Goverment Insights
Legislative Report from District One Legislators Apr. 5, 2005
Apr 6, 2005, 14:00
A letter to District One Constituents:
This session has been both challenging and rewarding. We have dealt with some very difficult and far reaching projects, including water rights issues, highway (GARVEE) bonding plans, public education funding, and health care priorities.
This correspondence will address one of the issues that has raised some concern in our district; i.e. contractor registration.
We supported House Bill 163 this session that requires contractor registration. The Bill passed the Senate (23-11) and the House of Representatives (43-27). The Governor has signed the bill and it is now law. The bill requires that contractors register with the State. It requires that a contractor provides proof of compliance with Idaho’s workers compensation law, carries at least $300,000 in liability insurance, and pays a registration fee that cannot exceed $150 annually; however, we have been advised that the actual fee charged will most likely be in the $50 range.
We believe this legislation will provide some protection for Idahoans. Idaho is the only state in the Northwest that does not require some sort of regulation on contractors, and as a result has become a safe haven for shady contractors who have been chased out of other states, making it more likely that Idahoans will encounter problem contractors.
Because of the location of our legislative district, the problem is especially unique. The Better Business Bureau of eastern Washington, Idaho and Montana wrote the following to us:
"Our bureau has a far-reaching service area. We service three states: WA, ID and MT. Idaho currently shares borders with two states that require licensing and bonding. What does this say about the geographic location of the state of Idaho and its current law regarding proper contractor registration? The nearly open door policy that Idaho has allows for very questionable contractors who have gotten into trouble in other states to use Idaho as fair grounds for questionable activity inside its industry.
"We, as a bureau, see each year questionable contractors sharing borders and it creates confusion for the consumer when the rules are so drastically different from state to state. We receive calls from Idaho consumers on a weekly basis regarding unlicensed contractors or contractors who falsely describe themselves as “licensed and bonded.” That phrase causes many Idaho residents to blindly believe that this is a true statement for the industry in Idaho when in fact, those aren’t the current rules for ID."
Before the passage of this bill, the homeowner's only protection was in the courts, and even that offered little consolation if the contractor could not be found or was unable to pay damages. Despite intentions to find an honest contractor, homeowners have been blind-sided. People have told stories of being swindled out of their savings by a contractor who agreed to build or renovate their homes and then would abandon the project.
Registration, as provided in this bill, would give homeowners the ability to have the state investigate and revoke the registration of illegitimate contractors and prevent other residents from suffering the same fate.
This bill offers a more level playing field for Idaho’s legitimate contractor. Idaho contractors who comply with the law, pay taxes and provide workers compensation are put at a disadvantage simply for complying with the law. As a result, unscrupulous contractors quote lower bids and thumb their nose at the legitimate contractors.
It also gives the state assurance that those businesses are reporting and sharing the state's tax burden. The Idaho State Tax Commission estimates that between $1.3 to $1.7 million of sales and income taxes are unreported and uncollected from out of state contractors doing business in Idaho.
Critics argue that this bill will be expensive for smaller contractors. We disagree. Most contractors already carry liability insurance that far exceeds the bill's requirement. Workers Compensation is already a requirement of law, so this should not be an additional cost for law-abiding contractors. The registration fee has been capped at $150 annually and may in fact, be as low as $50 per year.
Another criticism of the legislation is that homeowners would not be allowed to work on their own homes. This is not the case. The bill has exemptions for people working on their own homes, acting as their own contractor, and exempts small jobs under $2,000. The exemptions are tailored with the intention that this law only apply to persons who present themselves as building contractors - not homeowners remodeling or repairing their own home.
Thank you for contacting us regarding House Bill 163; whether or not you agreed with the position we took, please know that we appreciated your input and opinion. Please feel free to contact us on any issue of importance to you in future.