MINUTES OF THE meeting
of the
ASSEMBLY Committee on Commerce and Labor
Seventy-First Session
March 14, 2001
The Committee on Commerce and Labor was called to order at 3:53 p.m., on Wednesday, March 14, 2001. Chairman Joe Dini, Jr. presided in Room 4100 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Guest List. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.
COMMITTEE MEMBERS PRESENT:
Mr. Joseph Dini, Jr., Chairman
Ms. Barbara Buckley, Vice Chairwoman
Mr. Morse Arberry Jr.
Mr. Bob Beers
Ms. Chris Giunchigliani
Mr. David Goldwater
Mr. Lynn Hettrick
Mr. David Humke
Ms. Sheila Leslie
Mr. John Oceguera
Mr. David Parks
Mr. Richard D. Perkins
COMMITTEE MEMBERS EXCUSED:
Ms. Dawn Gibbons
Mr. Dennis Nolan
GUEST LEGISLATORS PRESENT:
Assemblywoman Vonne Chowning
STAFF MEMBERS PRESENT:
Vance Hughey, Committee Policy Analyst
Darlene Nevin, Committee Secretary
OTHERS PRESENT:
Tom Grady, Executive Director, Nevada League of Cities
Kurt Segler, Legislative Advocate, representing the City of Henderson
Jim Keenan, representing the Nevada Public Purchasing Study Commission
Danny Thompson, Legislative Advocate, representing the Nevada State AFL-CIO
Richard Daly, Laborers Local 169
Jack Jeffrey, Legislative Advocate, representing the Southern Nevada Building and Construction Trades Council
Cheryl Blomstrom, Legislative Advocate, representing the Nevada Association of Mechanical Contractors and the Nevada Chapter of the Associated General Contractors
William Tryon, Vice President, Adventure Photo Tours, Las Vegas
Barry Perea, President and General Manager, Showtime Tours, Las Vegas
Patricia Jarman-Manning, Commissioner, Consumer Affairs Division
Tom Skancke, Legislative Advocate, representing the Las Vegas Convention and Visitors Authority
Jo Ann Gibbs, Senior Deputy Attorney General, Bureau of Consumer Protection
Daryl Capurro, Managing Director, Nevada Motor Transport Association, Inc.
Monica Jackson, Clark County Legal Services
Gustavo de León, Private Citizen
Candida A. Ureno, Private Citizen
Michael J. Franzoia, Mayor, City of Elko
Stephen West, City of Winnemucca
Stephanie Licht, Legislative Consultant, Elko County
Warren B. Hardy II, Legislative Advocate, City of Mesquite and Associated Builders and Contractors
Steve Weaver, Division of State Parks
Larry White, City Engineer, City of Fallon
Danny Costella, Organizer, Iron Workers Local 118
Pete Cox, Operating Engineers Local Union No. 3
Chairman Dini called the meeting to order at 3:53 p.m. A quorum was present.
Vice Chairwoman Buckley informed those present that Mr. Dini was present but because of his laryngitis asked her to be his voice for the hearing. Vice Chairwoman Buckley opened the hearing on A.B. 155.
Assembly Bill 155: Revises provisions governing substitution of subcontractor who is named in bid for public work or improvement. (BDR 28-366)
Tom Grady, Executive Director of the Nevada League of Cities and Municipalities, remarked that the intent of A.B. 155 was to simplify the process for the substitution of subcontractors. He informed the committee that Mr. Wilkie of the City of Henderson, Cheryl Blomstrom of the Associated General Contractors, Skip Daly of Union Local 169, Jim Keenan of Nevada Public Purchasing Group and the League worked together to create an amendment to A.B. 155. He indicated that since the League had not come to a complete agreement with all those involved, they were offering the amendment (Exhibit C) on behalf of the League only.
Mr. Grady pointed out the first change involved the wording in Section 1, paragraph a, and replaced “of” with “containing.” This was a grammatical change suggested by the Legislative Counsel Bureau. The second change, he indicated, was in Section 3, paragraph b, and added “or an authorized representative of the awarding authority.” This change was made to hasten the process. Without this change, related Mr. Grady, the prime contractor would contact the city manager and the issue would be scheduled for a city council meeting. This could delay the project several weeks and increase costs for all those involved. Mr. Grady offered that if the city council granted an authorized representative of the city to work with the prime contractor, the delay could be avoided and the city manager would be able to provide timely reports to the city council.
Kurt Segler, Legislative Advocate, representing the City of Henderson, voiced their support of A.B. 155 and contended it would save contractors and local governments time and money. He also clarified it was his intent that the authorized representative of the awarding authority would be an employee of the awarding authority.
