March 11, 2022
CEO REPORT
Advocacy Never Takes a Holiday                         

Recent geopolitical events in Ukraine have jolted the world economy, threatening our sense of security and bringing about the latest “new normal” to life in the 21st century. Americans again face a moral reckoning of what being the world’s police force means when trouble arrives at the front door disguised as higher consumer prices and supply shortages.

When viewed through the lens of the American economy, the most prevalent pawn in this complicated story has been the spike in gasoline prices. Not unexpectedly, the outcry for relief has landed squarely in the political arena where politicians have been quick to take the bait and promote easy solutions that appeal to populist sentiment. This past week, Governor Walz joined a growing chorus of governors asking congress to enact a “Gas Tax Holiday” and suspend the federal 18 cent per gallon federal gas tax. In a tortured twist of irony, the appeal comes just a few short months after Congress passed the largest infrastructure investment package in history (IIJA Act), leaving industry advocates dumbfounded to comprehend how a hard fought “win” might be undermined in short order?  It is also significant to note that Governor Walz ran for office promoting a large state gas tax increase to bolster infrastructure investment. So why the change of heart?

Not to be outdone, Minnesota legislators have also stepped into the fray, introducing legislation to suspend the state 28.5 cent gas tax for the summer travel season and backfilling the lost revenue with state budget surplus dollars. To be fair, it is an election year, and it is worth noting that playing gas tax politics is not exclusive to either political party. The challenge is separating myth from reality and fact from fiction. Gas taxes generate the largest share of revenue that funds our infrastructure, yet they make up a small (somewhere around 15%, depending upon price per gallon) but not insignificant portion of the retail price of gasoline. Eliminating the tax would not necessarily correlate to a corresponding reduction in the price of gas, because so much of the world oil market is driven by factors beyond consumer-driven variables and tax policy.  Additionally, even if lost tax revenue is backfilled with other sources, how much political courage will policymakers have to reinstate (“raise”) the tax once it is suspended, and will reinstatement become another election year ploy?

While the populist appeal of gas tax politics is obvious, the risk to sustain and hold hard fought industry advocacy gains in the face of these efforts is real. Advocacy never takes a holiday, because the favorable political circumstances and factors present at specific points in time change quickly. The political process is expressly designed to accommodate and respond to societal change. Our industry is compelled to therefore engage and respond accordingly. I urge every member to leverage the AGC advocacy tool via the button below and let Governor Walz and your state legislators know how you feel about this issue. 2022 is lining up as a significant year for the construction industry at the legislature with a large-scale bonding bill in play and significant surplus dollars ($9.2B) on the table for distribution.
GOVERNMENT AFFAIRS NEWS
State Legislative Session Week 6: Calls to Act

Earlier this afternoon, AGC of MN issued a dual action alert to all members. Please take a couple minutes to communicate with policymakers about these issues. Thank you!
Action #1: Unemployment Insurance Trust Fund Restoration

Recently, the Minnesota Senate passed a bill providing the $2.73 billion needed to restore the Unemployment Insurance Trust Fund by March 15. Now, the House needs to quickly pass the bill or employers will see UI payroll taxes skyrocket. Just last week, the State announced that the budget surplus grew to a historic $9.25 billion. Legislative leaders and the Governor met several times during the week, but did not reach a final agreement. The Senate Republicans, along with Governor Walz, support using surplus dollars to replenish the fund. House Democrats support restoring the fund over time and with expanded eligibility for certain hourly workers. Additionally, the UI issue has been linked to Frontline Worker bonuses, often referred to as Hero Pay. The legislature did not come to an agreement last year regarding these bonuses. The House Democrats proposed using one billion from the state surplus for Frontline Worker bonuses, but Senate Republicans oppose increasing the current funding pot of $250,000. Leaders are expected to meet again next week.

Now’s the time to contact your House representatives and urge them to support the passage of the UI Trust Fund fix legislation before the March 15 deadline.
Action #2: State Gas Tax “Holiday”

This week, Governor Walz expressed an openness to a state gas tax holiday from Memorial Day until Labor Day. A small group of legislators in the House have introduced a proposal to this effect. Although the bill has not been scheduled for a hearing, it’s important to let the Governor and legislators know the construction industry is opposed to these types of shifts. As studies have shown, this proposal does not translate to consumer savings at the pump and leaves the transportation system playing catch up with funding even more.

Lost fuel tax revenue over the summer months equates to over $200 million dollars. Even if the State would use surplus money to backfill the lost revenue, transportation would continue to be underfunded because the State needs at least $200 million more to match and leverage the federal dollars coming in through the Bipartisan Infrastructure Law. 

