Capitol Update – 10/11/2021
AB 416: Governor vetoes tropical deforestation bill (SBE / SRBX / CBA Opposed this bill and urged a Governor’s veto)
California Gov. Gavin Newsom (D) today vetoed a bill that would have required businesses selling certain products to the state to prove they’re not contributing to tropical deforestation. Environmental advocates had hoped Newsom would make California the first state to limit contracts to businesses that can prove their supply chains don’t engage in the destruction of tropical forests, which is a major contributor to global climate change. But in a veto message to the state Legislature, Newsom said he rejected the legislation because it would harm small businesses. “Deforestation is a major contributor to the climate crisis that California and the world are facing right now,” Newsom wrote. “Unfortunately, this bill’s extensive requirements would create a significant burden on California businesses — particularly small businesses — that are looking to participate in state contracts.” Newsom said under the bill, every time the state bought something that contained soy, the vendor would have been required to disclose where the soybeans were grown, who the farmer was, and where the soybeans were processed. “Most small business suppliers do not have access to that information,” Newsom said. The bill, authored by Democratic Assemblyman Ash Kalra and backed by numerous environmental groups, aimed to ensure that California isn’t contributing to deforestation through its contracts for goods and services. Proponents said the goal was to protect tropical forests that provide critical habitat to animal species and, in doing so, help mitigate climate change. “If you don’t know who you are getting it from, guess what? It is probably coming from where they burned down the Amazon and they’re pulling it out cheap,” said Judie Mancuso, founder and chief executive of Social Compassion in Legislation, one of the bill’s sponsors. “As long as you close your eyes to where that supply is coming from, we will continue to rape and pillage this Earth until there’s nothing left.” The American Forest & Paper Association opposed the bill, saying it would be “practically impossible” for manufacturers to determine the origin of recycled content.
Trade deficit in Aug. increases by $3B
The trade gap widened in August from $70.3 billion to $73.3 billion, according to the Commerce Department, representing a record high. The rise is attributed to increased consumer demand for imported goods. Full Story: The Wall Street Journal
Aug. construction spending steady
Spending on private projects edged down 0.1% in August as overall construction spending was flat on a month-to-month basis, according to the Commerce Department. Public construction spending increased 0.5%, with state and local projects up 0.8% while federal spending fell 4.6%. Full Story: Reuters
Unemployment Insurance Fund
In the most recent data from the EDD, California paid out a total of $175.7 billion in benefits under all the UI programs since the week of March 7, 2020, and through the week of September 18, 2021. The most current estimate from the EDD is up to $31 billion of unemployment benefits was paid out to fraudulent claims, consisting of $11 billion in known fraud and up to $20 billion in suspected fraud. While much of this fraud was driven by the federal pandemic enhancements, the sharp rise in fraudulent payments under the regular UI program included the components paid through the state fund, further increasing the debt that in the absence of budget action will be paid off by sharply higher taxes on the businesses that are now trying to recover jobs in the state. The most recent data from the US Department of Labor indicates California’s outstanding loans as of September 28 from the Federal Unemployment Account were $19.6 billion. Combining EDD’s May projections with the cash flow results to date, total debt is likely to reach around $30 billion by the end of 2022. This amount is far more than twice the peak of about $11 billion reached during the previous recession that began in 2008. That debt took 10 years to pay off through higher employment taxes imposed on businesses by both the state and federal governments. The latest federal debt data, however, also illustrates the high degree to which this soaring debt was the result of pandemic policies followed in California and, at best, in a few other states. Only 11 states and one territory (Virgin Islands) now have a debt to the federal fund. California constitutes 43% of the total.
What to Expect From a More Aggressive OSHA in the Next 12 Months
While OSHA, like much of the country, has been preoccupied with COVID-19 safety and health concerns in the past 18 months, employers should expect the Biden Administration and its new team at OSHA will turn their focus to other occupational safety and health issues as well.
Specifically, the agency’s regulatory agenda, as well as statements by officials, tell us that examples of key issues to watch include:
- Heat Illness Rulemaking and Enforcement
- Emphasis on Safety Enforcement in Transportation Tank Cleaning Operations
- Greater Focus on Concerns with Workplace Exposure to Hazardous Chemicals
- Assuring Safety Training is Provided in All Relevant Languages for the Workforce
- Enhanced Enforcement of Whistleblower Protections
These are just some examples of concerns that we should expect OSHA to emphasize. With the Administration and its supporters in Congress proposing unusually large increases to the agency’s budget – including its enforcement budget – the agency will have more money and staff to pursue its priorities. In sum, employers should be prepared for a far more active OSHA and should understand the agency’s likely regulatory and enforcement priorities.
