CAGC Reviews Ups, Downs of 2003 Legislative Session

Fri January 16, 2004 - Southeast Edition

North Carolina

With the North Carolina General Assembly’s “long session” now history and legislative candidates hammering Carolinas Associated General Contractors of America (CAGC) with campaign funding requests, the construction industry fared well with CAGC achieving its top goals:

• CAGC was the lead business association that successfully defeated bills that would have caused nightmares for contractors doing local government work.

Under two bills that were defeated, not only could unwarranted discrimination claims have been filed against a company for previously completed public and private work, but also the traditional court system process would have been eliminated for a new bureaucracy for Charlotte and possibly other local governments.

• CAGC helped defeat a bill that would have extended the statute of repose, which could have made a contractor liable for construction problems on public and private work 25 years down the road.

• CAGC helped lead efforts for a study of the delivery system for the North Carolina Department of Transportation (NCDOT) and the North Carolina Department of Environment and Natural Resources.

The current process has slowed the construction and permitting process considerably. NCDOT’s Transportation Improvement Program letting amount in the past year of approximately $600 million is expected to grow to $1.2 billion –– with an additional $400 million for resurfacing and pavement preservation. NCDOT’s August 2003 letting marked the largest in Tar Heel history.

• CAGC helped defeat statewide legislation that would have allowed a contractor’s “commitment” to MBE goals to be a criterion on whether or not he or she could bid public work.

While CAGC supports ways to improve MBE participation, the language was general enough that a bureaucrat could unfairly stop some companies from bidding on public work.

CAGC also was able to defeat a statewide proposal that would have unfairly denied many qualified bidders from bidding public school work. The bill originally said that up to a week before bids were due, a prequalified contractor could be disqualified by the owner, wasting the contractor’s time and money in putting together a bid.

• CAGC supported bills that would give contractors tax credits for workplace safety improvements and reduce construction equipment taxes –– though passage appears unlikely in this year’s short session with the state’s ongoing budget troubles.

CAGC helped the University of North Carolina System keep in place its $4.2 billion construction bond program at a time when lawmakers were looking to reduce such funding. The association also led efforts to restore millions of dollars in vocational education funding that was left out of the House-approved budget.

• Throughout the final weekend leading to adjournment, CAGC staff, along with other industry and NCDOT lobbyists, worked with the General Assembly to enure passage of the North Carolina Moving Ahead legislative package, which will provide an additional $700 million of transportation project market opportunity with mostly smaller-sized projects that will be attractive to small- and medium-sized firms.

Construction Funding

Before adjourning, lawmakers approved more than $1 billion toward construction projects.

Of those funds, nearly $500 million is earmarked for University of North Carolina construction projects paid for by dormitory and other fees as well as $650 million in debt to North Carolina’s future obligations. The additional debt will be used to build a new psychiatric hospital, three new prisons and pump $300 million into long-neglected state building repairs.

For highways, the state for each of the next two fiscal years will continue its diversion of an extra $80 million out of the Highway Trust Fund.

The $80 million transfer is an addition to the original $170 million transfer that was authorized annually in the 1989 Highway Trust Fund. What this means for highways is that a total of $250 million is being transferred to the General Fund from the Highway Trust Fund for each of the next two years.

Other budget items concerning construction include $62 million for each of the next two fiscal years, beginning July 1, for the Clean Water Management Trust Fund, compared with $100 million initially appropriated for the next two years. That fund pays for sewer improvements and water clean-up projects.

Also extended for the next two years is a half cent on the sales tax rate, bringing in more than $341 million annually, and maintaining the top income tax bracket for the wealthy at 8.25 percent, generating $37.5 million for 2004.

South Carolina

The first year of the 115th General Assembly adjourned June 5, and no resolutions were passed to allow the legislature to return to Columbia to complete conference committee reports or to take up any gubernatorial vetoes prior to the next legislative session, which begins this week. Therefore, all bills enrolled, ratified and sent to the governor for his consideration, remained with the governor until the second day of the 2004 legislative session.

Meanwhile, the General Assembly introduced 2,166 bills and resolutions since the beginning of the session and of those, 182 have been ratified by both the House and the Senate. Of those 182 bills and resolutions, only 36 have been enacted. All of the remaining bills and resolutions that have been filed will be carried over to the 2004 session.

CAGC closely followed 96 pieces of legislation throughout the legislative session –– bills that not only affect the construction industry but those that may impact the way business is run as well.

Below are the highlights of several bills CAGC followed in 2003:

• The Business Debt Recovery Act, which would require businesses to garnish the wages of their employees for commercial debt, was defeated in full committee early in the session.

CAGC, the Small Business Chamber, the South Carolina Manufacturer’s Alliance and South Carolina Fair Share all opposed the legislation. A similar bill has been filed in the House but has yet to receive any consideration by a subcommittee.

• S 449 references the National Building Code and modifies how the building codes in SC are adopted. The law now requires a notice of intent to make changes to the code to be printed in the State Register, a comment period of 180 days for the public to submit questions and then a study committee will be assigned to research the matters the public requests to be considered. The original bill deleted the mechanical, electrical and plumping representatives from the Council and CAGC worked to get them back in the bill and were successful. The bill was ratified on the last day of the session

• The right-to-cure bill passed and was enrolled for ratification on the last day of the session. This bill will ensure an alternative method to resolve legitimate construction disputes and reduces the need for litigation while adequately protecting the rights of homeowners. The contractor or subcontractor has 30 days from service of the notice to inspect, offer to remedy, offer to settle with the claimant or deny the claim regarding the defects before a suit can be filed.

• The Second Injury Fund addresses the establishment of a fund for workers compensation claims and prohibits reimbursements to employers or carriers which have defaulted on their current assessments until the assessments are paid in full. This legislation also passed the last day of the session.