The 2023 Legislature is past its mid-season mark. Finance committees have passed their budget provisions, with negotiations between the House and Senate budget bills occurring this month.

With appreciation to the Association for General Contractors (AGC) for this overview, here are a handful of highlighted key items worth noting that directly affect the construction industry (a link to the full overview can be found at the end of this post):
 

• IIJA FORMULA MATCH
One piece of unfinished business from last session landed on the Governor's desk on February 6th and was signed into law. Minnesota Laws 2023 Chapter 6 appropriates $315.5 million from the trunk highway fund in FY 2023 to MnDOT for state road construction work on the trunk highway system. This amount reflects federal funds currently accessible under the infrastructure Investment and Jobs Act for the state's roads. 
 

• CAPITAL INVESTMENT / BONDING
The House passed a $1.5 billion dollar bonding bill and additional $400 million in cash-funded projects in early March, but the Senate failed to muster the necessary 3/5ths majority for passage. The final fate of a public works package in the form of a bonding bill will be dependent upon the required minority (Republican) votes in the Senate. While Senate Republicans have said they ultimately support passage of a bonding bill, they do not support a bill before action on tax cuts. The DFL majority has indicated they will use cash from the surplus if Senate Republicans do not support a bonding bill by the end of session. See a full list of programs and projects in the current bill.
 

• LIABILITY FOR CONTRACTORS / WAGE THEFT 
HF1859 / SF1988 makes construction contractors civilly liable when workers make a claim for unpaid wages or fringe benefits. "Contractor" means any person, firm, partnership, corporation, association, company, organization, or their entity, including a construction manager, general or prime contractor, joint venture, or any combination thereof, along with their successors, heirs, and assigns, which enters into a construction contract with an owner. An owner is also deemed a contractor and liable as such under the bill if the owner has entered into a construction contract with more than one contractor or subcontractor on any construction site.

A contractor can request payroll records of subcontractors. Language included in the House Labor and Industry omnibus bill requires a subcontractor to provide the information within 15 days of the request, but is silent on consequences if records are not produced in that time frame. The bill has one final committee stop in both the House and the Senate, and is included in a House omnibus bill. All versions include intended exemptions for contractors signatory to a collective bargaining agreement with a building and construction trade, and prevailing wage projects.

If passed, the bill would be effective on August 1, 2023, and would apply to contracts signed, renewed, amended, or modified after that date. 
 

• PAID FAMILY & MEDICAL LEAVE
A newly created paid family and medical leave insurance program would be funded by a payroll tax of 0.7% that can be evenly split between employers and employees and would begin in 2025. HF2/SF2 are moving through the legislative process with a similarly structured program despite some differing language between the bills. For example, the Senate lowered the total allowable leave time from 24 to 20 weeks. Similar to unemployment insurance, employees meeting the eligibility criteria can apply to the state foa tiered wage replacement. 
 

• LEGALIZATION OF ADULT-USE CANNABIS
HF100 / SF73 establishes a regulatory framework for adult-use cannabis and lower potency hemp edibles, moves the medical cannabis program under the newly created Office of Cannabis Management, establishes taxes on regulated products, creates grants to assist individuals entering into the legal cannabis market, amends criminal penalties, provides for expungement and resentencing of certain convictions, and more. Current language in both bills includes the definition of "safety-sensitive position," meaning a job, including in which an impairment caused by drugs, or alcohol, or cannabis usage would threaten the health or safety of any person and allow for testing. The bills have been heard in more than a dozen committees and language continues to be amended in the process.
 

• PROCUREMENT - CONSTRUCTION MANAGER AT RISK
HF1555 authorizes Construction Manager at Risk delivery model for municipalities and was passed to the House floor.

A similar bill was also heard in the House State Government Committee authorizing Hennepin County to use construction manager at risk method of project delivery. HF1784 also adds a provision to the Hennepin County competitive bidding statute that allows a contract of $500,000 or less to be made through sealed bids or by direct negotiation and without advertising for bids provided that a business that is directly solicited is certified as either a small business enterprise or a small business that is majority owned and operated by a veteran or a service-disabled veteran. This provision is notwithstanding the uniform municipal contracting law threshold, which states that sealed bids and direct negotiations may occur on contracts exceeding $25,000 but not $175,000. Both bills passed and can be taken up by the House for a full vote at any time during session. The provisions are also included in the House State and Local Government omnibus bill.
 

• SALES TAX EXEMPTIONS FOR CONSTRUCTION MATERIALS 
SF1519 would streamline the process local units of government must follow to receive the sales tax exemption on materials used in construction projects when a contractor initially purchases the project materials. A contractor purchasing materials for a city would continue to pay the sales tax, but a city could then file for a refund of the tax with the Dept. of Revenue based upon documentation of the material purchases. The bill was heard in Senate Taxes and might b included in a future omnibus tax bill. 
 

• "BUY CLEAN" TASK FORCE 
Both the House and Senate Climate and Energy omnibus bills contain provisions to create the Environmental Standards Procurement Task Force. AGC worked with stakeholders to craft a workable construct and includes building and transportation representation on the task force. If passed into law, the task force will examine issues surrounding implentation of a program requiring vendors of certain construction materials purchased to:

 • submit environmental product declarations that asses the lifecycle environmental impacts; and
 • meet greenhouse gas emission reduction standards established by the commissioner of administration.

The task force will also examine:

 • which construction materials should be subjected to program requirements; 
 • what factors should be considered for greenhouse gas emission reduction targets in material product and manufacturing processes;
 • a schedule for the development of standards for specific materials and to include those standards into the purchasing process;
 • financial incentives for vendors developing products;
 • the provision of grants to defer vendor costs;
 • how to coordinate with federal programs; and
 • how the issues set forth in this subdivision interact with other state agencies and policies.
 

• CONTRACTS - DUTY TO DEFEND & BANNING PROJECT-SPECIFIC INSURANCE 
HF865/SF754 adds "defend" to the definition of "indemnification agreement" in building and construction contracts. It also bands project-specific insurance beyond insurance programs such as owner or contractor-controlled insurance policies. The bill passed through necessary committees and can be taken up by the House or the Senate at any time during session. Language, which differs slightly between the House and the Senate, was also included in the House Judiciary and Civil Law omnibus and Senate Labor omnibus bills. 

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This full 2023 mid-session legislative overview can be found on AGC's website HERE.