Suspension of these user fees creates uncertainty, simply shifts money around, and does not guarantee savings at the pump for consumers.
Utility Locating Legislation

The House Transportation Committee heard HF 3600, a bill that directs owners or operators of underground lines and facilities to provide quarterly reports to the Office of Pipeline Safety. The required reporting is on excavation notices received from Gopher State One Call as well as underground facility damages. A recent national survey conducted by the Associated General Contractors of America found significant flaws in the current 811 utility location system. Nationally, most contractors said that calling 811 often leads to inaccurate line marking and that utility firms are often very slow in coming out to locate and mark underground lines. Our contractors in Minnesota report the same frustrations. AGC Government Affairs staff Sarah Psick testified in support of HF 3600 and will continue to work with the Minnesota Office of Pipeline Safety to move this bill. The bill will be considered as part of a larger transportation policy bill. It has not received a hearing in the Senate, but has bipartisan author support and made a key legislative deadline before the end of March. 
LEGAL NEWS
Dealing with Fuel and Other Material Cost Increases

Fuel prices have ignited. Other material costs have increased significantly (the inputs producer price index for nonresidential construction is up 20.3% for January 2022, steel up 136% and lumber up 89%) and bidding prices lag (up 16.5% for January 2022). This gap between rising supply costs and lagging bids prices portends new potential problems for the construction industry. Plus, multi-quarter contracts make it difficult for the contractors to be nimble and market volatility makes it difficult to raise bids. 

AGC staff continues to gather information about inflation, supply chains, and their impact to the industry. Staff also are in touch with the public owners and will update members. Highway contractors who perform work with MnDOT should be aware of the fuel escalation clause, which is a special provision to compensate contractors for the cost of motor fuels and includes only certain scopes of work. A copy is also available on our website here

All contractors should consider price escalation clauses in their contracts, such as ConsensusDocs 200.1. (AGC-MN’s Owner-Contractor form agreement includes an explicit option to incorporate ConsensusDocs 200.1.) Contact Mike or Laura for economic slides from AGC America’s chief economist, Ken Simonson, or if you have other questions.

Free DocumentCrunch Uploads ($1200 value)

Available to members and nonmembers who use AGC of Minnesota's form contracts. This offer is expiring soon. Contact Mike to take advantage.
DIVERSITY, EQUITY, & INCLUSION NEWS
Women in Construction (WIC) Week

Over the past week, we've highlighted women each day who excel in their craft in Minnesota's construction industry. Click the image below to view all the WIC Week 2022 profiles, and join us in honoring these and all women in construction!
WIC Week Industry Showcase

AGC Director of Diversity, Equity, & Inclusion Yolanda McIntosh represented AGC at the Women in NECA Twin Cities Industry Showcase and Happy Hour on Wednesday! Big thanks to the Minneapolis/St. Paul chapter of NAWIC for their industry leadership during WIC Week 2022!
GENERAL NEWS
Upcoming changes to spring load restrictions, winter load increases

MnDOT is making the following changes to spring load restrictions (SLR) and winter load increases (WLI) starting March 14.

  • Spring load restrictions (SLR) in the south and southeast seasonal load limit (SSL) zones start Monday, March 14, 2022, at 12:01 a.m.
  • Winter load increases (WLI) end in the metro and central zones Tuesday, March 15, 2022, at 12:01 a.m.
  • Finally, spring load restrictions start in the metro zone Wednesday, March 16, 2022 at 12:01 a.m.

Seasonal load limit zones and restricted routes can be found on the MnDOT load limits map. Start and end dates and other load limit information are shown at mndot.gov/loadlimits.
AGC Foundation Scholarship Application Open

Students pursuing a secondary degree in a construction related field are encouraged to apply for an AGC of Minnesota Foundation scholarship!

Click here to apply, and direct all potential students to the AGC Foundation web page!
EDUCATION & EVENTS
AGC Board of Directors "Ice Breaker" Member Networking Reception
The AGC Board of Directors invites all members to join them for a networking reception at the Water Street Inn in Stillwater on April 6!

Come meet your new board members, enjoy drinks and appetizers, and celebrate the thaw of winter as you enjoy some in-person networking with other AGC members.

AGC staff will give brief presentations on relevant legislative and collective bargaining developments and expectations.
THANK YOU TO OUR SPONSORS!
Save the Date!

Mark your calendar for the following AGC events coming up in the next year!

  • Spring Networking Reception: April 6 (Water Street Inn)
  • Golf Tournament: August 5 (Keller Golf Course)
  • Saints Game: August 10
  • Sporting Clays Fundraiser: September 14 (Minnesota Horse & Hunt Club)
  • Recognition Evening: October 13 (Intercontinental Hotel, St. Paul Airport)
  • Holiday Party: December 8 (The Machine Shop)
  • 2023 Minnesota Construction Summit: January 17-18 (St. Paul RiverCentre)
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