Jim Keenan, representing the Nevada Public Purchasing Study Commission, who was employed by Douglas County as their Purchasing and Contracts Administrator, expressed their full support of the amendment presented by the Nevada League of Cities and Municipalities. He offered, “The function could be delegated even to the level of a public purchasing professional.”
Vice Chairwoman Buckley asked if anyone wished to testify against A.B. 155.
Danny Thompson, Legislative Advocate representing the Nevada State AFL-CIO, explained that their representatives did meet with the League of Cities and attempted to work out a deal but came to an impasse. He introduced Skip Daly to address their amendment.
Richard Daly, Laborers Local 169, explained their proposed amendment (Exhibit D) was the same as that proposed by Tom Grady with the exception of its addition of paragraph 4. Mr. Daly continued, saying paragraph 4 gave more guidance to the awarding authority or authorized representative regarding terminology. He explained it offered the ”leeway” general contractors needed and the support subcontractors needed so they could not arbitrarily substitute. Mr. Daly added the League did not support this addition to the bill because they did not want arbitration between subcontractors and general contractors. However, Mr. Daly contended this amendment, because of the guidance it offered, would actually help avoid their having to arbitrate between the two.
Jack Jeffrey, Legislative Advocate representing the Southern Nevada Building and Construction Trades Council, confirmed his support of the amendment presented by Laborers Local 169.
Ms. Giunchigliani noted a difference between the amendment offered by the Nevada League of Cities and Municipalities and that offered by Laborers Local 169 that was not addressed. She noted on Laborers Local 169’s proposed amendment the words “or an authorized representative of the awarding authority” were added to Section 3, paragraph a. It was not included in the League’s proposed amendment. She was wondering if it was intentional or an oversight.
Mr. Daly said if the League did not include the wording in theirs it appeared they did not want the alternative and did not see how they could have “an authorized representative of the awarding authority” in Section 3, paragraph b, yet not have it in Section 3, paragraph a. Ms Giunchigliani asked Vice Chairwoman Buckley if Mr. Grady could clarify the discrepancy. She further obtained clarification from Mr. Daly that the significant difference between the two proposed amendments was the addition of paragraph 4 and its definition of “general terms.”
Vice Chairwoman Buckley asked Mr. Grady to clarify the discrepancy between the two amendments. Mr. Grady asked for some time to look over the amendment proposed by Laborers Local 169, as he had not yet seen it.
Vice Chairwoman Buckley asked if there was anyone else to testify on A.B. 155.
Cheryl Blomstrom, Legislative Advocate, representing the Nevada Association of Mechanical Contractors and the Nevada Chapter Associated General Contractors, voiced their opposition to A.B. 155 without the amendment proposed by Mr. Daly. She related that although they recognized the city’s need for an expeditious method of substituting a subcontractor, they were concerned that an authorized representative could be “more arbitrary than a public body.” Being able to go before the city council would give the contractor, and the subcontractor as well, another “court of appeal” to make the decision rather than a representative. She declared that “general terms” as defined in Laborers Local 169’s amendment would better address those concerns.
Ms. Giunchigliani established the issue was the amount of authority the authorized representative would have to remove the contractor and the inclusion of “general terms” would offer some protection against abuse by the authority. Ms. Blomstrom continued by relating an instance in which a general contractor had attempted to remove a subcontractor because they “wanted his quantities changed; they wanted to change his bid after they’d accepted it.”
Kurt Segler, Legislative Advocate representing the city of Henderson, addressed the wording in Section 3, paragraph a, of the amendment proposed by the Nevada League of Cities and Municipalities. He established “The awarding authority” was their intended wording. They purposely did not add “or an authorized representative of the awarding authority.” It was their contention that the authority should stay with the awarding authority and not an authorized representative. Vice Chairwoman Buckley asked if there were any questions. She further asked Mr. Segler if he was in support of the amendment except for that portion. He replied that he was.
Tom Grady, speaking for the League of Cities and Municipalities, responded they had been advised that with the addition of paragraph 4 in Laborers Local 169’s amendment, the city or county would be the negotiator between the subcontractor and the contractor. They did not feel the responsibility should be given to city or county; rather the contractor and subcontractor should work out the disputes. For this reason they could not accept the amendment.
Vice Chairwoman Buckley closed the hearing on A.B. 155, commenting there were still some problems that needed to be resolved.
Vice Chairwoman Buckley presented the following BDR for committee introduction:
· BDR 52-1462 – Enacts provisions governing possession, use, manufacture and distribution of certain items employed to commit theft. (A.B. 375)
ASSEMBLYMAN GOLDWATER MOVED TO INTRODUCE BDR 52-1462.
