Though the state legislature pulled an all-nighter last Friday, the official last day of the 2009 legislative session, they still could not come up with enough votes to pass a massive water development plan sought by the governor.
The AGC of California reports that agreement came quickly on controversial plans for new dams and a canal that would divert drinking water south around the environmentally sensitive delta, but questions rose about how to pay for the nearly $12-billion project. Republicans and the governor favored asking voters to approve a bond that would be paid back from the state’s general fund, but most Democrats wanted some of the project to be funded through user fees.
So meanwhile, with the 2009-2010 legislative session half over, the AGC of California gives us a summary of the status of some of the major construction issues up for consideration.
Two bills are headed to the governor’s desk for signature:
Payment/Retention Legislation (SB 802, Leno & Fuentes) was originally introduced as AB 396, but AGC’s original sponsored bill that protected contractors against late payment bond claims and limited retention on public works jobs was stalled in the assembly. Provisions of AB 396 were amended into SB 802 the last week of session in order to keep the issue alive. The senate approved SB 802 the last night of session and the bill is headed to the governor for signature.
And Limited Liability Companies (SB 392, Florez) will allow contractors to be licensed as Limited Liability Companies. Final opposition to the bill was removed the last night of session and agreement was reached with the state building trades to require a $50,000 wage and benefit bond as a condition to be licensed as a LLC. Earlier agreement was reached with the trial lawyers to remove their opposition. The final amendments will be made to SB 392 in January and the bill will be moved swiftly to the governor.
Other construction issues that went nowhere include Elimination of Good Faith on Public Works Bidding. AGC teamed up with other industry associations and negotiated legislation with the governor’s office to reinstate the Disabled Veteran Business Enterprise good faith effort for public works that was eliminated by budget related legislation in July. In spite of the governor’s office commitment to secure passage of clean-up legislation, the legislative proposal that AGC amended into unrelated legislation during the last days of session fell victim to end of the session partisan bickering between the legislature and governor. Ultimately, the legislation incurred the opposition of the DVBE and veteran community, due to legislative demands for amendments to the legislation. A solution may again be considered in January.
Sales Tax Exemption (AB 1523, Calderon) would have exempted contractors with fixed price contracts from having to pay the 1% increase in the sales tax that went into effect on April 1. Due to the estimated fiscal impact of the legislation, the bill was held in the assembly appropriations committee with virtually all other legislation that was identified with cost impact. Currently, there are discussions of reviving the legislation in January to make it apply to any future changes in the state sales tax so that the industry will be protected at the time the current sales tax increase expires.
And Plans and Specifications – Bidding (AB 815, Ma) allows contractors to file claims with public agencies for failure to provide complete plans upon which to bid. AB 815 is being held in the Senate until a decision has been reached by the California Supreme Court on a pending case; at which time the bill will be amended to address the Supreme Court decision.