NASBP Focal Point - June 24, 2021

Legislative News at a Glance

Thirteen state legislatures, DC, and U.S. Congress are currently in session: California, Delaware, District of Columbia, Federal, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, and Wisconsin.

Territories: American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and U.S. Virgin Islands.

*Click here for a complete 2021 calendar of the states’ legislative session dates.

In This Issue

Federal Report
Infrastructure Deal
Build Local, Hire Local Act
State Report
Performance and Payment Bonds
Retainage

Federal Report

Infrastructure Deal

As we go to press, a bipartisan agreement on an infrastructure spending package has been reached. While the specifics have not been released, the deal was brokered by 10 senators and presented to the White House late last night.

The five-year deal includes $579 billion in new spending with a total price tag of $953 billion. The Republicans withdrew their support for indexing the gas tax to inflation and a user fee for electronic vehicles. Rather, revenue pay-fors may come from expanding enforcement staff at the Internal Revenue Service (IRS) for collecting delinquent taxes owed to the U.S. Treasury, expanding tax-advantaged financing options, such as municipal bonds and private activity bonds, and public-private partnership agreements (P3s).

Meanwhile, on the other side of Capitol Hill, Speaker Pelosi announced that the House will not consider infrastructure legislation until the Senate passes – in tandem – a bipartisan infrastructure bill and a reconciliation bill, supported by the administration, which addresses paid family leave, child care subsidies, climate investments, free community college, and an expansion of Medicare.

Senators Manchin and Sinema will be asked to support President Biden’s reconciliation bill (nearly $4 trillion) in exchange for the president’s support on an infrastructure bill, which falls short of what was supported by the progressive wing of the party. Enactment of both bills will occur if the administration can assure House and Senate progressives that their priorities are met in the reconciliation package without needing Republican votes.

The Senate adjourns today for two weeks and will begin to consider both measures in July.

The “Build Local, Hire Local Act”

H.R. 3474 (Bass-D-CA) and S.1827 (Gillibrand-D-NY) are bicameral legislation reintroduced this year to expand infrastructure programs. Specifically, Section 125 amends the Small Business Investment Act of 1958 (15 U.S.C. 694b (a)(1)(A)) by increasing the contract size of the SBA Surety Bond Guarantee Program from $6.5M to $10M.

Recently, NASBP was contacted by the Senate Small Business Committee concerning improvements to the Bond Guarantee Program for inclusion in the American Jobs Program. An item for consideration was to increase the contract size to $10M and up to $20M upon approval from a federal agency.

State Report

Performance and Payment Bonds

Texas House Bill 1477

UPDATE (in bold) TX H.1477 (Bell) Amends Sections 2253.001 (3),(4) to expand the scope of the Texas Little Miller Act to require performance and payment bonds for public work contracts on public property leased to a nongovernmental entity. A nongovernmental entity leasing public property would require its prime contractor to furnish performance and payment bonds. A public work contract does not include “any contract entered into by a nongovernmental entity that leases property from a river authority created pursuant to Section 59, Article XVI, Texas Constitution, that owns electric generation capacity in excess of 1,000 megawatts.” This bill passed the House on May 5, passed the Senate on May 25, and was sent to the governor on May 29.

On June 18, Governor Abbott vetoed this bill. According to the veto statement, H.1477 was not signed into law because it “would make the government entity responsible for the prime contractor obtaining a bond to protect subcontractors. If no bond is obtained and the prime contractor does not pay subcontractors, the government entity would be responsible for payment because the bill waives the government entity’s sovereign immunity in this situation.”

NASBP is following up on this development, particularly in light of the fact that this bill passed unanimously through both chambers. We have been in contact with Texas members to see if we can get more information from the bill’s sponsor or if a potential veto override could be in order during the special session on July 8.

Retainage

Texas House Bill 692

TX H.692 (Shine) Amends Section 2252.031, Government Code, by adding Subdivision (6) to read as follows: “if the total value of a public works contract is $1 million or more, a governmental entity may not withhold retainage in an amount that exceeds five percent of the contract price and the rate of retainage may not exceed five percent for any item in a bid schedule or schedule of values for the project, including materials and equipment delivered on-site to be installed…For a competitively awarded contract with a value of $10 million or more, and for a contract that was awarded using a method other than competitive bidding, a governmental entity and prime contractor may agree to deposit in an interest-bearing account the retainage withheld on periodic contract payments.”

On June 15, 2021, the governor signed this bill into law.

If you are aware of any bills impacting the industry, please reach out to Larry LeClair, NASBP’s Director of Government Relations, and let us know.

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The National Association of Surety Bond Producers

www.nasbp.org

Focal Point is an e-bulletin sent to members and friends of the National Association of Surety Bond Producers when most state legislatures are in session and as needed thereafter. To obtain copies of Bills or other materials discussed above, contact advocacy@nasbp.org. Copyright © 2021 NASBP^®. All rights reserved.