ASSEMBLYWOMAN LESLIE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY BY ALL THOSE PRESENT.
Vice Chairwoman Buckley opened the hearing on A.B. 245.
Assembly Bill 245: Makes various changes relating to advertising and charges by tour operators and tour brokers. (BDR 52-1021)
Assemblywoman Vonne Chowning, District No. 28, Clark County, presented A.B. 245. Mrs. Chowning informed the committee A. B. 245 was a response to concerns brought her by the public and primarily affected tourists.
First of all, she commented, A.B. 245 provided that “each business that is engaged in tours of 24 hours or less must tell the truth in advertising” and that they “must disclose in a clear and conspicuous manner the total price that a customer must pay.” This price, she expounded, did not need to include taxes or fees if a state or federal statute prohibited them from doing so. She clarified extra charges could not be hidden in fine print. Mrs. Chowning emphasized the importance of tourism to Nevada and that some of the tourism companies were giving good businesses a “black eye.”
Secondly, A.B. 245 stated the tourism business must charge the customer correctly, that would be the total price and tax or fee if applicable. They could not charge extra fees such as “environmental fees,” fuel fees and numerous others.
Third, A.B. 245 provided that invoices needed to reveal the consumer could call the Consumer Affairs Division of Nevada and include the division’s phone number. Because the consumer would not actually be in a place of business in which a sign could be posted, the aforementioned information needed to be included on the invoice or the receipt.
Lastly, by placing the proposed changes in the deceptive trade section of the statute, noncomplying businesses could face penalties of up to a $10,000 fine and suspension of their right to do business. Mrs. Chowning justified there were thousands being victimized and communicated that the Better Business Bureau, the Consumer Affairs Division, the Las Vegas Convention Visitors Authority and the Clark County Business License Department had received complaints. Mrs. Chowning related that in one incident, the customer had been quoted $300; yet the final cost was $1200.
William Tryon, Vice President of Adventure Photo Tours in Las Vegas, spoke on behalf of A.B. 245. He prefaced his presentation by indicating that in his three years of doing business in Nevada, he had come across several problems in the transportation industry for which he received immediate response from the Parks, Bureau of Land Management and the Transportation Services Authority. Mr. Tryon contended that over 50 percent of Nevada’s revenues were from non-gaming activities; therefore it was especially important to concentrate on the treatment of tourists.
Mr. Tryon referred to seven magazines ads (Exhibits E through L) that “lure in the unexpected.” He expounded these ads could be found in over 50 percent of the 32 magazines in Las Vegas. He also referred to 13 letters from various businesses and associations expressing their support of A.B. 245.
Mr. Tryon described the “deceptive advertising practices” that he claimed had been occurring for many years. According to Mr. Tryon, tour brokers would advertise a price $30 to $50 below the actual price. On the morning of the tour, the customers would be transported by bus to a warehouse. There they would be informed of additional fees. Because they were without transportation and perhaps were leaving Las Vegas the next day, they felt “under pressure” and would agree to the extra fees.
Mr. Tryon further informed the committee that he and Robert Barringer of Coach USA estimated such scams affected “a minimum of 1 million tourists to a maximum of 3 million tourists per year.” Mr. Tryon remarked these tourists left Nevada with a bad opinion of our state. He also submitted this was unfair trade practice because honest companies had to compete with the dishonest on a daily basis. In closing, Mr. Tryon stated this was a “black eye” for the state of Nevada and urged the committee’s support of A.B. 245.
Barry Perea, President and General Manager of Showtime Tours in Las Vegas, referred to What’s On magazine and its “Grand Canyon/Hoover Dam” ad (Exhibit J) offering two for one. He then referred to another ad in the same magazine “Magic Tours” (Exhibit L) and noted the prices were different. He indicated these ads were by the same company, with the same ownership, but with different phone numbers. Both contained the fine print “Some tours may be subject to environmental/fuel/airport/park entrance fees.”
Mr. Perea expounded that with the two-for-one tour coupon, both customers would be assessed extra fees and would have paid as much or more than they would have with a “good company.” He also stated, as had Mr. Tryon, that these tourists, even though they knew they were getting “ripped off,” had made those plans for that day and figured if they chose not to go, it would be a lost day in their plans. So they would go ahead and pay the fees.
