This legislation would seem to be bad news for New Jersey taxpayers. The misleadingly titled “New Jersey Material Price Stabilization Act” is really nothing more than a payoff from an outgoing state legislator to the construction trade industry and could result in cost runups for local construction projects.
In Monroe, for instance, the school board will likely advertise bids for its new high school in February. If this legislation passes, it could leave that project open to price changes and cost hikes for which the board has not planned. The same goes for the firehouse being built in town.
And these are just examples. Charles Stiles in The Record called the legislation the “Politically Connected Contractors Protection Act of 2007”:
The bill would let contractors stick local governments with the cost of unforeseen spikes in construction materials, such as fuel, lumber and macadam. In effect, companies could charge local governments more than the original contract price. Towns could be refunded for drops in prices.
The builders, of course, like the bill.
“A few years ago, there was a dramatic run-up that caused problems, particularly with steel and copper [prices],” Kevin Monaco, lobbyist for electrical contractors, said in an interview Monday. “People talk about tremendous demand in China for goods, and building growth there causes upward pressure on the market. Natural disasters such as [Hurricane] Katrina cause upward pressure.”
Seems logical except that contractors should be monitoring the market and building their projections into their bids. That’s what towns and school districts do when they set their budgets for these projects.
The reality, as Stiles points out, is that the legislation would “saddle towns with higher operating costs.”
Some towns, they argue, will have to assign staff just to validate contractor claims of higher materials costs. Smaller towns will be forced to farm out the work to consulting engineers. Officials also worry that unscrupulous contractors will artificially lower their bids to get the work, knowing that there is a good chance they can charge towns for construction costs at a later date.
And local officials argue that the borrowing costs for projects will rise. Towns will be forced to approve large bond issues for unexpected cost fluctuations — another cost that could put pressure on local tax rates.
The bill would minimize the risk for contractors, and add to the work and possibly costs to taxpayers, says L. Mason Neely, a longtime fiscal watchdog for the New Jersey League of Municipalities.
“This bill is not going to help the general public,” he said.
So why pass something like this? Stiles offers one possible answer:
The Building Contractors Association of New Jersey, one of the bill’s supporters, contributed $180,000, most of it to Democratic candidates, according to Election Law Enforcement Commission records. The Mechanical Contractors Association, another supporter of the bill, donated $114,000 during the election cycle, records show.
The powerful AFL-CIO of New Jersey, the umbrella group that boasts 1 million members and a de facto auxiliary of the state Democratic Party over the past decade, also supports the bill. Giving contractors a chance to recover their losses for materials reduces the risk of layoffs.
If ever a piece of legislation demonstrated the need for campaign finance reform, this is one.
South Brunswick Post, The Cranbury Press
The Blog of South Brunswick
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Hank Kalet 