Date Requested: January 29, 2015
Time Requested: 12:05 PM
Agency: Highways, Division of
CBD Number: Version: Bill Number: Resolution Number:
2682 Introduced SB361
CBD Subject: Labor


FUND(S):



Sources of Revenue:

Other Fund State Road Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The West Virginia Department of Transportation, Division of Highways (WVDOH) is responsible for maintenance, construction, and operations for over 92% of the road system in the State of West Virginia. To meet these responsibilities, the WVDOH utilizes revenue from both federal and state sources and implements projects through the use of its own employees as well as advertising, letting, and awarding construction contracts. Currently, the WVDOH is required to use WV State Prevailing Wage Rates if the contract is funded with only state funds and Davis-Bacon or WV State Prevailing Wage Rates, which is higher, on federally constructed contracts. Historically and currently, the majority of the WVDOH construction contract program is federally funded. In consideration of the Davis-Bacon wage rate requirement on the majority of the WVDOH program and the existing labor pool, it is anticipated little to no savings would materialize as a result of the legislation.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


    See Fiscal Note Summary above for information regarding the fiscal impact of this bill on the State of West Virginia.



Memorandum


    The WVDOH advertises, lets and awards construction contracts for new highway construction as well as to operate and maintain existing highways. Historically, the predominant funding source for WVDOH construction contracts has been federal aid funding, representing approximately 80% of construction contracts. The federal aid funding has included the WVDOH’s annual apportionment of federal-aid highway funding, earmarks, and the recent America Recovery and Reinvestment Act of 2009. The overall size of the WVDOH construction program has varied only slightly based on previous revenue streams and, based on current projections, is expected to remain at the same level in the future. The construction contract program is estimated at approximately $400 mill per year of which over $300 mill is federal aid funded and thus, subject to the Davis-Bacon federal wage rate requirements. The consistency of the program including the large percent of federal aid funding has allowed the potential bidders to forecast their material, labor, and equipment needs accordingly. This stability in program size including large percent of federal funding plays a significant role in the ultimate labor rates utilized.
    
    The State Prevailing Wage Rates only apply to projects that are funding exclusively with state revenues. Given the percentage of state funded only construction contracts (approximately 20%), it is not expected the labor pool and rates utilized by the contracting industry would differ much, if at all. The need for maintaining a skilled labor force with labor rates driven predominately by federal funding, the elimination of a State Prevailing Wage Rate is anticipated to have little to no effect on the overall cost of a highway construction contract.
    
    



    Person submitting Fiscal Note: Lorrie Hodges
    Email Address: lorrie.a.hodges@wv.gov