Mr. Perea commented such deceit had given the entire industry a “black eye.” It was, he asserted, “a direct result of the federal pre-emption of states to regulate passenger transportation that was taken away from the states about four years ago.” He revealed he did not like competing with these businesses; he charged more but felt he provided a better service. He labeled the transactions described “deceptive advertising,” and urged the committee to vote in favor of A.B. 245.
Mr. Perea commented he understood there was an amendment to be given by the Las Vegas Convention and Visitors Authority. This amendment, he perceived, would conflict with the federal preemption and felt he had a solution to reach the same goals as those sought by the Las Vegas Convention and Visitors Authority represented by Mr. Skancke.
Mrs. Chowning asked Vice Chairwoman Buckley if the Consumer Affairs Division Commissioner could come forward and a representative from Las Vegas Convention and Visitors Authority. Vice Chairwoman Buckley also invited the deputy attorney general from Las Vegas to come forward to testify.
Patricia Jarman-Manning, Commissioner of the Consumer Affairs Division, voiced their support of A.B. 245 with the stipulation that there be a $10,000 bond on all business that conducted tours in Nevada. She also requested the $10,000 bond be held by the Division and kept in “full force” at all times. This would mean that if an aggrieved consumer were granted restitution from the bond, the company must immediately bring the bond back to the $10,000; it would have to be held at $10,000 at all times.
Vice Chairwoman Buckley ascertained that this stipulation was not in the original bill and asked Mrs. Chowning’s opinion.
Mrs. Chowning expressed her full agreement with the $10,000 bond stipulation because the consumers were so often aggrieved and there was not a recovery fund for them. The bond would provide recovery for the consumers. Also, by being included in the deceptive trade portion of the statute, applying the $10,000 bond requirement would not be an uncommon practice. She added that the businesses present at the hearing were in total agreement. Mrs. Chowning applauded the businesses and Ms. Jarman-Manning for adding the bond requirement to A.B. 245. She asserted it would strengthen the legislation.
Chairman Dini, referring to small businesses, suggested the $10,000 bond requirement could ”open a can of worms.” He recognized a blanket requirement such as this could hurt many small businesses and voiced his disenchantment with the proposal. Vice Chairman Buckley acknowledged the validity of Chairman Dini’s observation.
Tom Skancke, Legislative Advocate representing the Las Vegas Convention and Visitors Authority, informed the committee they had brought forth an amendment they thought appropriate at the time. He disclosed when the amendment was brought forward to Mrs. Chowning, they suggested some type of bond and proposed $5,000. He agreed with Chairman Dini that this matter needed to be addressed with regard to smaller businesses. Reflecting on the large support received over the last 48 hours from many entities, from the Attorney General’s office to other companies adversely affected, who advertised legally and provided good service in good faith, and mindful of those who come forward since A.B. 245 had become known, Mr. Skancke offered to work with the Office of the Consumer Affairs, the Attorney General’s Office and Mrs. Chowning as a subcommittee. He stated they could devise an amendment that would not adversely affect smaller businesses and added that the Attorney General’s office had some language to assist them.
Vice Chairwoman Buckley said she would defer assignment of a committee to Chairman Dini.
Jo Ann Gibbs, Senior Deputy Attorney General, with the Bureau of Consumer Protection in Las Vegas, expressed their support of A.B. 245 as it addressed false advertising and “bait and switch” type operations run by tour operators and brokers. Ms. Gibbs remarked that the inclusion of the activities in the deceptive trade statute was important because the problems were widespread, affecting consumers and legitimate businesses as well. She recognized A.B. 245 not only protected the consumers but promoted legitimate businesses as well.
Daryl Capurro, Managing Director, Nevada Motor Transport Association, appearing on behalf of their bus company members who brought forth the proposed legislation, expressed full agreement with the testimony presented and congratulated Mrs. Chowning for sponsoring A.B. 245. Mr. Capurro pointed out there was at least one magazine in the Clark County area that chose not to accept advertising that did not reflect the total price. He added that the same company advertised in another magazine that had not adopted such policy and a different price was given for the same tour. He asserted it was not right. It was not good for the consumer, Nevada, and the businesses that had to compete. Mr. Capurro restated his full support of A.B. 245. He declared they did not have a problem regarding the bond proposition, but suggested the amount of the bond be based on the size of the business. He said they could accept a bond proposition relative to the Office of Consumer Affairs.
Assemblyman Parks noted Section 3 of A.B. 245 would make the bill effective on October 1, 2001. He suggested the author of the bill consider moving the date to July 1. Mrs. Chowning responded that issue had been presented to her. Some businesses were concerned about the small amount of time to react. However, she noted, the businesses present at the hearing did not seem to have a problem with the date. They would need time, though, to reprint billing invoices. Mrs. Chowning affirmed she would gladly work with the other parties involved to address the concerns raised today regarding A.B. 245.
