Multiemployer Projections Show Need for Program Changes

Absent changes in law, the financial condition of PBGC’s Multiemployer Insurance Program will continue to worsen over the next 10 years. About 125 multiemployer plans covering 1.4 million people are expected to run out of money over the next 20 years. More and larger claims on the Multiemployer Program over the next few years will deplete program assets and lead to the program’s insolvency by the end of FY 2025.

Projections for FY 2028 show a wide range of potential outcomes, with an average projected negative net position of about $90 billion in future dollars ($66 billion in today’s dollars).

If the Multiemployer Program were to run out of money, current law would require PBGC to decrease guarantees to the amount that can be paid from Multiemployer Program premium income. This would result in reducing guarantees to a fraction of current values. PBGC’s guarantee is the amount of retirement benefits that PBGC insures for each participant, which is capped by law.

The President’s FY 2020 Budget contains a proposal to shore up PBGC’s Multiemployer Program. The budget proposes to create a new variable rate premium and an exit premium for the Multiemployer Program. It would raise an additional $18 billion in premium revenue over the 10-year budget window. The proposal includes a provision allowing for a waiver of the additional premium if needed to avoid increasing the insolvency risk of the most troubled plans.

AGC of America is working to make Congress aware of this problem and proposing solutions.

Contact ICI’s Director of Labor Relations George Sheraw (317) 634-7547 with questions about PBGC’s Multiemployer Program.

2016 Legislative Session Wrap-Up

Road Funding

The Indiana General Assembly didn’t pass long-term transportation funding during the 2016 short session, but it approved several bills allowing for diversion of existing and future collected tax funds from the local option income taxes reserves, general fund and gas use tax. These will provide:

  • $330 million for local units of government in fiscal year 2016;
  • $228 million for INDOT in fiscal year 2017
  • $414 million for local units of government in fiscal year 2017;
  • $68 million for local units of government in fiscal year 2018; and
  • $105 million for local units of government in fiscal year 2019.

Counties can now double their wheel tax (raising an additional $286 million), and municipalities with a population of more than 10,000 may impose a wheel tax at their existing rate (raising an additional $90 million).

Lawmakers created a 16-member task force of legislators and gubernatorial appointees (including one recommended by Build Indiana Council) to analyze state and local road and bridge needs and long-term funding methods. The task force must present its recommendations to the State Budget Committee by January 1, 2017.

Lake, LaPorte, and Porter counties will see additional funding from revisions to local income tax laws, and Henry County plans to use a food and beverage tax for roads. Lagging farmland assessment values will decrease local tax revenues across the state.

Time & Material

Contractors selling non-tax exempt construction under a time and material (T & M) agreement or simply providing invoices including detailed labor, material, and equipment costs should consult with an accountant familiar with contract law and the new Indiana Code 6-2.5-4-18, Retail Transactions of Merchants. The new law is retroactive to January 1, 2007. Indiana Department of Revenue supported the bill to provide a legal basis for existing administrative code 45 IAC 22-3-9. The law states that contractor selling construction under a T & M contract must collect and remit the state gross retail tax.

Insurance

Legislators adopted language that provides a specific legal basis for “named driver exclusions” that limit liability to the insured.

VBE

Lawmakers added a definition of “veteran” to Indiana’s small business code. For the purposes of qualifying as a veteran-owned business for set-aside government purchases, a veteran is any individual who is serving, or has served, in any branch of the armed forces of the United States or their reserves, the national guard, or the Indiana National Guard. The bill also removed the requirement that a veteran be a resident of Indiana for at least one year before making an offer to bid on a state contract.

Public Works Contracts

The public works contractor qualification requirement, adopted in 2015 and scheduled to go into effect on July 1 will now go into effect on December 31 of this year. Lawmakers added two new sections under State Public Works – Qualifications for State Public Works Projects and INDOT – Qualifications of Bidders for Contracts. Contractor prequalification is not required for public works contracts awarded by a local unit of government if

  1. The total estimated contract amount does not exceed $300,000;
  2. The public agency complies with Indiana Code 36-1-12 including bidding procedures, bonding and drug testing.

Local government units may not establish wage rates in a contract in a public works contract unless mandated by federal or state law.