2014 End of Session Wrap Up: Finance and Procurement

This post summarizes the status of finance and procurement legislation that MACo either considered or took a position on.

Lowering Prevailing Wage Threshold for School Construction: HB 727 / SB 232 lowers the prevailing wage threshold for school construction projects.  With this change, all school construction projects that are funded with 25% or more State funds would be subject to the State’s prevailing wage law.  As introduced, the bills would have lowered the threshold to require prevailing wage rates to be paid for a local project receiving any amount of State funds. MACo expressed concerns that lowering the threshold would increase project costs and affect the number of projects budgeted each year. After committee deliberations on SB 232, the bill was amended to only apply to school construction projects and instead of eliminating the threshold, to lower it from 50% to 40%.  However, the bill was reconsidered by the Senate Finance Committee and the threshold was lowered to 25%. The House Economic Matters Committee took the same action.

Final Status: HB 727 / SB 232 passed the General Assembly and is now awaiting the Governor’s signature.

Investment of Self-Insurance Funds: HB 772 clarifies that self-insurance funds and trust fund accounts may be invested in the same manner as pension funds and other postemployment funds. Legislation enacted two sessions ago (Ch. 516, Laws of 2012) excluded self-insurance funds from the definition of public funds. However, upon review by the Attorney General, it was found that the law was ambiguous because the legislation failed to make changes to another section of statute that would have made it absolutely clear that these funds could be invested in a more diversified manner. HB 772 was introduced to address this ambiguity and clearly express the intent of the General Assembly to authorize local governments to invest self-insurance funds and trust funds in a more diversified manner.  MACo supported this bill.

Final Status: HB 772 passed the General Assembly and is now awaiting the Governor’s signature.

Contractor Safety and Health PrequalificationHB 951 creates a workgroup to study the effects of public works contractor occupational safety and health prequalification requirements. As introduced, HB 951 would have prohibited a contractor or subcontractor from bidding on a public works project with any public body in the State unless they had been prequalified as a bidder based on a safety rating system established by the Department of Labor, Licensing, and Regulation (DLLR). MACo expressed concern that this approach would limit the number of qualified bidders and place more onerous requirements on local governments when procuring for projects, thereby increasing costs. MACo also expressed concern that the bill would have a limiting effect on small and minority contractors. HB 951 was turned into a study to address the concerns of MACo and others.

Final Status: HB 951 passed the General Assembly and is now awaiting the Governor’s signature.

Prevailing Wage Expansion: SB 204 would have substantially expanded the applicability of the State’s prevailing wage law to apply to all local government public works projects regardless of whether State dollars are received. The bill also would have lowered the dollar threshold for a project to $25,000 and expand the calculation of the prevailing wage to include combined hourly wages and fringe benefits. MACo opposed the bill stating that placing new, overly broad prevailing wage mandates on local governments would further limit the number of projects funded each year by increasing project costs and limiting local flexibility.

Final Status: SB 204 had a hearing on February 27 with no further action taken by the Senate Finance Committee.

Increasing Prevailing Wage Threshold for School Construction: SB 1068 would have increased the share of State funding required for a school construction project to be subject to the state prevailing wage law from 50% to 75%. The bill was introduced as an alternative to HB 727 / SB 232 described above.  MACo supported the bill stating that increasing the prevailing wage threshold for school construction purposes would provide for additional utility of limited school construction funds at the state and local level.

Final Status:  SB 1068 was voted unfavorable by the Senate Finance Committee.