Assemblyman Beers asked the industry representatives to what degree “small players” contributed to the problems addressed by A.B. 245. Barry Perea responded there were no small players. The ads pointed out today were from businesses that probably spent one-half million dollars each in advertising per year.
Ms. Chowning submitted, for the record, letters from various tour businesses (Exhibits M through Y).
Vice Chairwoman Buckley closed the hearing on A.B. 245.
Chairman Dini appointed a subcommittee consisting of Assemblyman Humke, himself, Chairman Dini and Assemblyman Oceguera to work with Mrs. Chowning on A.B. 245.
Chairman Dini opened the hearing on A.B. 204.
Assembly Bill 204: Provides that failure to comply with certain requirements regarding acceptance of application for credit relating to retail installment transaction is deceptive trade practice. (BDR 52-1091)
Assemblywoman Buckley, District No. 8, introduced A.B. 204 and described it as a “common sense” bill that offered protection to consumers and honest businesses from unfair practices that involved retail sales on credit. A.B. 204 mandated that all essential components of a credit application be completed before it was signed. If completed by hand, the application had to be completed in the applicant’s own handwriting. If typed, it had to be initialed by the applicant. There was an exception if the applicant was illiterate or unable to complete the application due to a disability.
A.B. 204 also stipulated that if the law was violated the applicant could, in lieu of other remedies, rescind the transaction and recover the costs and fees. Ms. Buckley reinforced that A.B. 204 was necessary because sales were being financed based on false information. Ms. Buckley maintained that dishonest sellers and overzealous sales persons were writing false information on credit applications to obtain credit approval and push through sales. Ms. Buckley informed the committee they would hear from a prospective buyer who discovered her application for credit was not in her own handwriting, and another who noticed, after the credit approval and sale, the income entered in her credit application had been falsified. Others reported their length of employment and length at residence were falsely represented. These misrepresentations, Ms. Buckley indicated, affected the premises on which a loan company would base their loan approval.
Ms. Buckley informed the committee that existing laws did not adequately protect the victims. She noted sellers often assigned their retail installment sales contracts to finance companies or banks. If sellers falsely completed credit applications, it was considered false representation by the seller to the lender. Common law fraud ordinarily addressed false representation made by the seller to the buyer. Also, if a consumer, having discovered their credit application had been falsified, complained to the seller, the seller would not admit his or her own wrongdoing. And if the consumer complained to the lender, the lender would usually not take back the goods to undo the transaction.
Therefore, offered Ms. Buckley, existing law did not protect those involved, as would A.B. 204. As a “side benefit,” Ms. Buckley informed, A.B. 204 would protect honest sellers from applicants who falsified information on their credit applications, because their applications would be in their own handwriting or initialed by them. Ms. Buckley advised the committee that Mr. Sande and Ms. Lau brought concerns to her before the hearing. She offered to work with them to address those concerns. Ms. Buckley stressed the need for a ”remedy against those who falsify documents” and asserted the existing remedies were not adequate.
Monica Jackson, who works with Clark County Legal Services, read testimony of Gustavo de León, at his request, in support of A.B. 204. Mr. de León related to the committee his experiences purchasing vehicles on two separate occasions. He indicated the credit applications were not in his handwriting and contained false information. The first incident occurred on August 2, 2000. The salesman asked him for information regarding his housing and his and his wife’s income. The information was recorded on “a regular sheet of papers.” He informed the salesman he had lived at his current address about two years and at his previous address for about one year. He related his wife’s monthly gross income as well as his was about $1,800. Mr. de León noted he was never asked about rental property or any other property income. Mr. de León purchased the vehicle.
A few months later Mr. de León’s attorney showed him a copy of the credit application whereupon he realized what the salesman had written. Mr. de León noted the application was not in his handwriting, and that his income as well as his wife’s had been increased by $2,000 each. He also observed the recorded time at his residence had been increased by one year. Mr. de León revealed to his attorney that he did have rental property but the income was only about $194 monthly, not $1,500 monthly as stated on the credit application.
When Mr. de León returned to the dealership to have his vehicle serviced, he was notified the extended service contract would not cover the repairs. He requested cancellation of the contract and was subsequently approached by a Spanish-speaking salesman who advised him to purchase another vehicle instead. He conveyed that his wife was not with him and he did not feel he would qualify. According to Mr. de León, the salesman told him he had “never lost a customer before” and that he could get him qualified “one way or another.” Mr. de León reported his income the same as on the previous credit application, excluding his wife’s income, and was not asked about any other income. After he informed the salesman he had only one of three necessary references, the salesman recorded himself as another reference. Mr. de León’s credit application was approved without his wife’s income.
