BILL ANALYSIS                                                                                                                                                                                                    




                   Senate Appropriations Committee Fiscal Summary
                           Senator Christine Kehoe, Chair

                                           258 (Oropeza)
          
          Hearing Date:  5/11/2009        Amended: 4/21/2009
          Consultant:  Bob Franzoia       Policy Vote: B,P&ED 7-3
          _________________________________________________________________ 
          ____
          BILL SUMMARY: SB 258 would, after January 1, 2012, prohibit a  
          contractor from performing work as a contractor or subcontractor  
          on a public work contracted for the state or a local agency  
          unless he or she has obtained a public works certification from  
          a state certifying agency to be determined by the Legislature.   
          This bill would require the certifying agency to establish and  
          validate standards of competency through a prequalification  
          certification system by January 1, 2011.  The certifying agency  
          would also be authorized to deny or revoke a public works  
          certification.  This bill would require the agency to charge  
          each applicant a fee in an amount sufficient to pay for the  
          costs of administering prequalification and certification, not  
          to exceed certain amounts.  This bill would create the  
          continuously appropriated Public Works Certification Fund in  
          which fee moneys would be deposited and used only for these  
          purposes.  Because this bill would create a continuously  
          appropriated fund, this bill would make an appropriation.
          _________________________________________________________________ 
          ____
                            Fiscal Impact (in thousands)

           Major Provisions         2009-10      2010-11       2011-12     Fund
           New certification for public                            
          works contractors
            - licensing          $389       $688        $377      Special*
                                                        $115 ongoing  

            - enforcement        $0         $161        $321
                                                        $321 ongoing

           - testing             $60

          Application fee        ($825)     ($825)      ($130)    Special*
          (revenue)                                     ($130) ongoing

          * Public Works Certification Fund
          _________________________________________________________________ 










          ____
          STAFF COMMENTS: Based on an analysis of Contractors' State  
          License Board (CSLB) license classifications, it is estimated  
          there will be 33,000 public works certification applications  
          initially and 2,600 applications ongoing.

          This bill indicates that the public works certification shall be  
          obtained from a state certifying agency to be determined by the  
          Legislature.  This lack of specificity prevents implementation  
          of the provisions of the bill.  A version of this bill from a  
          previous session required the CSLB be responsible for  
          implementing the program.  Staff recommends the bill be amended  
          to specify the CSLB be the certifying agency with the  
          understanding 
          that a different and presumably more appropriate, certifying  
          agency may be identified at a later time.
          Page 2
          SB 258 (Oropeza)

          This bill states the certifying agency may charge a one-time  
          application fee of no more than $65 until December 31, 2014, and  
          no more than $125 beginning January 1, 2015.  Assuming an  
          application fee of $50, this bill would generate the following  
          revenue: 
          - 2010-11. $825,000 (33,000 applications/2 x $50)
          - 2011/12: $825,000 (33,000 applications/2 x $50)
          - 2012-13: $130,000 (2,600 applications x $50)
          - Ongoing: $130,000 (2,600 applications x $50)

          In order to maintain legislative oversight, staff recommends the  
          bill be amended to delete the continuous appropriation.

          This bill is similar to SB 1698 (Romero) 2008 which was vetoed  
          by the Governor with the following message:

          I believe that sufficient safeguards are already in place to  
          prevent contractors from bidding on public works projects if  
          they fail to comply with current Labor Code provisions.  This  
          bill would create barriers to small business by adding  
          additional requirements to become a qualified bidder on public  
          works projects, while providing little additional value to the  
          public works process.  By creating this barrier, competition on  
          public works projects could be reduced, that may result in  
          increased bid and project costs.