Kukurin
Contracting, Inc. of Export, PA
Before the
Senate Committee on
Environment
and Public Works
The Water
Investment Act of 2002
February 26,
2002
Good morning, Mr. Chairman and distinguished members of the Committee. My name is Bill Kukurin and I am President of Kukurin Contracting, Inc. located in Export, PA. On behalf of Associated Builders and Contractors (ABC), I would like to thank Chairman Jeffords, Ranking Member Smith and the members of the Senate Committee on Public Works for providing me with this opportunity to discuss the Water Investment Act of 2002 and the important role it could play in improving our nation’s water quality and infrastructure. I will be summarizing my comments, but I would request that my full statement be submitted for the official record.
For nearly 30 years, Kukurin Contracting, Inc. has been operating in Western Pennsylvania as a family owned and operated business. Kukurin Contracting, Inc. has 125 employees and focuses primarily on municipal work, specifically the construction and maintenance of water and sewer lines, pumping stations, water tanks, reservoirs and sewage treatment facilities. We have built our reputation through providing quality workmanship for our clients and safe, healthy worksites for our employees. In 1997 and 1999, Kukurin Contracting, Inc. was recognized by ABC National as one of the leaders in the construction industry and presented the annual Excellence in Construction Award for our work on the Long Run Sewage Retention Facility and the Plum Creek Sewage Retention Facility, respectively.
Kukurin Contracting, Inc.
has been a member of the Western Pennsylvania Chapter of ABC for 20 years. ABC is a national trade
association representing more than 23,000 merit shop contractors,
subcontractors, materials suppliers and construction-related firms within a
network of 82 chapters throughout the United States and Guam. Our diverse membership is bound by a shared
commitment to the merit shop philosophy within the construction industry. This philosophy is based on the principles
of full and open competition unfettered by the government, and
nondiscrimination based on labor affiliation and the awarding of construction
contracts to the lowest responsible bidder, through open and competitive
bidding. This process assures that
taxpayers and consumers will receive the most for their construction dollar.
With 80 percent of the nation's construction workers choosing not to be
represented by a union, ABC is proud to be their voice.
I would like to commend
Chairman Jeffords and Senators Smith, Graham and Crapo for introducing S. 1961,
the Water Investment Act of 2002. I
also commend this committee for undertaking a comprehensive look at our nation's
water infrastructure needs. The costs
of insufficient attention to clean water issues are indisputable. Non-point source pollution, leaking toxics,
stormwater run-off and coastal pollution pose grave risks to water quality. Our
nation's water quality and "environmental" infrastructure could not
be more vital to our health, safety and overall quality of life.
The Water Investment Act of
2002 would serve to ensure the environmental and financial sustainability of
our nation’s water programs. The measure
would authorize the Clean Water and Safe Drinking Water State Revolving Loan
Fund (SRF) Program at $35 billion over 5 years. The SRF program allows states to provide low-cost financing to
communities for the construction, repair and rehabilitation of wastewater
collection and treatment facilities.
While this legislation seeks to provide additional resources to states
and localities to aid them in meeting water infrastructure needs and increased
state flexibility to states in administering their water programs, the
imposition of the Davis-Bacon Act to this vital program would negate many of
these efforts.
While ABC members have concerns
regarding a number of wastewater needs, I will focus my comments today on
funding for construction of wastewater treatment facilities and on the
detrimental impact that the discriminatory and antiquated Davis-Bacon Act would
have, if included in the legislation, on these vital projects.
The
commitment Congress made with the states beginning in 1972 to clean up the
country's waters by funding projects relating to water supply and wastewater
treatment is responsible for the significant progress made in restoring the
quality of our nation's waters. When
Congress decided to turn the program over to the states in the Water Quality
Act of 1987, a schedule was set to phase out direct grants for construction and
provide seed money to the states to establish revolving loan funds. These funds would eventually become
self-sustaining and fund the states' wastewater treatment construction needs.
All
states have established the legal and procedural mechanisms to administer the
new loan programs and are now eligible to receive State Revolving Fund (SRF)
capitalization funds under title VI.