On October 18, 2000, when his attorney showed him copies of his credit application, he realized the erroneous information the salesman had recorded. The credit application was not in his handwriting and the salesman had recorded a monthly income of $2,800. It was his observation that the $1,500 had been added as income from the rental property. He informed his attorney that after payment of mortgage and utilities, the rental property netted him $194 monthly, not $1,500 as indicated on the credit application.
Candida A. Ureno, private citizen, testified from Las Vegas in support of A.B. 204. She related her experience at a used car dealership. At that time she was 19 years old and a recent high school graduate. Because of her disabilities, she had asked if she could take the sales agreement home for her mother to examine. Although she conveyed to the salesman her learning disability and difficulties in reading, comprehension and math, he continued trying to sell her a used car. Ms. Ureno divulged the dealership kept her drivers license and would not permit her to leave the office with the sales agreement.
Ms. Ureno noted she was attending community college and was enrolled as a work-study earning about $400 per month. She did not complete the income portion of the application because she did not have a job. She added she had to sign the credit application.
Financing was obtained and Ms. Ureno was sold the vehicle. After the fact, Ms. Ureno’s family discovered the income on the application had been entered as $1,900 monthly and it reported she had worked six years. Ms. Ureno could not afford the monthly car payments of $357 and voluntarily returned the vehicle. Ms. Ureno informed the committee that the finance company sought to add the reported repossession to her credit report. Ms. Ureno offered A.B. 204 would help protect others from being sold vehicles on the basis of falsified credit applications and making payments they could not afford.
Chairman Dini asked if there was anyone else who wished to testify for or against A.B. 204. He closed the hearing on A.B. 204.
Vice Chairwoman Buckley opened the hearing on A.B. 156.
Assembly Bill 156: Increases monetary limitation on cost of public works projects used to determine application of requirements concerning payment of prevailing rate of wages. (BDR 28-365)
Tom Grady, Executive Director of the Nevada League of Cities and Municipalities, informed that A.B. 156 increased the “monetary limitations on the costs of public works projects requiring prevailing wage under NRS 338.080.” He understood the amounts had not been changed since 1985 and indicated this aspect would be addressed later in the hearing.
Mr. Grady attested local communities supported living wages for the strength of the community, but that A.B. 156 did not address the issue of living wages. Rather, A.B. 156 was concerned with prevailing wages. Mr. Grady prefaced his remarks noting wages of other professions varied from one community to another depending on the economic conditions of their communities. He also submitted they had met with Terry Johnson, Nevada’s Labor Commissioner, and subsequently had a better understanding of the difficulties involved with the establishment of prevailing wages and committed to assist him.
Mr. Grady indicated others present would address problems faced by local contractors regarding the “added bureaucracy” that resulted from oversights of prevailing wages. He further declared urban contractors were not very interested in traveling to rural Nevada for small jobs and A.B. 156 would address that problem. Mr. Grady observed that contracting smaller jobs locally kept the money in the community, served the public and saved expenses for all concerned. He concluded that with the joint efforts of Terry Johnson, Labor Commissioner, they could “work together to bring everyone — contractors, subcontractors, labor and local governments — together to get a job done.”
Michael J. Franzoia, Mayor, City of Elko, read from his letter to the committee (Exhibit Z). He reported the board of supervisors had met the previous evening and discussed the proposed change to the Mini Davis Bacon threshold, which increased it from $100,000 to $250,000, and its impact. He reported the board’s total support of A.B. 156 and their contention that local government was responsible for providing the community services at “the least costs and impact to them” and that failure to adjust threshold levels was “bad policy.”
Furthermore, noted Mr. Franzoia, the board recognized the dollar’s purchasing power had decreased over the past ten years and felt the new $250,000 threshold would help maintain their buying power, lessen the fiscal impact locally, and help them meet the needs of their community. In closing, Mr. Franzoia requested the committee’s support of A.B. 156.
Steve West, City Manager of Winnemucca, referred to letters from Paul J. Vesco, Mayor of Winnemucca (Exhibit AA), and from the Humboldt County Board of Commissioners (Exhibit BB) in support of A.B. 156. Mr. West explained the primary problem with the $100,000 threshold was that it failed to allow for inflation. If the threshold was adjusted each year for inflation, it would be closer to $200,000.
