Playing with a full deck

What's in the cards for construction legislation in 2002?

By Jeremy Harrell
Daily Reporter Staff

The state Legislature will have its hands full in 2002 as lawmakers grappling with an enormous budget shortfall must also redraw Wisconsin's legislative map in accordance with the 2000 census.

With budget debate and redistricting hogging the legislative limelight, construction industry insiders said they still expect a handful of old and new building issues to find their way on the stage, though perhaps in a limited form.

Following is a rundown of the most likely construction issues to land in the Legislature's lap in the next year.

Holding back

The American Subcontractors Association of Greater Milwaukee led a charge in 2001 to rewrite Wisconsin's retainage law for public projects. Gov. Scott McCallum eventually vetoed from the state budget a measure that would have reduced retainage -- the amount of money an owner withholds from a contractor until substantial completion of a project -- from 10 percent to 5 percent.

But with the economy slumping, the governor plans to reintroduce the measure as part of an economic stimulus package, said Debbie Monterey-Millett, McCallum's spokesperson.

"The governor will put that into his Build Wisconsin initiative," she said, referring to the stimulus plan.

Staff at the state Division of Facilities Development and construction groups are still working out the possibilities for the retainage measure. ASA's executive director, Don Croysdale, said the various parties are honing in on an agreement that would replace the current 10 percent language with a law that would allow up to 5 percent on all public projects.

"The 5 percent would be from day one throughout the entire project," he said. "The (proposal) might also give municipalities the option to do different bids on different retainage rates to see if they can get a better price."

Reducing retainage would allow contractors to get their work done more quickly and more cost-effectively, Croysdale said. ASA wants to add a line-item clause permitting a contractor to claim his retainage after completing his phase of the job, rather than wait for the completion of the entire project, he said.

Even if the line-item proposal fails, lawmakers will likely approve a measure giving local and state governments more control when setting percentages, said Jim Boullion, Associated General Contractors of Wisconsin government affairs director.

"It won't be dramatic, but it will give some flexibility to the state and municipalities if a contractor wants to negotiate a new retainage level that's agreeable to both," he said.

License to wire

“Anything and everything will be on the table.” Jim Boullion Government Affairs Director AGC of Wisconsin

Rep. Lee Meyerhofer, D-Kaukana, is already at work on a bill that would mandate licensing and certification for electrical workers statewide. The Legislature previously approved a law that set up a state certification program, but the measure didn't require electrical workers to enter the program.

Meyerhofer, a former electrical worker, has held talks with interested parties, including the International Brotherhood of Electrical Workers Local 494 and the Associated Builders and Contractors of Wisconsin. Both sides said they view electrical licensing as a consumer confidence issue, but they haven't come to terms on how extensive the certification should be.

John Mielke, ABC's government affairs director, said his organization favors certifying electrical contractors along with a rigid system of state inspection. But ABC has not taken a position on whether a contractor's employees should be certified.

"Licensing individual field level workers is not something we've bought into in the past," Mielke said. "We tend to prefer inspection over licensing."

The IBEW, on the other hand, wants the state certification program to become mandatory for all workers, including journeymen, master electricians and beginning electricians, said Leon Burzynski, IBEW business representative.

"Being an electrician is not something one can learn by hanging around with electricians," he said. "There needs to be oversight, and this is one place where the government should be involved."

Several large cities in Wisconsin already require electrical worker licenses. Under a draft of Meyerhofer's bill, municipalities could continue to adopt their own programs as long as they're as stringent as the proposed state standard.

Burzynski said any proposal would exempt utility companies and homeowners performing their own work. Both Mielke and Burzynski said the talks have proceeded amicably, and they see room for compromise.

Safe haven

The ASA is also mounting an effort on a second front to change the state laws governing hold harmless and indemnification clauses in construction contracts. Croysdale has continued negotiations begun this fall with AGC and ABC, and the debate over limiting liability on the job site could be similar to last session's discussion of design/build for public projects.

As with design/build, any changes to indemnification laws would require industrywide approval, Croysdale said. Fourteen construction groups have agreed in concept to ASA's proposal, which Rep. John Gard, R-Peshtigo, recently introduced as AB 606.

“I think we’re close. It’s just a matter of finding wording everyone is comfortable with.” Don Croysdale Executive Director ASA of Greater Milwaukee

"There's a strong feeling that we need to get industry consensus so that (Gard) is comfortable that this is something the construction industry wants," he said. "I think we're close. It's just a matter of finding wording everyone is comfortable with."

According to Gard's bill, each party in a construction contract would be liable only for an injury or accident arising from its own negligence. The proposal would prohibit owners and general contractors from holding its subcontractors legally responsible, through indemnification clauses and additional insured policies, for accidents caused by a general contractor or owner, Croysdale said.

But as with the design/build debate, general contractors are finding more holes in Gard's bill as they apply more scrutiny, Boullion said.

"It's like design/build: The more you look at it, the more problems you see," he said.

General contractors are still concerned about the state's "safe place" language, which requires generals to maintain a danger-free work site. A general could conceivably be held liable for a subcontractor's negligence because the firm is required to oversee the safety of the entire site, Croysdale said.

The usual suspects

A familiar crop of bills has also crept back onto the legislative radar. The AGC, ABC and AFL-CIO are keeping close watch on Senate and Assembly prevailing wage proposals introduced in 2001.

Sen. Brian Burke, D-Milwaukee, wrote a bill that would force contractors to keep their prevailing wage data as public records open to inspection by any citizen. Contractors have complained the proposal would pile on unnecessary administrative burden, while unions have contended the bill codifies a Department of Workforce Development aim to reduce its bogged-down system of enforcement.

Unions also favor a second Meyerhofer bill allowing the DWD to use public projects in the agency's prevailing wage calculations if the job pays more than the prevailing wage rates.

"It's important to recognize when a rate being paid on a prevailing wage job is over the rate required," said Nancy Hoffman, AFL-CIO staff representative. "It's a better indication of the wages being paid."

Contractors and ABC have said factoring public jobs into the prevailing wage calculations violates the spirit and letter of the law because prevailing wages are supposed to reflect private sector rates.

The state's tight fiscal situation will probably push two other contractor-supported proposals to the back burner. One would exempt sales taxes on materials used in the construction of buildings for nonprofit owners, and the other would give employers a tax rebate on fees associated with sending a worker through an apprenticeship program.

"Anything and everything will be on the table," Boullion said. "But it doesn't look good for the apprenticeship tax credit because of the money the state says it could lose."

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