Unemployment Data Update: March 2020 through September 25, 2021
Initial claims within California again jumped during the week of September 25, rising 26.1%, while claims in the rest of the country dropped 11.1%. In all, California contained 41.0% of all initial claims processed during the week. PUA initial claims—which are still being processed for claims covering the previously eligible period—rose to 7,530. California claims were at their highest level since the beginning of April 2021. Nationally, the California numbers kept the total at levels seen in August. Even as activity levels decreased due to the expiration of the federal enhancements, the revised backlog numbers awaiting EDD action rose 3.9% the week of September 11, while the backlog due to all sources rose 6.4%.
Unemployment Insurance Fund
In the most recent data from the EDD, California paid out a total of $175.7 billion in benefits under all the UI programs since the week of March 7, 2020, and through the week of September 18, 2021. The most current estimate from the EDD is up to $31 billion of unemployment benefits was paid out to fraudulent claims, consisting of $11 billion in known fraud and up to $20 billion in suspected fraud. While much of this fraud was driven by the federal pandemic enhancements, the sharp rise in fraudulent payments under the regular UI program included the components paid through the state fund, further increasing the debt that in the absence of budget action will be paid off by sharply higher taxes on the businesses that are now trying to recover jobs in the state. The most recent data from the US Department of Labor indicates California’s outstanding loans as of September 28 from the Federal Unemployment Account were $19.6 billion. Combining EDD’s May projections with the cash flow results to date, total debt is likely to reach around $30 billion by the end of 2022. This amount is far more than twice the peak of about $11 billion reached during the previous recession that began in 2008. That debt took 10 years to pay off through higher employment taxes imposed on businesses by both the state and federal governments. The latest federal debt data, however, also illustrates the high degree to which this soaring debt was the result of pandemic policies followed in California and, at best, in a few other states. Only 11 states and one territory (Virgin Islands) now have a debt to the federal fund. California constitutes 43% of the total.
Colorado contractors sue Denver over vaccine mandate
Alleging that vaccine mandates for contractors are unconstitutional, the Colorado Contractors Association is suing the city of Denver for requiring workers on public contracts to get inoculated against COVID-19. In a filing in the federal U.S. District Court for Colorado, the CCA and six other construction associations argued that the mandate violates the U.S. Constitution’s contracts clause because it substantially impairs firms’ existing contract rights with the city. Tony Milo, executive director of the CCA, said the organization is not anti-vaccine, but that Denver’s mandate is too restrictive compared to President Joe Biden’s executive order that companies with 100 employees or more must require vaccinations or have employees submit to regular testing. “Our members are pro-vaccine,” Milo told Construction Dive. “We’ve met with Denver officials and suggested mirroring the Biden plan, which is much more doable. But they flatly rejected all of our requests.”
Construction tech investment soars in 2021
Investment in construction technology, prompted by demands imposed by the pandemic, has more than doubled this year from the year-earlier period, according to a data analysis by Construction Dive. The funding total to date of $2.1 billion reveals a nearly 100% increase for early-stage projects and a 150% surge in funding for projects in later stages. Full Story: Construction Dive
US to retain tariffs on Chinese goods
President Joe Biden intends to hold China to trade agreements made during the Trump administration, keeping tariffs on many Chinese goods, including construction materials, in place. However, US Trade Representative Katherine Tai says an expired tariff-exclusion process would be reintroduced, holding out the possibility of relief for some Chinese producers. Full Story: Politico Engineering News-Record (tiered subscription model)
DPR Construction completes purchase of GE Johnson
California-based DPR Construction has completed its acquisition of Colorado Springs, Colo.-based general contractor GE Johnson Construction. The deal allows GE Johnson to operate under its current name while retaining CEO Jim Johnson and other leaders. Full Story: The Gazette (Colorado Springs, Colo.)
Construction industry leaders urge House to pass infrastructure bill
The House of Representatives has not yet voted on the $1 trillion bipartisan Infrastructure Investment and Jobs Act (IIJA), due to opposition from Republicans and disputes among members of the Democratic party. House Speaker Nancy Pelosi had first promised to bring it to the floor on Sept. 27. On Monday, Senate Majority Leader Chuck Schumer said his party will aim to pass both IIJA and a major reconciliation package by the end of October, CNBC reported, when major transportation funding programs will expire. CNN reported Monday that several Republicans who were formerly on board are now rethinking their support, saying it’s clear the infrastructure bill is linked to the $3.5 trillion reconciliation package. That package would expand a variety of social programs, tackle climate change and also add further investments in infrastructure
Megaproject pipeline still moving despite pandemic
The pipeline of new, billion-dollar megaprojects was much stronger before the pandemic put a strain on the construction industry, but there are still some big projects in various phases despite labor and materials shortages. Dodge Data & Analytics lists seven megaprojects that broke ground over the first eight months of 2021, including Enbridge’s $2.1 billion Line 3 replacement in Minnesota. Full Story: Construction Dive
Mark Smith
Advocate
California Builders Alliance
5370 Elvas Avenue ǀ Sacramento, CA 95819
Cell: 916.335.5072
Email: mark.smith@calbuilders.org