Legislature is Going, Going and Nearly Gone (Without a Budget in Sight)! BY: Phil Vermeulen, Legislative Advocate
Well, as I mentioned in a previous update, the streets of Sacramento are nearly safe to walk again!! Although the Legislature is supposed to adjourn officially on August 31st at Midnight, the rumor "around the halls" was that they were going to close it all down today. However as they continue to "plod" through the myriad bills today, the latest word is that it might not be too politically correct to leave without a budget in-place (do ya think?). Speaking about the budget, what's the latest you ask? Well, the "Big 5" met for the first time in 73 days yesterday and everyone in the meeting seemed to think that some progress was made. Does that mean that a budget solution might be close at hand? I'm still hearing that they may well "cobble" an interim budget together and then wait until either after the election or until the new governor comes into power in January. Honestly though, no one really knows and that's the truth! As soon as I learn anything of true substance, you'll be the first to know! This has been quite a week in terms of our legislation! While my End of the Session report will fill you in with everything you need to know (but were afraid to ask), there are several key bills that I'm very proud to report are headed to the governor or will be shortly: AB 2036 (Berryhill, Bill) - As many of you know, more and more public agencies are now requiring contractors and plan rooms to pay for sets of plans and specifications in order to bid on their public works projects. This bill would require all public agencies (both state and local) to provide an electronic set of plans and specifications for free to plan room. Note that this measure has changed a bit from when I reported on it two weeks ago. This is due to the fact that we received considerable pushback from ALL public agencies to the point that if we didn't limit it to providing an electronic set to only the 32 plan rooms around the state, we would have lost the bill. Since the agreement was reached with all of the public agencies earlier this week (which was after the deadline for amending bills), we had to obtain a Senate Rule waiver from the Rules Committee yesterday to amend the bill. It will be officially amended today on the Senate Floor and placed on third reading and then head back to the Assembly for concurrence to the amendments. All of this technically could occur today, but the key point is that this bill will make it to the governor, whew!!
AB 2060 (Calderon) You may recall that my colleagues and I tried to get a bill out of the Legislature last year that would have exempted fixed price construction contracts, consummated prior to April 1st, 2009, from the 1 cent sales tax increase which took effect on that date. Unfortunately, we got "tripped up" due to the uncertain cost impacts it would have had on the state. Not to be deterred, we are back again this year with a bill that applies prospectively to any future tax increases. Specifically, AB 2060 (Calderon) will require a fixed price contract between any government entity and a contractor to authorize payment for a change in the contract price that is attributable to an increase or decrease in the state sales and use tax rate, with the increase or decrease paid in accordance with the contract terms or as agreed to by the parties. In other words, if a sales tax increase occurs the governmental entity will be bound to pay the increase; conversely however, if the sales tax decreases during the time of the contract, then the contractor will be bound to reimburse the governmental entity for the difference since it would be unjust enrichment. I'm happy to report that this bill is now on the governor's desk and will be signed! SB 1254 (Leno) - Co-sponsored with the Contractors' License Board, this measure will provide the board with the ability to issue a stop work order against a contractor for NOT providing workers' compensation (which would pull his employees off the job). This would only apply to the contractor NOT in compliance with the law so other contractors on a job who were abiding by the law would NOT be affected. This measure will apply to both unlicensed and licensed contractors, because many legitimate contractors file a workers' compensation exemption with the board and then hire workers. This is blatantly unfair to legitimate contractors trying to compete against these (dirt bags). This bill will also give the board authority to request authorization to hire 9 more peace officers (one for each office) to help enforce their laws. They currently have 3 for the entire state. Proudly, this measure has been pegged as one of THE most important bills moving through the Legislature this year. It is said that politics makes for strange bedfellows. Interestingly, SB 1254 is a literal example of this phrase since, among many strong supporters, both the California Chamber of Commerce AND the California Applicants Attorneys have both written letters and testified in strong support of this measure! This measure is also headed to the governor and should be signed! Besides the aforementioned bills, our SB 694 (Correa) is also headed to the governor: SB 694 (Correa) - The Uniform Cost Accounting Act was created through legislation approved back in 1983. The Act was created as a consensus solution to resolving what had been a long standing battle between local government and private contractors about complying with existing force account limits for performing construction work in-house
using their own workforces instead of requesting bids to have the work done by outside contractors. Many of the problems were due to local governments and special districts using different accounting procedures that, for example, did not account for their true overhead costs to build or repair a project using their in-house staff. Consequently, while a public entity's force account limit to use their in-house staff at that time was $5,000 for labor and material costs combined, they would often not account for their true labor costs to pay for in-house staff in their calculations, and thus would perform work significantly over this amount. It was due to this constant battle between the private and public sectors that a consensus solution was reached that created the Uniform Cost Accounting Act and the Commission in 1983. The commission adopted an accounting procedure that agencies voluntarily agreed to adhere to in return for an increase in their force account limits which is now at $30,000 and is adjusted every few years to match inflation. Opting into the Act also allows these agencies to increase their informal bidding as well, which means that they can use a streamlined bidding process on projects that cost up to $125,000. Intent of the Bill For all of these reasons, the Act and the Commission have been tremendously successful which has resulted in over 740 local agencies participating as members. With the Act now approaching its 30 years of existence, there are a couple of fixes that need to be made to the law: Existing law requires the commission to review the accounting procedures of any participating public agency upon evidence of an interested party that the work undertaken by the public agency (1) is to be performed by the public agency after rejection of all bids, claiming work can be done less expensively by the public agency; (2) has exceeded the force account limits; or (3) has been improperly classified as maintenance. In any of those circumstances, a request for commission review may be made within 5 business days and the commission is required to commence review immediately and conclude within 30 days from the receipt of the request. This bill will extend the time to 8 business days to request a commission review, to 45 days for a commission review of a public agency project that is to be performed after rejection of all bids, and to 90 days for a commission review of work for which evidence was provided that the work has exceeded the force account limits or has been improperly classified as maintenance. This bill is also on the governor's desk. There are several other important bills that I'm working on which I'll report on next week once I know there final outcome. Stay tuned.