2018 Legislative Session Ends on Time
For the first time in several years the Legislature concluded its business on time, adjourning the 2018 regular legislative session on March 8th. With democrats holding narrow majorities in both the House and Senate, this year’s session saw an onslaught of dangerous bills unlike anything in recent memory. As one can only imagine, the construction industry found itself swept up in the cross-hairs of numerous anti-business bills fighting to defeat new carbon taxes, “clean” energy mandates, low carbon fuel standards and greenhouse gas reduction targets, among other bills specifically aimed at contractors. We were fortunate in being able to defeat all these bad bills for the time being, but the political climate in Washington state is leaning towards giving democrats larger majorities following the 2018 general elections. Should this happen, the business community, including the construction industry will, again, have its work cut out for itself.
In addition to the defeat of a carbon tax, the 2018 session saw no new taxes passed at all despite a record number of bills to do just that. With $1.3 billion in additional unanticipated revenues in state coffers, pro-tax legislators did not have the votes to pass any new tax measures including a highly controversial capital gains tax and an increased business and occupation gross receipts tax.
All things considered, NUCA had a good year in the state Capitol. In addition to working successfully to defeat many bad bills, we also saw the passage of a project loan list from the Public Works Trust Fund (PWTF) for the first time since 2013 as well as passage of a $4.2 billion capital construction budget. The following are some of the key pieces of legislation that NUCA covered and how they fared in the process:
Bills that Passed the Legislature
SB 6090 – Supplemental Capital Budget Funding PWTF
The Supplemental Capital Budget contains $97.1 million in new money for PWTF projects. Now that the legislature has addressed a major education funding issue, we are told it is intended that PWTF projects will be reinstated into the future using revenues from existing loan repayments. These funds and others from dedicated revenues sources (utility taxes, real estate excise taxes and sold waste taxes) have been raided by the legislature since 2013. The project loan list can be accessed by going onto the legislative website at, www.leg.wa.gov. Click on “Bill Information” and enter 6090. The list can be found on page 10 of the bill.
HB 1849 – Apprentice Utilization
The original bill imposed apprentice utilization requirements on all contractors and subcontractors individually and imposed a one-year debarment penalty for failing to meet the 15 percent mandate. The industry opposed this version but reverted to neutral following adoption of amendments offered by AGC that exempted WSDOT, removed the explicit language applying to all contractors and subcontractor and replaced debarment penalties with financial incentives and disincentives. NUCA members should be aware of this new law and the additional contractual provisions applicable to this new law, which is contained in RCW 39.04.320(4)(b)-(c) and will take effect 1/1/2020.
HB 1673 – Adding Training on Public Works and Prevailing Wage Requirements to Responsible Bidder Criteria.
This bill requires training in public works and prevailing wage to be a responsible bidder on public works, however, exempts bidders who have completed three or more public works
projects and who have had a Washington business license for more than three years. This new statute is at RCW 39.04.350(1)(f) and is effective July 1, 2019.
HB 1622 – State Building Code Council
This NUCA supported bill has been an ongoing issue for all sectors of the construction industry for the last several sessions and has resulted in the following reforms to the State Building Code Council (Council):
- Modifies the administrative processes of the State Building Code Council, including requiring the Council to adhere to statutory requirements applicable to significant legislative rules.
- Specifically requires that those appointed to represent a particular private sector need to remain employed in the private sector.
- Moves the Council to reside within the Department of Enterprise Services (DES) and specifies that the DES provides administrative support to the Council.
SB 6133 – Career and Technical Course Equivalency
This bill attempts to address the declining workforce in construction and other trades by expanding equivalency options for career and technical education (CTE) courses. It directs the Office of the Superintendent of Public Instruction to create a framework for counting more CTE credits for graduation requirements.
HB 2685 – Promoting Preapprenticeship Opportunities for High School Students
Requires the Office of the Superintendent of Public Instruction, in consultation with the State Board for Community and Technical Colleges and the Washington State Apprenticeship and Training Council, to examine opportunities for promoting registered preapprenticeship and registered youth apprenticeship opportunities for high school students and report to the Governor and the Legislature by November 1, 2018.
Bills that Did Not Pass the Legislature
HB 2407 – Reporting the Use of Out of State Materials
This bill opposed by NUCA would have required public owners using funds from the state Capital Budget on public works projects to report if steel or concrete were purchased from out of state, the reason for purchasing out of state and the cost of the steel or concrete purchased.
