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Cash-constrained contractors may soon find a bit of relief.

The Oregon House of Representatives today voted 59-0 to pass , which includes provisions to encourage prompt payment on public improvement contracts. The bill creates new penalties for public agencies that fail to pay on time and restricts the ability of owner-groups to change payment schedules.

Rep. Mark Johnson, R-Hood River, said the bill was an easy fix to a significant problem in public-sector construction.

鈥淧eople need to have reliable cash flows going on because their reserves are low, their resources are limited and when they get held up on payment on a large project it can be really detrimental to their whole business,鈥� he said.

Johnson said the bill had received broad industry support and that he was not aware of any opposition.

John Killin, president of the Pacific Northwest chapter of the Associated Builders and Contractors, said many subcontractors are not being paid in timely fashion 鈥� especially on public-sector jobs. His organization recently conducted a survey of payment trends, and he said that when private-sector payments were delinquent on a 30-day schedule, they were between 10 and 15 days late, on average.

鈥淥n the public side, it was twice that length,鈥� he said. 鈥淚t was commonly 60 days plus to get paid. There were some claims of six months or years to get paid. So we saw these much, much longer periods where people had done the work, provided the supplies and done everything they were supposed to do and just still weren鈥檛 getting paid.鈥�

Killin said the bill calls for a new penalty for delinquent payments 鈥� a flat, 9 percent fee on the amount owed. The previous system used a complicated multiplier based on the Federal Reserve鈥檚 national interest rate. When the Fed rate was high, he said, that penalty could be as much as 15 to 20 percent. But with rates near zero these days, that fine had less teeth, he said.

Johnson said a delinquent $1 million invoice might incur only a $400 fine. He said he wasn鈥檛 sure why public contracts were drawing late payments, but noted that it seemed to be a general lack of urgency.

The bill, Johnson said, also requires contracting agencies to provide 45 days notice to subcontractors before changing a payment schedule, as well as a legitimate reason for the change. He said that in the existing system, agencies were changing schedules on a more 鈥渨illy-nilly鈥� basis.

That becomes a problem, he said, for subs that have paid for supplies and materials and have their own obligations.

鈥淎 lot of these subs just don鈥檛 have the reserves that they had eight to 10 years ago,鈥� Johnson said. 鈥淭hey don鈥檛 have that much in their cash flow, they don鈥檛 have a lot of flow coming through their books, and the job they鈥檙e on now may be the only job they鈥檝e got going on.鈥�

HB 3034 will now go to the state Senate floor to be assigned to a committee for further review.