2011 LEGISLATIVE SESSION
Contributed by Eddie Bernacchi, Politico Group

SACRAMENTO – As the 2011 session of the California State Legislature heads towards its final stages, the budget impasse that usually overshadows this time of year has been addressed.  This has allowed the business of the State to press on.

The newly passed State budget closes the $9.6 billion deficit the state was facing.  The plan did not contain the Governor’s proposed five year extension of the 2009 temporary tax increases scheduled to expire June 30, 2011, but rather relies on $4 billion in anticipated revenue. If that revenue fails to come in, another round of cuts would be required midyear. The budget plan was passed by the Democrat majority on a party line vote and delays any public vote on tax increases until next year.  The good news is that the budget has been deemed “balanced” and will allow the state to issue the bonds needed to finance previously authorized public works projects statewide.

The approval of this budget plan means that there will be no special election in 2011, and that any initiative to increase taxes would be placed on the November 2012 general election ballot by petition rather than by a 2/3rds vote of the Legislature. 

The new budget includes a set of “trigger reductions” that will cut spending if revenues are not expected to reach anticipated levels.  If the funding falls short, the state will automatically implement mid-year cuts of more than $2.5 billion in State general fund spending (The bulk, $1.9 billion, would come from K-12 education.).

The new budget also eliminates Redevelopment Agencies (RDAs) effective October 1, 2011 unless cities or counties elect to participate in an Alternative Voluntary Redevelopment Program (AVRP). AVRP participants would have to make “community remittances” payments to help fund schools, fire protection, and transit services. In 2011-12, community remittances would total $1.7 billion, the vast majority of which ($1.696 billion) would be directed to school districts within redevelopment areas and would count toward the state’s Proposition 98 funding guarantee. The remaining $4 million would be directed to fire and transit districts within redevelopment areas in 2011-12. In 2012-13 and subsequent years, community remittances would total $400 million per year, of which $340 million would be directed to schools. However, these funds would augment existing school funding and not count toward the Proposition 98 guarantee.

Finally, the 2011-2012 budget agreement establishes a framework to shift primary responsibility for a number of public safety and related services, along with a dedicated source of funding, to counties beginning in 2011-12. Counties would assume responsibility for $5.6 billion in program costs in 2011-12, rising to a projected $6.8 billion in 2014-15. These costs would be funded primarily by transferring revenues from an existing 1.0625 percent state sales tax rate to counties, which is estimated to provide $5.1 billion in 2011-12. In addition, the budget agreement redirects $453 million in existing vehicle license fee (VLF) revenues to fund local costs in 2011-12. Under the portion of the realignment plan enacted in April, counties would assume responsibility for certain low-level felons, adult parolees, and juvenile offenders effective October 1, 2011. This transfer is expected to allow the state to comply with a federal court order, recently affirmed by the US Supreme Court, to reduce the state’s prison population by more than 30,000 inmates over the next two years. The budget agreement shifts responsibility for a number of additional programs to counties in 2011-12, including child welfare services, mental health services, substance abuse treatment, and adult protective services. However, those programs “will continue with minimal changes until additional 2011 realignment legislation can be enacted later this legislative session,” according to the Senate Budget and Fiscal Review Committee.

During the budget debate we pressed on in our efforts to protect the industry and get real reform in the area of “Road Commissioner.”  Below is an update of the pertinent legislative measures CIFAC is involved with on your behalf.

AB 720 (Hall) Road Commissioner Reform Bill, Support – We continue to work to advance the ball relating to reforming the county’s ability to use “Road Commissioner “authority.  Our CIFAC sponsored measure is up in its final policy committee today before the Senate Governance and Transportation Committee. Approval would send the bill to the Senate floor.  As amended in the Senate Transportation Committee, AB 720 (Hall) now reflects the culmination of over four years of work to positively address the use of the “Road Commissioner” authority while still allowing counties the flexibility they need to maintain California’s county road systems. The fact that the construction industry, counties, and public employee unions have reached an agreement on what has been such a contentious issue is a credit to the legislative process and those who work within it.

This measure provides enhanced flexibility to county governments by raising the force account limit within the California Uniform Construction Cost Accounting Act, places accountability on the use of the “Road Commissioner” authority on counties who are members of the Act and allows for a year-long phase in period to prepare for compliance with the Act’s new provisions by taking affect January 1, 2013.  The bill also provides opportunities for private construction contractors to bid on county highway construction and reconstruction projects and grants greater transparency and accountability to the public regarding the use of their tax dollars.

AB 943 (Williams) Amendments to the California Uniform Construction Cost Accounting Act, Support – Originally, this measure related to port and harbor districts and raised those districts force account limits from 10K to 35K. After alerting the author’s office that we would be strongly opposed to this increase, the author dropped the measure and allowed us to use it as a vehicle to address some technical clean up issues relating to the California Uniform Construction Cost Accounting Commission.

As amended, this measure would update the statute governing the California Uniform Public Construction Cost Accounting Act; specifically the bill will lengthen the California Uniform Construction Cost Accounting Commission (CUCCAC) chairperson's term to two years and will allow more time for the State Controller to appoint members to vacancies on the Commission.

These changes are needed because the CUCCAC meets infrequently (only once or twice per year), the longer term allows for more continuity on issues.

The current 45 day timeline to appoint a replacement to fill a vacancy on the Commission doesn’t allow the Controller enough time to fully vet all candidates and ensure that the most qualified representatives from public agencies and the construction industry are placed on the commission.

AB 656 (Huber) Boards and Commissions Sunset Review Act, Active – As promised during his election campaign, Governor Jerry Brown asked the Joint Sunset Review Committee to look at every State Board and Commission to vet their value and cost to the public and State. AB 656 (Huber) is the first step in the process to review all state boards and commissions to ensure their value and need. The California Uniform Construction Cost Accounting Commission (CUCCAC) has been assigned a sunset date of January 2016, to provide ample time to do a thorough review of its value.

• As an industry we fully believe in the value of the Commission, its worth to the state and its benefit to public agencies.  We welcome the opportunity, as provided by the review process, to show just how valuable the Act and the Commission are in a sunset review hearing.  The Commission is the only place outside of court for settling disputes between signatory agencies and the public works construction industry which saves all parties millions of dollars in legal fees and court costs. In mid-July, we found that the language, as currently written regarding the Act and the Commission, needs to be corrected. Therefore, the author has agreed to amend the sections relating to CUPCCAA and CUCCAC out of AB 656 and work with industry next year on a standalone measurer to provide for a sunset review of the Commission.