor and Economic Development Committee on March 13. This bill would revise provisions of the Employment Security Law pertaining to the calculation of weekly benefits and the assessment of employer contributions. The maximum weekly benefit would be capped at the current level of $474 until December 31, 2017. The minimum weekly benefits, as provided by current law, would remain equal to 25 percent of the maximum and would be $118 pursuant to the bill. By January 1, 2017, the Secretary would recommend to the Speaker of the House of Representatives and the President of the Senate a maximum weekly benefit amount for the subsequent three-year period, which would commence on January 1, 2018. For new employers who have an insufficient employment history to qualify for an experience rating and who are not engaged in the construction industry, the contribution rate would decrease from 4.0 percent to 2.7 percent. The number of years that an entering and expanding employer could be eligible for a contribution rate of 2.7 percent would be decreased from four years to three years. Starting in rate year 2016, employers with positive experience ratings would be distributed amongst 27 rate groups. The standard rate for the positive groups would range from 0.20 percent for rate group 1 and increase by units of two-tenths of a percent in each subsequent rate group until 5.4 percent would be established for rate group 27. Employers with negative experience ratings would be distributed amongst 11 rate groups. The standard rate for the negative groups would range from 5.6 percent to 7.6 percent.
PROPOSED REQUIRED USE OF E-VERIFY
House Bill 2294 remains a live bill in the House Federal and State Affairs Committee although no hearing has been scheduled at this time. Among other things, this bill provides that any business entity entering into any contract of $5,000 or more with the state or any municipality shall, by sworn affidavit signed before a notary and under penalty of perjury affirm its registration and good faith participation in the e-verify program. All public employers shall also register with and participate in good faith in the e-verify program. Further, every business entity within the state of Kansas that employs five or more employees shall register with and participate in good faith in the e-verify program to verify the employment authorization of all new employees by January 1, 2016.
The bill does provide that a general contractor or subcontractor of any tier shall not be liable when such general contractor or subcontractor contracts with its direct subcontractor who is in violation if certain conditions are met and includes language intended to protect employers from claims brought under state law for wrongful terminations based on incorrect e-verify information but cannot protect against claims brought under federal law. Significant penalties are included in the bill for failure to comply with the various sections, including termination of contracts, loss of business licenses, retroactive loss of business deductions and liquidated damages of up to 25 percent of the value of a contract. No provisions are included in the bill to protect an employer who is otherwise acting in good faith from liability resulting from inadvertent and unintentional violations caused by the acts or omissions of employees.
OTHER BILLS OF INTEREST
More Scrap Metal Legislation – Senate Bill 11creates the Scrap Metal Theft Reduction Act. Among many other things, the bill amends and repeals existing statutes concerning county and municipality oversight of regulated scrap metal. It replaces existing local regulation of scrap metal dealers with a statewide registry to be administered by the Attorney General. The bill authorizes the Attorney General to investigate and bring action against persons who violate the act. SB 11 also requires the Attorney General to create and maintain a central database, and requires registered scrap metal dealers to upload to this data base certain information related to scrap metal transactions. The bill was amended and approved (40-0) by the Senate on February 19 and received a hearing in the House Judiciary Committee on March 9.
RegentsEducationalBuilding Fund – House Bill 2019 remains alive in the House Taxation Committee. This bill increases the mill levy for the fund from 1 mill to 4 mills if requirements are met and provides that moneys raised in excess of 1 mill be used for a variety of purposes other than its current purpose which is the construction, reconstruction, equipment and repair of buildings and grounds at the state educational institutions under the control and supervision of the state board of regents.
Permissive Preference for Hiring Veterans – House Bill 2154, as amended, would establish a permissive veterans’ preference in private employment. The bill would authorize a private employer to adopt a policy to give a hiring preference to a veteran who meets the requirements of the job. The bill would require such a policy to be in writing and to be applied consistently to all decisions regarding initial employment. Veterans would be required to provide the employer with proof of military service and proof of honorable discharge or general discharge under honorable conditions from military service. The bill passed (121-0) the House on February 25 and has been referred to the Senate Federal and State Affairs Committee.
Reemployment of Persons Called to Duty –House Bill 2155would provide employment reinstatement protections to any person employed in Kansas who is called or ordered to state active duty by Kansas or any other state whether the person is a member of the Kansas Army National Guard, the Kansas Air National Guard, or other military force of Kansas or any other state. To receive these employment protections a person eligible under the bill would have to comply with other requirements in existing law including provision of adequate notice to employer and release from state active duty under honorable conditions. Like HB 2154 above, this bill passed (121-0) the House on February 25 and has been referred to the Senate Federal and State Affairs Committee.
TIFs for OldBuildings and Adjacent Lots – House Bill 2248remains alive having been withdrawn from House Commerce, Labor and Economic Development and referred to the Taxation Committee. This bill would expand the definition of an “eligible area” for a redevelopment district to include a building or buildings which are 65 years of age or older and any adjacent vacant or condemned lots.
Competitive Bid Protection Act Repeal – Both House Bill 2314 and Senate Bill 209 have died for failure to meet the February 27 deadline for consideration of bills in their house of origin. These measures would have repealed the prohibition against agencies and municipalities requiring contractors to enter into certain labor agreements for public works construction projects which was passed in 2012 in the form of Senate Substitute for House Bill 2157.
______
As always, if you have questions about any of the pieces of legislation above, or would like us to look into a bill or issue not listed, please contact Allen Dillingham, Government Affairs Director for The Builders’ Association, at 816-595-4121 or . We also encourage you to contact your elected representatives on these pieces of legislation and other issues important to you and your business.