SB 5667 – Off-duty Conduct of an Employee or Prospective Employee
Washington is an “at will” state meaning an employer or employee can terminate a working relationship at any time. This vague bill had the potential to deny an employer the ability to monitor off duty conduct of its employees, including drug use, that may create liability for the employer on the jobsite.
SB 6203 – Establishing a Carbon Tax
This bill opposed by NUCA, would have imposed a carbon pollution tax equal to $12 per metric ton of carbon dioxide on the sale or use of fossil fuel within the state and the sale or use of electricity generated using fossil fuels, beginning July 1, 2019. It would have increased the tax rate by $2 per metric ton per year, beginning July 1, 2021, until reaching $30 per metric ton of carbon dioxide. 67 “energy intensive trade dependent industries” (mostly manufacturers) were exempted from coverage. Immediate gas tax increase was projected at .10 cents/gallon reaching .30 cents/gallon at $30 per metric ton.
HB 2940 – Capital Gains Tax
This bill opposed by NUCA, would have taxed capital gains exceeding $25,000 for individual and $50,000 for joint filers at a rate of 7%.
HB 2940 – Modifying the B&O Tax (Did Not Pass)
This bill opposed by NUCA contained the following significant provisions:
- Beginning January 1, 2020, the filing threshold for B&O taxes is raised to $125,000 for all businesses, and each taxpayer must calculate their margin in order to determine their eligibility for a B&O credit or a surcharge:
- If a taxpayer’s margin is less than $250,000, the taxpayer is eligible for a credit equal to the B&O tax otherwise owed.
- If a taxpayer’s margin is $1,000,000 or more, a surcharge of 6 percent is imposed on the B&O tax otherwise owed.
- If the taxpayer’s margin is equal to or greater than $250,000, but less than $1,000,000, no credit is allowed and no surcharge is imposed on the B&O tax otherwise owed.
Ongoing NUCA Legislative Committee Activities
NUCA’s legislative committee meets each month throughout the year to identify and discuss significant policy issues affecting the heavy civil construction industry and take positions pertaining to relevant issues before the legislature and local government. The following are some of the current issues before the legislative committee:
Mike M. Johnson
During the 2017 legislative session NUCA introduced SB 5788 and HB 1574 to address the strict claim notice requirements in construction contracts resulting from the Mike M. Johnson case. As the result of strenuous opposition from many public owners (but not all) we decided not to pursue these carryover bills in the 2018 session. That said, we did make headway as the WSDOT has agreed to work with NUCA and AGC to revise their standard plans and specifications to reflect that just compensation should be provided even in instances where strict compliance did not occur or could not have occurred. A taskforce has been formed to meet with WSDOT on this issue and NUCA has two members on the task force. The meetings with WSDOT have been scheduled for April and May of this year.
One Call “Dig Law” Revisions
NUCA member Mark Scoccolo and Membership Director Jon Cornelius have undertaken an effort to revise the “Dig Law” to include provisions that will enable underground infrastructure to be more easily and accurately locatable. They have prepared draft legislation to be introduced in the 2019 legislative session. The NUCA legislative committee will be spending time throughout the remainder of the year working the issue with stakeholders and legislators in preparation for 2019.
L&I Injured Worker Compensation
L&I’s methodology for determining time-loss compensation unfairly treats the construction industry by basing compensation on hours not worked. It essentially provides benefits on an assumption that construction employees work full-time twelve months of the year even if they never have in the past. The net effect is that an injured worker can receive payment and benefits that exceed what they would have earned had they been on the job. The NUCA legislative committee is currently exploring possible avenues to remedy this situation and will continue to work on this important issue.
Your NUCA legislative committee will continue to meet monthly throughout the year to go over legal issues affecting NUCA members and develop strategies to implement to further the interests of NUCA members. The agendas for the monthly meetings are now available online on the NUCA website and we encourage you to check them out to see what the committee is working on.
If there are any issues that you would like the legislative committee to review, whether it be statutory changes in Olympia or any legal issues affecting NUCA members, we encourage you to contact your NUCA legislative committee chair, Brett Hill (brett.hill@acslawyers.com or (206) 515-2233), your NUCA lobbyist, David Ducharme (david@ducharmeinc.com or (206) 369-0440), or attend one of the monthly meetings of the legislative committee.