from Kevin Pedrotti, Legislative Advocate, Golden State Builders Exchanges
Legislative Activity
The legislature returned to the Capitol on Monday to begin the last month of the two-year legislative session. The primary focus this week was Appropriations Committees. Once bills are provided final consideration by these committees, it will then be floor deliberations until the last hour of the legislative session.
Below is a recap of the keys bills for the week just ending:
AB 2060 (Calderon) – GSBE co-sponsored legislation was sent to the Senate Appropriations suspense file. The Department of Finance opposed the bill in committee indicating (through twisted logic) that the bill somehow provided preferential treatment to construction contractors over others doing business with government entities. AB 2060 allows for prospective protection for fix-priced contracts on public works projects should future state sales tax increases be implemented.
AB 1254 (Leno) – Marin Builders’ Association sponsored legislation was sent to the Assembly Appropriations Suspense file prior to the July recess. The bill authorizes the Contractors State License Board (CSLB) to issue a stop work order when a contractor fails to provide adequate workers' compensation coverage for employees. The bill has a second component which increases the number of peace officers the Department of Consumer Affairs (DCA) may designate to the CSLB special investigations unit from three to 12. The bill was sent to suspense since staff estimates one-time costs in excess of $120,000 for 2010-11 for reclassifying and training new peace officers (Contractors License Fund). CSLB contends the training can be completed with existing staff. The bill will be considered next week when the suspense file is heard.
AB 1853 (Huffman) – The Senate Appropriations Committee sent to suspense this measure which requires state agencies to provide a 2% bid preference on public works contracts if the bidder and subcontractors provide health care coverage to employees. The Department of Finance opposed the bill and place a $300,000 cost to the state if it should pass.
AB 2627 (Nielsen) – After losing “good faith” with respect to DVBE requirements during last year’s budget negotiations, efforts to reinstate provisions were met with opposition from the DVBE community and key legislators wishing not to run afoul veterans organizations. Recently amended, AB 2627 would allow a contractor to meet the 3% DVBE goal by combining both public and private contract work and include the use of in-house DVBE in meeting the requirements.
As amended, this measure will allow the Department of General Services to approve business utilization plans for construction contracts. A business utilization plan is an additional way for contractors to meet the DVBE 3% participation requirement on their bids. Due to the enactment of AB 21 x4 last year, all departments are now required to meet 3% participation in their contracting programs.
The legislation would provide this to be accomplished by each contract having a 3% DVBE participation requirement in order for the bid to be responsive, or the company can submit a business utilization plan to DGS. The plan requires the contractor to estimate their total statewide contract dollars and commit to expend a minimum of 3% of those dollars on services from DVBE firms.
These DVBE firms can provide indirect services, such as health insurance, janitorial services, landscaping, accounting and other such services, as long as the DVBE firm is certified with DGS.
The bill is up next week in Senate Appropriations Committee. The Department of Finance has an oppose position on the bill.
Bill amended to protect Plans Rooms
AB 2036 (B. Berryhill) will be heard next week in the Senate Governmental Organization Committee. Some local governments have either begun or intend to charge for paper and electronic plans. The bill allows, not requires, local governments to charge a refundable $250 deposit for paper plans if the plans are returned in reusable condition within 14 business days of the award of the project. The bill as amended:
http://www.leginfo.ca.gov/pub/09-10/bill/asm/ab_2001-2050/ab_2036_bill_20100628_amended_sen_v96.pdf
No Budget
The state has gone without a budget for over a month. This week, the democratic leadership proposed a plan that is a combination of increased income taxes, lowering of the sales tax and increase of car tax. Republican’s have rejected the proposal and Governor called it dead on arrival. Some are thinking this could play out until after the November elections
Prop 24 – Could it Effect Transportation Funding?
Over the years, there has been disagreement regarding the difference between regulatory fees and taxes, particularly when the money is raised to pay for a program of broad public benefit. In 1991, for example, the state began imposing a regulatory fee on businesses that made products containing lead. In court, the Sinclair Paint Company argued that this regulatory fee was a tax.
In 1997, the California Supreme Court ruled that this charge on businesses was a regulatory fee, not a tax. The court said government may impose regulatory fees on companies that make contaminating products in order to help correct adverse health effects related to those products. Consequently, regulatory fees of this type can be created or increased by (1) a majority vote of each house of the Legislature or (2) a majority vote of a local governing body.
Prop 24 on the November ballot expands the definition of a tax and a tax increase so that more proposals would require approval by two-thirds of the Legislature or by local voters. Any state law adopted between January 1, 2010 and November 2, 2010 that conflicts with Proposition 26 would be repealed one year after the proposition is approved. This repeal would not take place, however, if two-thirds of each house of the Legislature passed the law again.
Recent Fuel Tax Law Changes
In the spring of 2010, the state increased fuel taxes paid by gasoline suppliers, but decreased other fuel taxes paid by gasoline retailers. Overall, these changes do not raise more state tax revenues, but they give the state greater spending flexibility over their use.
Using this flexibility, the state shifted about $1 billion of annual transportation bond costs from the state’s General Fund to its fuel tax funds. Because the Legislature approved this tax change with a majority vote in each house, this law would be repealed in November 2011—unless the Legislature approved the tax again with a two-thirds vote in each house.
If passed, where does that leave transportation funding a Prop 42? It is uncertain; however, most believe it does not reinstate Prop 42. Experts are doing a legal analysis. Worst case, changes would not occur for 12 months after November election should Prop 24 prevail providing adequate time to address (again) transportation funding. This is something to watch closely.
Elections
SD 40 went to former-Assemblyman Juan Vargas. He won with less than 30 votes over Assembly Member Mary Salas. Vargas is considered the more moderate of the two.
August 17 is the special election run-off for the former-senator Lt. Governor Maldonado seat. Assemblyman Sam Blakeslee (R) came within a whisker of winning the seat out-right in the special election primary. Blakesly faces former-Assemblyman John Laird (D).
With the recent passing of Senator Dave Cox (R), their will be special in November to fill the remaining two years of his term. It is expected republican Assembly Members Ted Gaines and Roger Niello will go head-to-head for this seat.
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