DISCLAIMER. Electronic versions of the exhibits in these minutes may not be complete.

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1 DISCLAIMER Electronic versions of the exhibits in these minutes may not be complete. This information is supplied as an informational service only and should not be relied upon as an official record. Original exhibits are on file at the Legislative Counsel Bureau Research Library in Carson City. Contact the Library at (775) or li brarya1cb.state.n~. us.

2 TESTIMONY IN SUPPORT OF AB 287 Provides provisions relating to contracts for public work ASSEMBLY COMMERCE & LABOR COMMITTEE MARCH 28,2005 Good afternoon, My name is James Sala and I am a representative for the Southwest Regional Council of Carpenters for the State of Nevada. I have been involved in the construction industry for almost 25 years. Since 1998 I have been extensively involved in working with the Labor Commissioners office, local public bodies like Clark County School District and the State Public Works Board and other groups in Nevada to improve the construction industry. We have always tried to take an industry view. (What I mean by that is ideas for the industry should try to benefit workers, the contractors, the owner or awarding body and the community) A great example of this is contractor pre-qualification, which has helped to improve public works cons$ruction quality, costs and on time performance. This bill is another step toward improving public works construction while addressing a very important issue facing all Nevadans, health care. This proposed bill very effectively addresses the serious issue of health care in our community and our industry and provides an effective solution that works for all participants. Requiring health care on Public Works is good public policy and a smart use of taxpayers' dollars. This bill will benefit workers, fair contractors, public awarding bodies, and I believe will save taxpayers money as well. This bill helps to do all that without any additional cost and with actual real cost savings to taxpayers, contractors and awarding bodies. ASSEMBLY COMMERCE & LABOR DATE: EXHIBIT PAGE 1. SUBMITTED ~y:sd.me: s4ir OF 2

3 First, a brief explanation of Prevailing Wage: the Labor Commissioner surveys each county annually. The rate that makes up the majority of the commercial work in the county "prevails" and is the rate for the next year on all public works for that county. In Clark County for year the rate for carpenters was $37.98 per hour. If you look at Chart #I below you will see how that rate is arrived at: Union Signatory Employer Wage (On Check) $26.61 Hr. Pension 4.69 Health & Welfare 3.92 Vacation 2.41 Apprenticeship.35 Total Non-Signatory Em~loyer Wage (On Check) $37.98 Hr. Total As you can see in Clark County the rate is comprised of a wage rate plus fringe benefits. Currently if you are a union signatory contractor you pay the breakdown on the left. An employer who is not signatory typically pays the entire wage on the check. As you can see the money for benefits is already built into prevailing wage. It seems like it would bea waste not to use it. GOOD FOR CONTRACTORS Contractors will benefit in two ways. First by putting money into pre-tax benefits, contractors will save money by having to pay less to tax burdens like workers compensation, social security and unemployment. This will help to provide real cost savings to contractors who should pass that savings along in the form of more competitive bids to public works (please refer to chart #2 attached).

4 Second, because of the state business tax incentives for employer paid healthcare the contractor can receive significant tax breaks. Which should result in additional savings for the contractor as well as the public works (please refer to chart #3 attached). GOOD FOR WORKERS Highly skilled workers will be attracted to public works jobs because they will have a good wage and good health and welfare benefits. Because these costs are already built in to the prevailing wage rate there would be no additional cost to employees and no additional cost to the employer. Plus the pre-tax benefits will save workers from having to pay tax on wage and then pay for their own benefits, which they usually will not do because of either no availability or excessive cost of some of the current plans offered. These employer sponsored plans should result in lower health care costs for the employee for comparable plans. GOOD FOR TAXPAYERS AND THE COMMUNITY As everyone here is acutely aware the issue of health care and its rising cost normally puts real pressure on workers, contractors and the community. The thing you may not know is that in a recent study of UMC indigent care costs by professor Jeff Waddups, that 27% of the estimated $40 million dollars a year comes from the construction industry. Since 30 to 35% of commercial construction work in Nevada is publicly funded this bill could have a real impact on reducing the indigent care burden to taxpayers in Nevada. It simply makes no sense for the public to fund a project, which provides for wages and benefits in the prevailing rate and then because employers don't provide any benefits that taxpayers get a second bill for indigent care and end up subsidizing employers who don't provide health care. This bill also will help to reduce cost shifting which is best described as workers and employers who do have health care fighting escalating cost while health care providers try to charge those who have health care plans to make up for the loss in revenue for those who do not have health care coverage. Let's only pay for health care once not twice, the money is already there in prevailing wage we just need the vehicle to encourage employers to use it.

