from Kevin Pedrotti, Legislative Advocate for the Golden State Builders Exchange
June marks the halfway point of the legislative year as the house of origin deadline forced each house to pass or hold their bills for the year. The two houses have now exchanged bills for final consideration. While the legislative process is not static and many pieces of legislation continue to be “works in progress,” the house of origin deadline more clearly defines remaining legislation for the year.
Unlike past years, the state is projecting a budget surplus because of a somewhat improving economy and the passage of Proposition 30, which raised sales and income taxes. The budget was approved by the legislature and met the June 15 constitutional deadline. The Governor has until July 1 to sign the main budget and trailer bills. Many lawmakers sought to use the increased revenues to restore many of the reductions that occurred during the economic downturn. Most of the calls were for restoration of cuts to health, welfare, and social services programs. The Governor resisted almost entirely calls to restore past cuts. There were some funds made available for CTE and ROP programs, but not enough to restore these programs to what they should be.
Legislatively, health care reform and the implementation of the health benefits exchange – Covered California – is one of the highest profile issues this year. The Affordable Care Act (ACA) will bring many changes for employers regarding the requirement to provide employee coverage, type of coverage, purchasing through the Exchange, among other very complex issues. It is strongly suggested you confer with a knowledgeable insurance professional or accountant to determine how the ACA will affect your members.
The Senate leader told a coalition group that with the passage of the state budget, his highest priority for the remainder of the year is comprehensive CEQA reform. The reform side has a well-known Sacramento CEQA attorney negotiating on their behalf. It is not apparent if legislation will move prior to the end of the legislative year or if this will be a two-year bill. We will keep you updated.
The most recent jobs report indicated the construction sector, which has outpaced all other industries in its rate of growth since April 2012, should add a few thousand jobs in May. In the last year, employers in construction industry have added nearly 45,000 jobs, trailing only professional and business services and the leisure and hospitality industries in sheer numbers.
Economists point to housing start figures as evidence that contractors will continue hiring laborers and skilled trades workers as demand for new homes keeps rising.
In any legislative session there are always numerous pieces of the legislation that have direct effect on the construction industry with much in the area of public works requirements. Listed below is a snap shot of some of the bills we have been focused on this year:
AB 10 - Increases the state's minimum wage in three separate increments over the next three years ending at $9.25 in 2016. Recent amendments removed automatic adjustments to wages based upon the California Consumer Price Index after 2016. This is legislation the Governor will decide.
SB 7 - Prohibits a charter city from receiving or using state funding for a construction project if the city has a charter provision or ordinance that authorizes a contractor not to comply with prevailing wage requirements on any public works contract. SB 7 is set for hearing June 26.
AB 44 - Requires a prime contractor, when submitting bids for any state or local government public works project, to list the contractor license number for each subcontractor to perform work on that project. This requirement will apply to bids received on and after July 1, 2014. Recent amendments worked out with the author will provide for an allowance that bids can not be protested for inadvertent errors when listing license numbers and a 24 hour period to make any corrections.
AB 1140 - Provides that changes made to prevailing wage rates apply on their effective date to any contract that is awarded or for which notice to bidders is published on or after January 1, 2014.
AB 1336 - Designed to combat those contractors who fail to pay construction workers all wages due and at prevailing wage rates, the bill could negatively impact contactors with expanded liability for fines and penalties through Department of Industrial Relations and/or court system. Amendments seemly agreed to provide relief for general contactors from fines and penalties for nonpayment of proper wages by subcontractors. Most contractor organizations remain opposed to bill because of the expansion from 180 days to 18 months for an employee to file a claim.
Worth repeating: Almost one-half of the Assembly’s 80 members are new to the legislature and this large freshman class begins serving under relaxed term-limit rules that allows legislators to serve up to 12 years in the same house. Prior term limits provide for three, 2-years terms in the Assembly and two, 4-year terms in the Senate. It is expected that the reformed term limits will reduce the incentive for legislators to move from one house to the other and, with it, hopefully bring some stability and expertise to the house in which they serve. In addition, it is possible that the 2013 class will produce the next Assembly Speaker. Thus, within the Assembly Democratic Caucus, counting votes and horse trading has begun. Lastly, both houses are currently ruled by 2/3’rds majority of democrats providing republicans little if any leverage to determine the outcome of significant legislation. There have some displays of the 2/3’rds majority this year, but with vacancies on and off because of legislators moving to other positions, the lock solid 2/3’rds majority has not been consistent throughout the year.
With four months remaining in the legislative years, other issues could surely reveal themselves. You can be assured we will be looking out for your interests.
***