Secondly, referring to Exhibit AA, Mr. West noted bids on public works projects based on prevailing wages were 21 percent higher than those not based on prevailing wages. A specific project contracted through Reno and based on prevailing wages would cost the community 21 percent more than if contracted locally without prevailing wages. He submitted the current legislation did not address that but emphasized the increase in threshold would benefit rural communities. Because Winnemucca had several jobs projected to cost between $100,000 and $250,000 each, it would greatly benefit from the passage of A.B. 156. In closing, Mr. West asked the committee to pass A.B. 156.
Stephanie Licht, Legislative Consultant, Elko County, referred to a letter from Nolan Lloyd, Chairman of the Board of County Commissioners (Exhibit CC). Ms. Licht informed the committee that passage of A.B. 156 would assist the county in addressing challenges to its infrastructure, promote employment and better utilize taxpayer dollars.
Warren Hardy, Legislative Advocate, City of Mesquite and the Associated Builders and Contractors, conveyed their support of A.B. 156.
Steve Weaver, Chief of Planning and Development, Division of State Parks, revealed State Parks also had to abide by the $100,000 threshold. In his 22 years of experience he had observed a 20 to 30 percent increase in costs when prevailing wages were paid. The Division of State Parks had numerous projects in rural areas that could not provide competition to the bidder. As a result “premium” prices were paid. He suggested such wages were more to scale in larger communities and were not affordable in rural communities. In closing, Mr. Weaver expressed passage of A.B. 156 would be a “godsend” to agencies such as State Parks who, like rural communities, were constantly stretching their improvement budgets. He strongly endorsed passage of A.B. 156.
Jim Keenan, Purchasing and Contracts Administrator, Nevada Public Purchasing Study Commission, relayed the Commission’s concerns that in all of their contracts, not only public works, inflation had limited the reach of the dollar and recommended the threshold be increased to “reflect current economic conditions.”
Larry White, City Engineer, City of Fallon, referred to a letter (Exhibit DD) from Ken Tedford, Jr., Mayor of Fallon, which offered the city’s support of A.B. 156. He chose not to reiterate statements by those who testified before him but restated cities needed to work within budgets, which often determined the amount of projects they could do. He submitted any money ”saved” could go towards other projects within those budgets.
Jack Jeffrey, Legislative Advocate, representing the Southern Nevada Building and Construction Trades Council (SNBCTC), spoke in opposition to A.B. 156 and remarked there needed to be a better understanding of the problems involved with prevailing wage. Mr. Jeffrey stated that by definition the prevailing wage was that which prevailed in the locality that let the contract and noted the Labor Commissioner did annual surveys to determine what the prevailing wage should be. He divulged there had been problems with contractors not reporting.
Mr. Jeffrey emphasized that if the threshold increased and more work was “taken out from under the prevailing wage,” there would be a bigger problem establishing a “meaningful wage.” He clarified projects affected would be major projects such as remodeling and renovation because they would more likely cost $100,000 and over. He added there was some talk in previous years of raising the threshold. However, due to the size of the entities involved, it was decided there would be no effect on them and the legislation was dropped.
Mr. Jeffrey observed rural counties often did not have their own construction work force and had to search outside of their community. Usually, the workers would come in from the closest locality, which could be a state bordering Nevada. Mr. Jeffrey asked the committee if they would rather have Nevada workers on the projects or workers from neighboring states. He reaffirmed the SNBCTC’s opposition to A.B. 156.
Danny Thompson, Legislative Advocate, Nevada State AFL-CIO, informed the committee the Nevada State AFL-CIO was composed of 120 different unions throughout the state including Elko and some rural communities. Mr. Thompson added they chose not to fill the hearing rooms and prolong the hearing, although they could have. He reiterated Mr. Jeffrey’s testimony that prevailing wages were determined county by county by the Labor Commissioner, and that there had been those contractors who chose not to reply. He declared prevailing wage ensured the projects would be completed by a Nevada work force and expressed the AFL-CIO’s “adamant” opposition to A.B. 156.
Mr. Jeffrey clarified statements he suggested the committee would hear repeatedly that claimed projects paying prevailing wage would cost 20 to 40 percent more. From his experience of 40 years, he related labor costs averaged between 30 to 40 percent of any project’s costs. He contended there was no way to save that amount on wages unless you found “people willing to work for nothing.” He noted he had seen such figures claiming increased costs due to prevailing wage but had not seen these figures substantiated.