5 This bill is long overdue, there is no extra cost for employers or public bodies there may even be cost savings. There is no down side for contractors or awarding bodies, this bill benefits all construction industry participants and more importantly it benefits our communities and our taxpayers. Remember there are no "free lunches" somebody has to pay the bill. The community should not have to subsidize free-riders through higher taxes, higher health care premiums and higher health care prices. This bill is a very reasonable way to solve part of the problem. I urge the committee to recommend approval of this very important bill. Thank you for your time and attention in this matter. Sincerely, James E. Sala

6 CHART #2 WW.p.rhr VaalCIon Supp Dun 8.2W Ses 5Flc r.joj% MM 0.60% Fwf Unemp 1QBZW Work Oomp 4.m OHI Uab 3% NV Unrrnp *melon A Annutty Annutty 8lH Aw#.nt CCCC ama m pun& H&W 0.mw w Mod STll mcrim=sh &W) Total savings for a Crew of 20 working 2000 hours in a year Employer Providing Health Insurance- Approx. Savings + $120,000 per year

7 CHART #3 Non-Signatory (No Health Insurance) Wage ($37.98 X 2000) $75,960 Total Taxable $75,960 Tax Burden (Total X.65%) 494 Signatory Wage ($26.61 X 2000) $53,220 Vacation 5,380 Health Insurance ($3.95 hr.) -7,900 Total Taxable $50,680 Tax Burden (Total X.65%) 329 Total Burden (crew of20) $9,875 Total Burden (crew of 20) $6,588 Difference -$3,330

8 \ BRIEF EXPLANATION OF AB 287 It also means that funds that could potentially go to build a To require that contractors performing work on public works projects provide bona fide health care for certain employees employed on public works new recreation center or park or fire station are being directed to cover the costs of the uninsured. A report presented several years ago to the UMC Board of Trustees, Clark County Commission, by Dr. Jeffrey Waddops, an Associate Professor of Economics at LlNLV entitled, "Employer Sponsored Health Insurance and Uncompensated All contractors bidding and performing work on publicly- Care: The Role in the University Medical Center in Clark funded construction projects valued at $100, or more are County," sought out to study the problem of the increased required to pay their employees what is referred to as the costs associated in caring for the uninsured. One of its key prevailing wage rate, which is established through a survey findings-which appeared in an earlier study as well as in the carried out by the Labor Commissioner's office. updated version-- found that the construction industry was responsible for one of the largest shares, proportionate to its By establishing a local standard for wages, it is possible to employment levels, of the uncompensated care costs incurred level the playing field in the bidding process, as well as to at UMC. promote high quality construction, protect the living standards of the construction workforce, encourage the use of training According to the report, there is no "free lunch." Somebody programs, and ensure tax-dollars are well-spent. has to pay the bill. The community subsidizes free-riders through higher taxes, higher health care premiums and higher Since the prevailing wage rate is broken down into a basic health care prices. wage rate plus a fringe benefit package (which can include health care and pension benefits), there is at the core of this The latest Census Bureau report found that the number of law the goal of making it possible for employers to provide uninsured Americans sky-rocketed to 43.6 million in workers who build our public facilities with healthcare Nevada ranks 1lth in the nation for those without health werage, while not being at a competitive disadvantage with insurance. Roughly 607,000 Nevadans under the age of 65 went,ther businesses. Basically, it is built into the program. From a without health insurance for at least part of public policy perspective, it is a smart way fortax dollars io be used to address the issue of health care coverage, and it can potentially relieve the burden on our public health systems. Nevertheless, there are contractors who obtain public works contracts and choose to not provide health care for their workers, but rather pay the entire amount in wages. Though this is legally possible, it creates a problematic situation. Those workers and their family members get sick and need medical attention, but have no coverage. And so they have to use our public health facilities. Ultimately, this sets up a scenario where taxpayers are having to pay twice for the medical care of these workers: at the front end, taxpayers pay the bill for the construction work, and then pay the bill when workers end up sick at a public hospital. In essence, these contractors shift the responsibility for health care for their workers to the tax-paying public. The region will see upwards of $5 billion in new public works construction in the coming years. It is imperative to take action to ensure that all workers performing that work will have health care coverage, and not be a burden on our public health system. This bill is a reasonable and cost-effective way to help make that goal happen, and avoid problems in the future. Moreover, since contractors are able to get a tax incentive for their health care payments, this bill would serve to stimulate a positive business climate, which ultimately translates into more solid companies being able to compete and thus offer lower prices to awarding agencies. H '7-7