BILL ANALYSIS
AB 727
Page 1
Date of Hearing: April 14, 2009
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Mary Hayashi, Chair
AB 727 (Nielsen) - As Introduced: February 26, 2009
SUBJECT : Resource conservation districts: California Prompt
Payment Act.
SUMMARY : Includes resource conservation districts (RCDs)
within provisions of law that require the state to pay penalties
for late payments to contractors. Specifically, this bill :
1)Includes RCDs within provisions of law that require the state
to make later payment penalties of 0.25% per day if the
contractor is a small business or nonprofit organization.
2)Defines "resource conservation district" as a RCD established
pursuant to specified provisions of the Public Resources Code.
EXISTING LAW requires the state to pay amounts due on the date
specified in a contract or within 45 days of a properly
submitted, undisputed invoice, or pay a penalty of 0.25% per day
if the contractor is a small business or nonprofit organization,
or 1% above the Pooled Money Investment Account rate for all
other businesses.
FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill . According to the author's office:
"Current law treats Resource Conservation Districts (RCDs) in
several different ways. In some parts of the code RCDs are
treated as non-profit entities that the state contracts with to
perform certain projects, and in other parts of the code they
are treated as quasi-state entities, as an extension of the
state itself. Due to this complex and ultimately ambiguous
nature of treatment of RCDs, they do not have a clear set of
rules under which they are to be paid for projects that they
perform for the state. This leads, in some cases, of payments
not being made for several years without penalty to the state."
Background . Existing law requires the state to pay amounts due
on the date specified in a contract or within 45 days of a
AB 727
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properly submitted, undisputed invoice, or pay a penalty of
0.25% per day if the contractor is a small business or non
profit organization, or 1% above the Pooled Money Investment
Account rate for all other businesses. This bill would include
RCDs within the provisions applicable to small businesses.
Previous legislation . AB 2992 (La Malfa) of 2008 was a
substantively identical bill that the Governor vetoed. The
Governor vetoed a substantial number of bills with the same
message that due to the delay in passing the 2008-09 State
Budget he would only sign bills that were "the highest priority
for California." AB 2992 was vetoed for this reason.
REGISTERED SUPPORT / OPPOSITION :
Support
California Special Districts Association
Rural Council of Rural Counties
Siskiyou County Board of Supervisors
Opposition
None on file.
Analysis Prepared by : Ross Warren / B. & P. / (916) 319-3301