ABC OF TEXAS REPORT

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ABC of Texas State Update

ABC of Texas and AGC-TBB held a joint luncheon following their respective Board meetings in Austin on April 17.  The meetings were held at the AGC Austin Chapter office and lunch was provided by TEXO.

A short program followed lunch with Mike Chatron and Corbin Van Arsdale of AGC-TBB and Jon Fisher of ABC of Texas presenting information on joint projects in the recent past, some key primary runoff races, likely upcoming legislative issues and some selected legislative interim studies.  

Mike and Jon highlighted recent joint efforts on Cost of Goods Sold, Workforce and Education issues, State Breach of Contract legislation and a Joint Legislative Reception.

After Mike, Corbin & Jon finished, Phil Thoden, President of the AGC Austin Chapter, talked about the Workers’ Defense Project.  Bob Parker of ABC’s Central Texas Chapter (and a member of the ABC of Texas Board) and Russell Hamley, President of the Greater Houston Chapter of ABC, talked about recent union activities in the state.  The presentations ended with Doug McMurry of AGC’s San Antonio Chapter talking about the "Texas Build" website.

Prior to that joint meeting, ABC of Texas had held its Board meeting where it set Priority Legislative Issues for 2015.  Those issues in order of priority are:

Lien Law Reform — Several brilliant attorneys are trying to craft a bill that simplifies the lien right preservation process as well as addressing other issues.  This will require a lot of preparatory work involving multiple stakeholders. 

Neutrality in State Government Contracting — This legislation (which passed the House in 2013) would prevent any construction project using state resources to mandate (or prohibit) a project labor agreement.

Retainage/Trust Fund — Currently, the practice is for banks to withhold 10% instead of the recipient of the loan retaining the money as required by law.  This gives banks a 10% equity hedge, but does nothing to help contractors and subcontractors (the purpose of retainage)  in the event of a default since the money never becomes "trust funds."

Lender Notice — There is no requirement that lenders notify general contractors in the event of a default or foreclosure.  This can compound the amount of money that can be lost by general contractors, subcontractors and suppliers.

Criteria for ADS Scoring — Contractors report the same governmental entity scoring the same company differently with the same information provided from project to project.  Governmental entities using alternative delivery systems should have transparent and consistent ranking mechanisms.

Taxes-Franchise and School Finance — Because of the amount of revenue available, there may be efforts to reduce or phase out the franchise tax.  In addition, the school finance lawsuit could create demands for increased revenue.

State Breach of Contract — In order to pass anything last session, the bill had to be water-down compared to the statutes dealing with other levels of government in Texas.  There may be an attempt to make these provisions consistent with those dealing with local governments.

During the joint presentation Mike Chatron and Jon Fisher also briefly highlighted other possible issues for the next legislative session in 2015.  Those issues included:

Workforce Issues (protect & enhance HB 5) — Some issues such as availability of teachers and career information available to counselors may need to be addressed.

Public-Private Partnerships — There is concern among some legislators that public-private partnerships may need some higher level of scrutiny. 

Immigration — Lacking any reform on the federal level, there may be some initiatives that need to be dealt with to make sure that innocent employers are not penalized.

Economic Development Corporations — EDCs are not subject to public procurement statutes which creates an incentive for entities to create EDCs to avoid transparency in the procurement of construction services.

Cooperative Purchasing Networks — There remains concern in our industry that construction services (other than job order contracting) should not be "pre-bid" through interlocal agreements using cooperative purchasing networks.

Statutory Employer — Any attempts to prevent third party lawsuits for employees on jobs where workers’ compensation insurance is required by the owner will likely be supported.

Employee Misclassification — A high priority issue for some in industry.  Any legislation needs to protect legitimate practices and prevent employers dealing in good faith from being unnecessarily penalized.

CIP Standards — The Insurance Commission is looking at consolidated insurance programs.  If there are remaining issues, there may be legislation.

This list is not meant to be exclusive, but does cover a good number of issues that both ABC of Texas and AGC-TBB may be dealing with next legislative session.