GBC Reports..., February 5, 2003

Governor's Budget Promotes Jobs, Opposes Tax Increases, Cuts Spending, Offers Cost-Saving Reforms
Governor George Pataki submitted his 2003-04 State Budget proposal to the Legislature last week, facing the most serious state deficit in decades. The situation and his proposal will have a vast impact on all sectors of the economy including the construction industry. The Governor chose jobs and economic development over spending and tax increases. It begins what promises to be a lengthy and difficult budget process that could last well into the year. 

How will it affect the construction industry? GBC has always taken the position that a sound statewide economy is our best hope for a growing and prosperous construction industry in all its sectors. This budget may or may not help that. Only time will tell. GBC has spent much time over the years working with The Business Council of NYS, whose major goal is to preserve beneficial tax cuts and control spending. We will continue that effort, believing it is best for the long-term health of the State and the industry.

A few of the major proposals directly affecting the building contractor are: 

• Reform of School Building Aid: The Governor recognized last year that school building aid, the most generous in the nation, needed reform. He continues in that effort this year by pursuing priority-based project selection and simplified state aid calculation. The former will establish a priority system on all projects approved after February 1, 2003 that address health and safety problems and relieve overcrowding. In the latter, projects approved by the voters after July 1, 2003 will be eligible for state aid based upon the district's current state-aid ratio, supplemented by a 10% enrichment for instruction-related projects. There are other proposed changes that are apparently designed to control costs. The Governor points out that from 1994 to 2004 the amount of building aid went from $536 million to $1.1 billion. He seeks to temper that.
• SUNY Capital: In 1998 the Governor and Legislature initiated a multi-year capital program. SUNY received $2 billion and CUNY $1 billion over five years. The Governor now proposes a $2.5 billion SUNY program and a $1.2 billion CUNY program over an undetermined number of years. Much of the SUNY program will be for renovations and health and safety. (See our public agency article below.)
• Mandate Relief and Wicks Law: To help cover the deficit, the Governor has proposed a host of reforms and one, again, is the full repeal of the Wicks Law, which he estimates will save 10% on building construction cost. This is not the first time a Governor has made such a proposal, but in this environment it may be taken more seriously, since many of the other choices are so much more difficult. 
• And Others: There are many other proposals that stress high technology, capital growth, economic development in general, affordable housing and transportation/infrastructure programs. We will provide more detail in future GBC Reports.

The State Budget process is always a long and difficult one. This year it will be tougher. While it may bring sacrifice for many, it also may provide opportunities in non-budget areas. Labor Law 240 and procurement reform may be two such areas. 


GBC Leadership Meets Again with State Agency Heads 
In late January the GBC contractor leadership met with the heads of the three major state building agencies - Maryanne Gridley of DASNY, Wayne Diesel of SUCF and Bill O'Connor of OGS Design and Construction and some of their staff. It was the second such meeting we have held in the last several months after each agency addressed the GBC Annual Meeting last summer. Progress is being made.

SUCF and DASNY both announced they were adopting OGS-type field order procedures, which would be designed to improve the flow of paper and money on changes in their work. SUCF even announced they were working on a better no-damage-for-delay clause in their contracts. DASNY announced they were attempting to improve closeouts by dedicating staff people exclusively to this function. Both DASNY and SUCF felt their staff's morale and attitude were improving as a result of some of these changes. The proof will be in the implementation. As Members experience these changes over the next year, GBC would welcome feedback. 

In terms of future markets, the meeting took place prior to the Governor's announcement of his budget. SUCF anticipated a new five-year plan and DASNY felt current workloads would not seriously diminish. Future workloads, however, would be impacted. While private colleges and health institutions seem to be slowing, DASNY sees the growth of public-private partnerships in the high tech area. SUCF acknowledged their program would be primarily in the renovation, maintenance and modernization area. New academic facilities will rely more and more on private donations. GBC expressed concern about the procurement method for many of these quasi-public projects in response. OGS's future workload was very uncertain, but they felt there would be greater need for homeland security projects and continued correctional work. 

All three agencies expressed concern over the prospect of losing more workforce as a result of retirement incentives, which could impact the management of their programs. 

