LEGISLATIVE SESSION HEADS INTO JUNE - The General Assembly and Governor Blagojevich could not reach agreement on the Fiscal Year 2005 state budget by the May 31st constitutional deadline, forcing session into overtime and requiring a 3/5 majority vote on all pending legislation. Both the House and Senate are now at "the call of the chair" while budgeters continue to negotiate. This edition of ICIC News, originally intended to be the Legislative Wrap-up brings you up to speed with the current status of legislation impacting the Construction Industry.
Design/Build Progresses - ICIC’s Design/Build initiative (SB 943) was approved by the Illinois House of Representatives on a 109-8 vote. The measure now returns to the Senate for approval of amendments that were made in the House version.
Specifically, the amendments include a provision that cost will be a weighting factor of exactly 25 percent of the evaluation when hiring a design/build team. (The original bill required "no more that 25%") The bill also now includes authority for the Capital Development Board to undertake a single project - the new Emergency Management Agency’s Emergency Operations Center in Springfield - using a single-prime construction method. The bill does not include Design/Build authority for universities, the Illinois Department of Transportation or the Illinois Toll Highway Authority.
Our many bill sponsors throughout this process have included Senator Terry Link and Representatives Skip Saviano, Mike McAuliffe, Patrick Verschoore, William Grunloh and Jay Hoffman. Please be sure to thank them when you have the opportunity.
House Approves Construction Management Bill - ICIC’s Construction Management bill (SB 1648) was approved on a 115-0 vote in the House of Representatives. Since the House amended the bill, the Senate must now approve it again.
Amendments offered and approved by the House include a ban on self-performance by those entities operating as CMs, and a ban on providing a guaranteed maximum price. The legislation only applies to projects undertaken by the Capital Development Board.
Sponsors of the Construction Management initiative include Senators Dan Rutherford, Don Harmon and David Sullivan, and Representatives Skip Saviano and Kurt Granberg. ICIC members are encouraged to thank our sponsors for their assistance this year.
Wetlands Bills Stall - HB 422 and HB 913 sought to create new restrictions on development in areas of the state designated as protected wetlands. ICIC opposed the bills that would have negatively impacted home and commercial construction, business expansion, farming and other economic development initiatives. The proposed maze of regulations would have led to inconsistent wetlands regulations throughout the state and also opened the door for more government fees on business.
While many business groups would potentially support a more reasonable approach to addressing environmental issues, these bills were considered too sweeping in their scope. Neither bill has yet gained enough support to pass the Senate.
Workers Compensation Compromise Plan Offered - A worker compensation reform package was unveiled in the Illinois Senate on May 31 as an amendment to HB 805 (Senate Amendment 2). The plan has many provisions designed to reduce employer costs and increase worker benefits. Most of the major business groups appear to be supporting the plan. The State Chamber of Commerce is neutral. ICIC is currently opposed but a lack of real data makes it difficult to form an opinion. Much of the information the negotiators considered was provided by the National Federation of Independent Business, which has been involved in the negotiations.
On the one hand, several insurance companies are opposed due to the impact on higher wage workers on comp rates and removing the caps, but all insurance companies are remaining "neutral" in the political debate.
On the other hand, the Senate negotiators asked NCCI (the Workers Comp rating agency) to evaluate the cost impact of the bill and they found the bill essentially neutral.
But yet another insurance company "claims expert" estimated a substantial increase in costs for contractors. And attorneys can be found weighing in on both sides of the issue!
The conclusion of most is we do not have enough facts to make a decision one way or another. Therefore, ICIC is working to postpone any consideration until a later date.
Mechanics Lien Bills Defeated - Three bills were introduced this year seeking various changes to the state’s mechanics lien laws. HB 1414/HB 4659 sought to extend the mechanics lien law to rental equipment. ICIC opposed the measure due to concerns with the expansive scope of the bill, the difficulty in keeping track of rental equipment that moves from job to job and may not be associated with a specific project, and other concerns that the bill as drafted would have had unintended negative consequences.
HB 4215 sought to extend lien rights of all subcontractors and suppliers from the current timeframe of 90 days after completion of work to 90 days after substantial completion of the project. ICIC opposed this bill because it extended the general contractor’s lien liabilities indefinitely, including the lien rights of second and third tier subcontractors and suppliers, of which a contractor may not be aware. ICIC agreed to work with the bill’s proponent over the summer to attempt to resolve his concerns.
HB 3994 would have required contractors to provide written notice to an owner before filing a lien. ICIC worked with the sponsor, Representative Kathleen Ryg, to limit the bill’s requirements to residential builders. The bill was later tabled at the sponsor’s request.
Contractor Licensing Bills Update - Two bills were introduced this year - Electricians Licensing (HB 1004) and Painters Licensing (HB 3715) - that seek to establish licensing processes for those two categories of contractors. After extensive review and suggested language changes, ICIC was able to adopt a neutral stance on both pieces of legislation. Both the International Brotherhood of Electrical Workers and the Painters District Council #30 of the International Union of Painters and Allied Trades made considerable effort to work with ICIC to address our concerns. At the time of this writing, neither measure had been approved by the Illinois House of Representatives.
School Construction - The fate of the Governor’s proposed $500 million school construction program for FY ’05 is uncertain. Neither chamber has approved the Governor’s plan. The bill (SB 3001) failed to receive the required 3/5ths majority vote when it was called for a vote in the Senate on May 31.
Much of the opposition to this bill centers around the Governor’s proposal to step up the Capital Development Board’s oversight of the construction program. Governor Blagojevich had proposed that CDB take a more active role in consultant selection, bidding and change order reviews. These enhancements were supported by ICIC as a means of providing more fairness and consistency in the management of school construction projects.
Both management responsibility for the school construction program and the appropriation are likely to be considered as part of the overall budget negotiations that are expected to be ongoing, possibly throughout the month of June.
Motor Fuel Tax - ICIC remains strongly opposed to the Governor’s proposed elimination of the Motor Fuel Tax exemption currently provided for vehicles used in construction and other off-road vehicles that do not operate on public roadways. His plan would require contractors to pay an additional 19 cents/gallon for gasoline and 21.5 cents for diesel fuel.
ICIC is part of a larger coalition that has worked to preserve the exemption. To date, the measure has failed to garner sufficient support in the General Assembly. Contractors are encouraged to continue letting legislators know that they oppose the elimination of this exemption.
Road Fund Appropriations and Diversions - The FY ’05 Road Fund appropriation remains up in the air and is not expected to be resolved until later this month as part of the final budget package. Additionally, efforts to limit diversions from the Road Fund are unresolved.
Worker Misclassification Stalls in Senate - HB 4883 and SB 797 contained language designed to crack down on the so-called misclassification of workers as independent contractors. ICIC members had met earlier this spring with the Carpenters Union in an effort to clarify the bills’ intent and insure that legitimate contractors and subcontractors were not negatively impacted by the legislation.
No compromise was reached and ICIC opposed the bills. While both were approved in the House, the Senate has not passed either bill this spring. ICIC’s position is that more time is needed to craft language that would protect the legitimate use of independent contractors.