Some with prior experience using similar financing programs moved
quickly, while others had difficulty in making a transition from the previous
grants program to the one that requires greater financial management expertise
for all concerned. Moreover, many states
have complained that the SRF program is unduly complicated by Federal
Rules--some contained in the statute, others in EPA guidance--even though the
states were intended to have greater flexibility.
Small
communities and states with large rural populations are having the largest
share of problems with the SRF program.
Many small towns did not participate in the previous grants program and
consequently are likely to require major projects to achieve compliance with
the law. Yet these communities often
lack an industrial tax base and thus face the prospect of very high per capita
user fees if their citizens are required to repay the full capital cost of
sewage treatment projects. According to
testimony from the General Accounting Office, SRFs will only meet about
one-third of the states' funding needs and will generally be unable to meet the
needs of disadvantaged communities.
States simply have not been provided enough time or seed money to
sufficiently capitalize their revolving funds.
There are many small communities that do not have the capital base
necessary to support a state revolving loan fund.
ABC
believes inadequate and insufficient wastewater facilities represent a large
segment of clean water problems facing our nation today. It is imperative that
the federal government immediately address our country’s need for clean water
infrastructure investment. ABC is
encouraged by the efforts being made by the Senate Environment and Public Works
Committee and the House Transportation and Infrastructure Committee and
supports the arrangements being made for small communities, such as modifying
the procedural or repayment requirements of the SRF loan program.
Combined
sewer overflows (CSO) are an example of a significant problem in over a
thousand cities nationwide. Billions of
dollars are needed to clean up previously overlooked and outdated systems. Nearly 1,200 municipalities have combined
sewers where domestic sanitary sewage, industrial wastes, infiltration from
groundwater and stormwater runoff are collected and treated together. These systems serve approximately 40 million
persons, mainly in older urban and coastal cities.
Combined
sewers are categorized as point sources under the Clean Water Act, yet they
have not been considered a high regulatory or permitting priority for EPA or
states. There are no express provisions
in the Clean Water Act dealing with CSOs, except to the extent that they are
subject to permit requirements and deadlines as are other point sources. The cost of controlling CSOs is potentially
very high and local governments say that resources are not available for a
program of that size. Conceivably, an
extended program can also address improved drinking water filtration or solid
waste disposal facilities. ABC supports
the idea of allowing localities greater flexibility to consider costs and
site-specific factors when designing various wastewater treatment facilitates.
ABC also supports continued
federal funding to further capitalize state revolving funds for the construction
of wastewater treatment facilities or environmental infrastructure
projects. Clearly, our clean water
needs are vast and the federal government must maintain a certain level of
participation. Shifting resources to
state revolving funds to provide a self-sufficient program and stable revenue
source is a productive use of federal funds.
Requirements for state revolving funds should be as uncomplicated as
possible to facilitate an accessible and efficient program.
Other forms of innovative financing and
cooperative efforts will expand the power of federal resources and should be
encouraged. Privatization and
public-private partnerships for example, are being used more frequently to
augment federal, state and local activities--and they work. These efforts bring experience, business
savvy and financial strength of the private sector to government entities for
the benefit of all. ABC supports the
provision in S. 1971 that would allow private utilities to access Clean Water
and Drinking Water SRFs.
ABC urges Congress to rely on market incentives rather than pursuing taxes to induce environmental conformance. To that end, ABC commends the sponsors of the legislation for including a provision that encourages competitive bidding of all projects to help reduce overall project costs. In addition, any funding plan should consider that states would have to impose user fees to meet their share requirements.
Continued
federal funding is not a panacea. A
long-term integrated plan that takes into account new environmental problems
and establishes realistic and achievable clean water goals should be
adopted. We also believe every state
must develop an environmental needs inventory and strategy for the future to ensure
efficient management of resources.
DAVIS-BACON
ACT
ABC commends the sponsors of this vital legislation for not expanding
burdensome Davis-Bacon Act requirements to the Clean Water and Safe Drinking
Water State Revolving Funds. The SRF
program has operated efficiently without Davis-Bacon since 1995, and ABC
encourages the committee to continue to allow states and municipalities the
flexibility to operate the SRFs without this expensive and discriminatory
requirement.
