SPRINGFIELD – Under legislation expected to receive a vote this week, contractors on state capital projects would be forced to pay their suppliers and subcontractors on a tighter schedule.
“This is to help our small businesses grow,” state Sen. Ram Villivalam (D-Chicago) said during a news conference Tuesday at the capitol.
Villivalam’s legislation, Senate Bill 104, shortens from 15 calendar days to seven business days the payment deadline for a construction project’s prime contractor to pay the smaller subcontractors and material suppliers of a project.
“There’s no excuse to not ensure that small businesses have prompt payment,” Villivalam said.
Dan Johnson, a lobbyist representing the Hispanic American Construction Industry Association and the Federation of Women Contractors, said a week’s worth of cash flow means a lot to subcontractors, which are often small, growing businesses owned by minorities or women.
“We need our subcontractors to be strong,” Johnson said. “An extra week of cash flow makes a big difference.”
As originally introduced, the bill would have made state agencies pay subcontractors directly, as is becoming increasingly common in private-sector construction projects.
But, after pushback from the Illinois comptroller’s office, the Department of Transportation and prime contractors, the bill was amended to the “more reasonable” form it takes now, Johnson said.
IDOT is now neutral on the bill, but prime contractors, and road builders in particular, remain opposed.
The bill would make no changes to the state’s deadlines for paying prime contractors.
Johnson said that’s because the bill would primarily affect contractors with IDOT and the state’s Capital Development Board, which have consistently paid contractors on time with revenue streams from the state’s motor fuel tax.
“That big general bills backlog,” Johnson said, “it mostly affects other sectors like health care, human services, local governments and higher education.
“This bill is really just for the traditional subcontractors, people working on roads and on state buildings.”
After receiving a bill deadline extension, SB 104 must clear the Senate by Thursday, May 2.