BILL ANALYSIS                                                                                                                                                                                                    Ó




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  AB 583                      HEARING:  6/19/13
          AUTHOR:  Gomez                        FISCAL:  No
          VERSION:  2/20/13                     TAX LEVY:  No
          CONSULTANT:  Weinberger               

                                COUNTY LIBRARIES
          

          Requires a city or library district that withdraws from a  
          county library system to comply with specified conditions  
          before operating a library with a private contractor. 


                           Background and Existing Law  

          More than a century ago, the Legislature authorized  
          counties to establish county free library systems (SB 289,  
          Hans, 1911).  Before Proposition 13 (1978), a county could  
          levy a separate property tax rate to support its library  
          system.  Nearly 30 county free libraries had separate  
          rates.  A county could extend the property tax rate to  
          parcels in a city that wanted to join the library system  
          and would cease to levy the rate within a city that  
          withdrew from the system.

          After Proposition 13, the Legislature divided the remaining  
          property tax revenues among local governments.  Although  
          they were not separate institutions, state law treated  
          county free libraries as if they were special districts  
          because they had their own property tax rates before  
          Proposition 13.  The county free libraries received shares  
          of the property tax revenues and they could receive money  
          from the Special District Augmentation Fund (AB 8, L.  
          Greene, 1979).  In general, to withdraw from a county  
          library system, a city must negotiate the amount of  
          property tax revenues, if any, that it will receive from  
          the county library system.  Different procedures apply to  
          city withdrawals from county free library systems in Los  
          Angeles and Riverside counties (AB 1998, Mountjoy, 1996 and  
          AB 927, Thompson, 1997).

          Two years ago, the Legislature imposed additional  
          requirements on a city or library district that intends to  
          withdraw from a county free library system and operate a  




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          library with a private contractor (AB 438, Williams, 2011).  
           Specifically, state law provides that a city or library  
          district that "intends to withdraw from the county free  
          library system and operate the city or district's library  
          with a private contractor that will employ library staff to  
          achieve cost savings" must:
                 Provide public notice.
                 Demonstrate specified cost savings.
                 Publicly and competitively bid contracts.
                 Limit a contract's term to five years or less.
                 Include, in a contract, provisions related to staff  
               qualifications, hiring practices, contract  
               termination, contractor disclosure, audits, and  
               performance standards.
                 Not approve a contract solely to produce savings  
               from lower contractor pay rates or benefits.

          Last year, a Ventura County Superior Court decision in  
          Service Employees International Union Local 721 v. City of  
          Simi Valley found that the requirements enacted by AB 438  
          apply only to a city or district that concurrently intends  
          to withdraw from a county library system and  operate its  
          library with a private contractor.  The decision suggests  
          that these requirements do not apply to a local entity that  
          withdraws from the county library to operate its own  
          library, even if the withdrawal ultimately may lead to  
          privatization at a later date.

          Labor union officials want the Legislature to clarify that  
          a city or library district that withdraws from a county  
          library after 2011 must comply with specified statutory  
          requirements before operating a library with a private  
          contractor, regardless of whether the city or district  
          intended to privatize at the time it withdrew from the  
          county system.


                                   Proposed Law  

          Assembly Bill 583 requires the board of trustees, common  
          council, or other legislative body of a city or the board  
          of trustees of a library district in which a withdrawal  
          from the county free library system becomes effective on or  
          after January 1, 2012 to comply with specified requirements  
          before entering into a contract to operate the city's or  
          the district's libraries with a private contractor that  





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          will employ library staff to achieve cost savings.  AB 583  
          provides that the specified requirements do not apply if  
          the city or district libraries are funded only by the  
          proceeds of a special tax imposed by the city or district,  
          pursuant to state law.


                               State Revenue Impact
           
          No estimate.


                                     Comments  

          1.   Purpose of the bill  .  Assembly Bill 583 closes a  
          loophole in current law that lets a city or library  
          district use a two-step process to circumvent requirements  
          enacted by the Williams bill in 2011.  A city or library  
          district that first withdraws from a county library system  
          without expressing its intent to operate libraries with a  
          private contractor can later operate libraries with a  
          private contractor without meeting the additional statutory  
          requirements.  AB 583's proponents argue that the  
          Legislature did not intend to limit the Williams bill's  
          requirements to only those cities and library district that  
          intend, at the time they withdraw from a county system, to  
          contract with a private entity for services.  The bill  
          amends current law to apply the additional statutory  
          requirements to any city or district that withdraws from a  
          county library system after January 1, 2012, when that city  
          or district chooses to operate libraries with a private  
          contractor.

          2.   Home rule  . Deciding how to provide municipal services  
          to city residents is what city council members and special  
          district directors are elected to do.  AB 583 exacerbates  
          the 2011 Williams bill's erosion of local officials'  
          ability to manage local affairs, making it more difficult  
          for them to preserve essential public services during tough  
          financial times.  Local elected officials are  
          well-positioned to judge the merits of a library service  
          contract and can either negotiate better terms or reject a  
          contract altogether.  The Committee may wish to consider  
          whether AB 583 imposes unnecessary new restrictions on  
          these local contracting decisions.






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          3.   Back to the future  ?  On February 28, 2013 the City of  
          Simi Valley entered into a contract with Library Systems  
          and Services, Inc. to operate the Simi Valley Public  
          Library beginning on July 1, 2013.  Because the Ventura  
          County Superior Court ruled that Simi Valley's effective  
          withdrawal date from the county library system was January  
          11, 2012 and AB 583 applies to any city or district that  
          withdraws from a county library system on or after January  
          1, 2012, Simi Valley officials worry that AB 583 could be  
          interpreted to retroactively disallow the city's contract  
          with LSSI.  If AB 583 becomes law, its provisions take  
          effect on January 1, 2014.  Article I, Section 9 of the  
          California Constitution prohibits the Legislature from  
          passing laws that impair obligation of contracts and AB  
          583's provisions do not convey any intent to retroactively  
          abrogate contracts entered into before the bill's effective  
          date.  A plain interpretation of AB 583 is that it applies  
          the Williams bill's contracting requirements to any city or  
          district that: 
                 Withdraws from a county library after January 1,  
               2012,  and  
                 Enters into a contract for library services after  
               the bill takes effect.
          The Committee may wish to consider whether it is necessary  
          to clarify further that AB 538 does not apply retroactively  
          to library services contracts.


                                 Assembly Actions  

          Assembly Local Government Committee:  7-1
          Assembly Floor:                    52-19


                         Support and Opposition  (6/13/13)

           Support  :  SEIU; AFSME; California Fair Elections Campaign  
          (SCV Fair Elections Committee); California Labor  
          Federation; Glendale City Employees Association; Los  
          Angeles Alliance for a New Economy; Organization of SMUD  
          Employees; San Bernardino Public Employees Association; San  
          Luis Obispo County Employees Association; Sana Rosa City  
          Employees Association, more than 400 individuals. 

           Opposition  :  City of Simi Valley; League of California  
          Cities; Library Systems and Services, Inc.   





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