August Legislative Update
Hiring Practices on State Projects
The AGC Legislative Committee met in July to review proposed legislation related to hiring practices on state projects managed by DFCM and UDOT. The proposal would increase penalties for contractors who violate existing law related to hiring workers as independent contractors (1099s) rather than employees, thereby avoiding unemployment insurance, workers’ compensation, and other obligations.
Initial drafts of this bill would have escalated the penalty from a civil violation to a felony, while also requiring prime and subcontractors to provide formal notices at every tier of contracting. AGC met with the proponents in both July and at the August interim session to discuss concerns. Encouragingly, the sponsors are now considering an alternative approach that focuses on increased oversight by the Utah Tax Commission and DOPL rather than new felony penalties or broad notice requirements.
This direction would resolve most of our concerns. We will continue to monitor and provide updates, and we thank our Legislative Committee members for their active engagement on this issue.
Audit of K-12 School Construction
The Committee also reviewed a new report from the Legislative Auditor’s Office examining K-12 school construction. Legislators requested the audit as part of a broader push to improve efficiency and accountability in education spending. [Click here for the full report.]
Key recommendations include:
- Greater oversight from the State School Board on construction projects.
- Tighter rules for how local districts manage construction and tax dollars.
- Additional input from DFCM to guide school construction processes.
This is becoming a politically charged issue. Many school boards approved significant property tax increases this summer, leading to heightened scrutiny and public pressure. Legislators are signaling strong interest in moving quickly, and AGC is actively working with them to ensure any resulting legislation reflects industry realities. Many recommendations could be positive for both construction and taxpayers; there are also concerns that need careful attention. Our goal is to help shape this conversation so that the outcome is a net positive for Utah’s education system, taxpayers, and the construction industry.
Proposed Prevailing Wage Legislation
AGC also met during the August interim session with Rep. Clancy (R–Utah County), who is considering legislation for 2026 that would establish prevailing wage requirements on state-funded projects, such as UDOT and DFCM work. Local governments could follow suit if such a policy were enacted.
His current concept would set prevailing wages by position and geographic area, but notably would not require certified payroll reporting, a typical feature of prevailing wage laws. AGC expressed initial concerns and will be engaging members in the months ahead to determine the best strategy forward. We appreciate Rep. Clancy’s proactive outreach to AGC. He emphasized that he values AGC as the voice of the industry, and we intend to maintain a strong and constructive relationship as this discussion evolves.
Interim Session & Broader Fiscal Context
As usual, AGC attended the August interim session of the Utah Legislature. Outside of the issues already noted, the session was relatively quiet. UDOT provided a detailed report on how state funding for transportation and construction projects is allocated, and potential updates may be considered in the months ahead.
A larger backdrop shaping these conversations is the federal government’s H.R.1, known as the “One Big Beautiful Bill Act.” While this measure delivered significant tax cuts nationally, it also reduced federal funding to states. Medicaid is expected to bear the brunt of the cuts, forcing Utah to consider reallocating or reducing other state-funded programs. Construction projects supported by state funding could be vulnerable as legislators weigh options.
At the same time, H.R.1 provides unprecedented federal investment in infrastructure, creating opportunities for our industry if Utah is able to effectively allocate and leverage those dollars. This is a rapidly evolving situation that AGC will continue to monitor closely.
Looking ahead, the Governor is expected to call a special session of the Legislature in September. At this point, no construction-related bills are anticipated, but AGC will remain engaged and report back on any developments.