BILL ANALYSIS
AB 727
Page 1
ASSEMBLY THIRD READING
AB 727 (Nielsen)
As Introduced February 26, 2009
Majority vote
BUSINESS & PROFESSIONS 9-0 APPROPRIATIONS 17-0
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|Ayes:|Hayashi, Emmerson, |Ayes:|De Leon, Nielsen, |
| |Conway, Eng, Hernandez, | |Ammiano, |
| |Niello, John A. Perez, | |Charles Calderon, Davis, |
| |Ruskin, Smyth | |Duvall, Fuentes, Hall, |
| | | |Harkey, Miller, |
| | | |John A. Perez, Price, |
| | | |Skinner, Solorio, Audra |
| | | |Strickland, Torlakson, |
| | | |Krekorian |
|-----+--------------------------+-----+--------------------------|
| | | | |
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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 : According to the Assembly Appropriations
Committee, any delay in the implementation of the annual budget
would result in a General Fund penalty cost for the state under
this legislation. Using this year's budget delay as an example,
if a budget were signed by September 23 (85 days into the start
of the fiscal year) for every $5 million in delayed RCD
AB 727
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payments, the penalty cost for this legislation would be
$500,000 in special funds.
COMMENTS : 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."
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 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.
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.
Analysis Prepared by : Ross Warren / B. & P. / (916) 319-3301
FN: 0001177