Richard Daly, Laborers Local 169, informed the committee that prevailing wages were originated to minimize the impact that government, as a construction consumer, had on wages paid in an area. He explained the prevailing wage was determined annually by survey for which he commended the Labor Commissioner. Mr. Daly explained the “inherent problem” he perceived with “cost savings” expected by increasing the threshold. If the threshold was raised, he contended, jobs would not be covered by prevailing wage. Therefore, government contracts would affect the going rate for that type of work in that locality. Without prevailing wage, Mr. Daly did not see how the rural community could attract a work force or how that benefited their economy. The local contractor who paid prevailing wage would have to compete with outside contractors. Contracting out of state would increase, forcing local wages to be lowered as a result of the competition. Mr. Daly contended prevailing wage laws were intended to minimize the impact of government as consumers of construction.
In response to previous statements that inflation had given the dollar less purchasing value, Mr. Daly noted the dollar also had less value as wages for the laborers. Mr. Daly disagreed that the lowering of wages would well serve the citizens of Nevada.
Mr. Jeffrey submitted, for general information, that the threshold for the Federal Davis Bacon was $2,000.
Chairman Dini interjected that wages had risen “considerably” since 1985 and questioned Mr. Daly’s rational for not raising the threshold.
Mr. Jeffrey acknowledged this issue was also being addressed at a federal level and the proposed reform package would bring the Davis Bacon threshold to $100,000. He mentioned we were at the $100,000 threshold as the result of a compromise reached in 1985 when the threshold was $2,000. Mr. Jeffrey pointed out the rate was in line with other rates around the country, yet “considerably below” the Davis Bacon rate. He stated the Department of Transportation, when operating a road project, worked with a threshold of $2,000. Mr. Jeffrey did not see a need to change the threshold and predicted it would cause more problems than it would solve.
Chairman Dini commented his small town of Yerington had to stretch their dollars. He explained that Yerington, with a budget of probably $2 million or less, would be glad if it could squeeze in an extra block when sealing the streets. Mr. Dini asked Mr. Jeffrey what he thought about making the threshold $200,000.
Mr. Jeffrey responded the problem would remain. The Southern Nevada Building and Construction Trades Council, he conveyed, was concerned that raising the threshold would “open the door” to further expansions. He also suggested that expenses of smaller jobs were mostly for materials, not wages.
Miss Giunchigliani asked if she was accurately restating previous testimony when she said many of the laborers that bid on projects came out of either Reno or Las Vegas areas and that added costs resulting from travel time and contractual issues. She then inquired if there was something that could be done when bidding in such instances whereby those additional costs could be compiled into the bid.
Mr. Jeffrey replied prevailing wage did not pay travel but did provide “zone pay.” They could be paid more per hour based on the zone in which they lived. He expounded none of the jobs were bid with travel pay.
Miss Giunchigliani clarified she could not remember if travel pay had been part of the bid process.
Mr. Jeffrey added costs could be increased by the laborers coming from a distance and reiterated the problem was not the wage paid in the area but the lack of a construction work force. He asked if the workers should come from Reno where there is a similar wage or from out of state. The Southern Nevada Building and Construction Trades Council has always preferred to see Nevada spend its taxpayer dollars on Nevada labor.
Danny Costella, Organizer, Iron Workers Local 118, voiced their opposition to A.B. 156.
Pete Cox, District Representative, Operating Engineers Local Union No. 3, informed the committee they represented approximately 1,200 construction workers in Nevada and affirmed the testimony preceding him in opposition to A.B. 156. He asked the Assembly and proponents of A.B. 156 if they would like a 30 percent reduction in wages, as he likened A.B. 156 to such a wage decrease. Mr. Cox supported his comments by informing the committee the union’s construction workers had to maintain two residences. He further acknowledged the extra money was available to maintain both residences, but that by the end of the year the money was spent.
Vice Chairwoman Buckley closed the hearing on A.B. 156 and asked Mr. Dini if there was any further business.
Chairman Dini called for a vote on A.B. 171 from a previous hearing. He noted he had not received any comments since the hearing.
Assembly Bill 171: Makes various changes relating to garages for repair of motor vehicles. (BDR 43-582)
ASSEMBLYWOMAN GIUNCHIGLIANI MOVED DO PASS ON A.B. 171.
ASSSEMBLYWOMAN LESLIE SECONDED THE MOTION.
THE MOTION CARRIED UNANIMOUSLY. (ASSEMBLYWOMAN GIBBONS AND ASSEMBLYMAN NOLAN WERE EXCUSED AT THE TIME OF THE VOTE.)
Chairman Dini adjourned the meeting at 5:18 p.m.
RESPECTFULLY SUBMITTED:
Darlene Nevin
Committee Secretary
APPROVED BY:
Assemblyman Joe Dini, Jr., Chairman
DATE: