Fiscal impact
reports (FIRs) are prepared by the Legislative
Finance Committee (LFC) for standing finance committees of the NM Legislature. The
LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
Current FIRs (in HTML & Adobe PDF formats) are available on the
NM Legislative Website (legis.state.nm.us). Adobe PDF versions include all attachments,
whereas HTML versions may not.
Previously issued FIRs and attachments may be
obtained from the LFC in
F I S C A
L I M P A
C T R E P O R T
|
SPONSOR |
|
DATE TYPED |
|
HB |
471/aHTRC |
||
|
SHORT
TITLE |
Contractor & Subcontractor Registration |
SB |
|
||||
|
|
ANALYST |
Gilbert |
|||||
APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY04 |
FY05 |
FY04 |
FY05 |
||
|
|
$600.0 |
|
$600.0 |
Recurring |
Labor
Enforcement Fund |
(Parenthesis
( ) Indicate Expenditure Decreases)
REVENUE
|
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
|
FY04 |
FY05 |
|||
|
|
$600.0 |
$600.0 |
Recurring |
Labor
Enforcement Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates SB 178
SOURCES
OF INFORMATION
LFC Files
Response
Received From
Regulation
and Licensing Department (RLD)
New
Mexico Department of Labor (DOL)
SUMMARY
Synopsis of HTRC
Amendment
The House Taxation and Revenue Committee
amendment to House Bill 471 makes the following changes:
The language in section 1E is
stricken as follows:
E. For the purposes of
this section, "contractor" and "subcontractor" include any
party acting in such capacity regardless of professional licensure, including
public entities."
This
corrects the provision in this bill that made the registration requirement
applicable to all parties “regardless of professional licensure.” Unlicensed
contracting, which includes bidding on construction projects, is a misdemeanor
under the CILA.
The
amendment on page 3, lines 15 through 18 adds the
following language:
"[NEW
MATERIAL] REGISTRATION CANCELLATION, REVOCATION, SUSPENSION--INJUNCTIVE
RELIEF.--The director of the labor and industrial division of the labor
department may:
A.
cancel, revoke or suspend with conditions including probation the registration
of any party required to be registered pursuant to the Public Works Minimum
Wage Act for failure to comply with the registration provisions or for good
cause subject to appeal pursuant to Section 13-4-15 NMSA 1978; and
Synopsis of Original Bill
House Bill 471 amends the Public Works Minimum
Wage Act to require contractors and subcontractors who bid or work on Public
Works Minimum Wage Act (PWMWA) projects to register with the Labor and
Industrial Division (LID) of the New Mexico Labor Department (NMLD). The state
and political subdivisions would be prohibited from accepting bids from
contractors who do not provide proof of registration for any PWMWA project.
Significant Issues
As part of the registration process, contractors
must pay annual registration fees of $200. These fees, collected by the LID, are
deposited in a new labor enforcement fund. The LID is charged with
administration this fund and appropriations may be made to the LID for
administration and enforcement of the PWMWA.
The registration requirement would apply to any
party acting in the capacity of a contractor, including public entities, regardless
of professional licensure.
Unlicensed construction activity is a
misdemeanor under the Construction Industries Licensing Act (CILA). Therefore,
the provision in this bill that makes it applicable to everyone, regardless of
“profession licensure,” may inadvertently authorize, or create the appearance
of authorizing unlicensed criminal activity.
FISCAL IMPLICATIONS
The bill creates a new fund, the labor
enforcement fund. Funds deposited in the
labor enforcement fund are not subject to general fund reversion.
The bill would provide additional revenue to the
LID for administration and enforcement of the PWMWA. The NMLD estimates that
the $200 annual contractor’s fee would generate approximately $600.0 to the
labor enforcement fund.
Continuing appropriations:
This bill creates a new fund and provides for
continuing appropriations. The LFC
objects to including continuing appropriation language in the statutory provisions
for newly created funds. Earmarking
reduces the ability of the legislature to establish spending priorities.
ADMINISTRATIVE IMPLICATIONS
The bill would assist the LID in its enforcement
of the Public Works Minimum Wage Act and the registration requirement is not
expected to impact the licensing, permitting or inspection processes regulated
by Construction Industries Division (CID).
According to the NMLD, the labor enforcement fund
will bring revenue that is needed to help fund an additional FTE to perform
responsibilities associated with enforcing the Public Works Minimum Wage Act.
TECHNICAL ISSUES
The bill, as written, may conflict or create the
appearance of conflict, with the CILA. The provision of the bill, on page 2,
lines 19-22, makes the registration requirement applicable to all parties
“regardless of professional licensure.” Unlicensed contracting, which includes
bidding on construction projects, is a misdemeanor under the CILA.
Therefore, unlicensed persons could register
with the LID and be apparently authorized to bid on projects under that
statute, but doing so would constitute a violation of the CILA, thus subject
them to criminal charges.
OTHER SUBSTANTIVE ISSUES
According to CID, it is not uncommon for their
licensees to experience disciplinary problems that arise out of undercapitalization. By better enforcement of mandatory wage
requirements, a segment of the licensee base would, theoretically, be receiving
payment for services that it may not be receiving now due to violations of the
Minimum Wage Act. While better enforcement
of this statute may affect only a fraction of CID’s licensees, it could have a
positive impact on the economic health of the construction industries, which
could in turn eventually result in better licensee performance overall.
RLG/yr