During this time of economic
recession, while fighting a costly war on terrorism and facing a federal budget
deficit, any expansion of the Davis-Bacon Act would be fiscally irresponsible
and unjustified. In an era of
constrained resources, the promotion of higher federal construction costs to
the benefit of a few and to the detriment of the American taxpayer can no
longer be accepted. The Davis-Bacon Act unnecessarily raises the cost of
federal construction by an average of 5-15 percent and an enormous 25-38
percent in rural areas—where clean water infrastructure improvements are most
desperately needed. This is a needless waste of taxpayer dollars and thwarts
the progress of additional projects that could be built.
Davis-Bacon is a relic of
the infamous Jim Crow era. The law,
enacted in 1931, was intended to prevent minority workers, mostly from the
South, from competing with northern, mostly union construction firms for
federal contracts in the North.
Conceived during a time of discrimination, the Act still has much the
same effect today. Davis-Bacon
disadvantages small, emerging, and minority businesses. Davis‑Bacon discourages many qualified
small and minority-owned contractors from bidding on public projects, because
the complex and inefficient wage and work restrictions make it nearly
impossible for small businesses to compete with well-capitalized
corporations. To seek Davis-Bacon
contracts, small and minority owned firms must not only pay the “prevailing
wages” and adopt inefficient work practices and rigid union-based job classifications,
but also must expose themselves to huge compliance costs and burdensome
paperwork regulations. As a result, few small and minority firms win
Davis-Bacon contracts, and many others give up trying.
According to the
Congressional Budget Office, repealing the Act would save taxpayers $10.5
billion over 10 years. Eliminating
Davis-Bacon requirements would reduce unnecessary federal spending and
guarantee more construction for the dollar for important public projects such
as water infrastructure needs, schools, roads, bridges, low-income housing,
hospitals and prisons. It would also
remove barriers that preclude emerging businesses and entry-level workers
(helpers) from working on public projects paid for with their own tax dollars.
If funds wasted on Davis-Bacon wage rates were utilized in a more efficient
manner, they could be put towards meeting our overwhelming national demand for
environmental and infrastructure improvements.
The federal Davis-Bacon law
hurts states and localities because its requirements are imposed even if the
federal government contributes a minimal amount of funds. For example, the federal government could
offer a small amount of money for a primary state, local or privately funded
project, and the artificially inflated Davis-Bacon wage rate would have to be
paid to all workers on that job. Often
times these increased costs nullify the federal contribution and states are
better off not accepting federal help.
The federal government should not impose costly Davis-Bacon requirements
on financially strapped state and local governments.
Especially in the case of state
revolving funds, where the federal government does not directly appropriate
money for projects, Davis-Bacon requirements are not applicable. In the Clean Water Act of 1987, Davis-Bacon
requirements sunset on all SRF assistance in FY 1995, and has not applied to
such funds since. This loan program,
whereby the funds are repaid and then revolved, is no place for federally
mandated Davis-Bacon.
Davis-Bacon
violates states’ rights for those twenty
states that have chosen not to have a state prevailing wage law because the
wage mandates inflate construction costs.
These states should not be saddled with the outdated federal law, which
serves as an expensive and burdensome “unfunded mandate” imposed on state and
local governments. In fact, even states
that have “little Davis-Bacon” laws have voiced their opposition to
federally-mandated Davis-Bacon on Clean Water Act SRF projects. When the building trades sued to re-impose
Davis-Bacon on CWSRFs, thirteen states, six of which have their own state
prevailing wage laws, formally wrote the EPA in opposition to the
re-application of federal Davis-Bacon requirements.
CONCLUSION
In
conclusion, Mr. Chairman, ABC strongly supports the efforts being made by the
Environment and Public Works Committee to ensure that our nation's water
quality is improved. ABC supports the
Water Infrastructure Act of 2002 as currently written. We believe that with
full funding and without any expansion of the Davis-Bacon Act our water
infrastructure needs will begin to diminish and our nation's water quality will
dramatically improve. It is imperative
to improve the efficiency of the State Revolving Loan Fund program by not imposing
outdated and unnecessary prescriptive administrative requirements the federal
government places on municipalities, namely the Davis-Bacon Act.
On behalf of Associated
Builders and Contractors, I again want to thank you and the members of the
Committee for the opportunity to testify here today, and I will be happy to
answer any questions you may have.