GBC and the agencies also talked briefly about our respective legislative programs and promised to work where we can on mutual goals. DASNY announced they would again seek authority to provide services for local schools, which GBC voiced opposition to as unfair public sector competition for the taxpaying private sector. 


Welcome New Members!
We're pleased to welcome the following General Contractor to GBC Membership:
Retail Project Management of NY, Holbrook. Represented by Bob Bonett, President.

Welcome also to the following new Specialty Member:
Total Structural Concepts, Inc., Greenlawn. Represented by Michael Schiavo, Sec./Treas.

And welcome to the following new Associate Member:
Agovino & Asselta LLP, Mineola. Represented by Leonard M. Kessler, Esq., of Counsel.


Labor Law Battle Being Organized
GBC, the home builders, subcontractors and many elements of the insurance industry will meet next week to begin planning a strategy to address our most important legislation issue - Labor Law 240-241 reform. A strong coalition is forming. The continuously rising insurance cost is fueling a potentially strong effort. More and more legislators know we have a problem and seem interested in helping. GBC and the NYS Builders Association (homebuilders) have drafted a revised reform bill which we are optimistic will have a chance for movement. Our long-time sponsor, Senator Dale Volker of Buffalo, is reviewing it now. The GBC Membership and construction industry will be called upon soon to seriously mobilize on this matter. It is the only way we will succeed. Stay tuned. 


Federal Design Build Seminar Scheduled
The AGC of Washington DC, AGC of America and Federal Agency Partners have jointly developed a two-day program covering the basics of Design Build with the Federal Government. The program is scheduled for February 19-20 in Arlington, Virginia at the Ritz Carlton, Pentagon City. Seminar topics include the Federal planning process, request for proposals (criteria development), selecting a contractor, and contract administration after award. Cost to AGC members is $295 and the Ritz Carlton is offering a $150 room rate to attendees. Please contact Brendan Manning for an electronic or faxable copy of the agenda and registration form. 


CFMA Releases 2002 Financial Survey
The Construction Financial Management Association (CFMA) recently published their 2002 Construction Industry Annual Financial Survey. The survey has financial data on 546 construction firms nationwide including specialty firms. As part of the survey, companies were asked what their top five challenges will be in the next five years. The top five named were: 
1) General liability insurance costs 
2) Sources of future work 
3) Shortage of trained field help 
4) Healthcare insurance costs 
5) Workers' compensation insurance costs

Learn how your company's financial performance measures up by Contractor Type, Revenue, and Geographic Region. For more information on ordering the survey, visit the CFMA website at www.cfma.org. 


Supreme Court Rejects Appeal in PLA Case
On January 27, the Supreme Court refused a request by the AFL-CIO Building and Construction Trades Department to hear its appeal of a lower court ruling that affirms a White House order prohibiting project labor agreements on federally funded construction projects. That ruling was the 2001 case, Building & Construction Trades Department AFL-CIO v. Joe M. Allbaugh. Shortly after Bush took office in January 2001, he issued an order prohibiting mandatory PLAs on federal projects. Later that year, the BCTD and others successfully sued in U.S. District Court to block enforcement of the directive. In November 2001 the Justice Department appealed the district court decision and, last July, scored a victory when the U.S. Court of Appeals reversed the lower court ruling and affirmed the executive order. 


AGC Accepting Applications for Accident Victims Scholarship
AGC of America is now accepting applications from students with a parent who was working for an AGC company when he or she was killed on a jobsite. The student must be enrolled or planning to enroll in a state-approved, post-secondary, certificate or degree-granting institution. The scholarship will be awarded to family members that have experienced a death since December 31, 2002 and will be awarded in varying amounts. The deadline for submission is July 1, 2003, and scholarships will be awarded in August 2003. Please contact Brendan Manning at GBC for an application.


New AGC Catalog on the Way 
The new AGC Products and Services Guide is on its way to all GC/CM and Specialty AGC members. If you don't receive a copy or if you'd like additional copies, contact Krista Rice at GBC or order a copy on line at www.agc.org. You can also browse and purchase any of the items in the catalog at the AGC of America secure website. 


Upcoming Events
Please check the GBC Calendar for a complete list of upcoming events, with links to registration forms.