BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 2272
Author: Gray (D)
Amended: 8/19/14 in Senate
Vote: 21
SENATE ENERGY, UTIL. & COMMUNIC. COMM. : 8-1, 6/17/14
AYES: Padilla, Block, Cannella, Corbett, De León, DeSaulnier,
Hill, Pavley
NOES: Fuller
NO VOTE RECORDED: Knight, Wolk
SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE : 4-1, 6/25/14
AYES: Hueso, Leno, Padilla, Mitchell
NOES: Wyland
SENATE APPROPRIATIONS COMMITTEE : 5-0, 8/14/14
AYES: De León, Hill, Lara, Padilla, Steinberg
NO VOTE RECORDED: Walters, Gaines
ASSEMBLY FLOOR : 56-17, 5/27/14 - See last page for vote
SUBJECT : Public works: prevailing wage
SOURCE : California-Nevada Conference of Operating Engineers
DIGEST : This bill establishes that infrastructure projects
funded by the California Advanced Services Fund (CASF) are
public works projects.
ANALYSIS :
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Existing law:
1.Establishes the CASF, administered by the Public Utilities
Commission (PUC), to help fund deployment of broadband
infrastructure and bring high-speed Internet access to all
areas of the state and authorizes collection of a customer
surcharge on intrastate communications services of up to $315
million for the CASF through 2015 with collections capped at
no more than $25 million per year.
2.Authorizes the PUC to use ratepayer funds collected for
universal service programs, including the CASF, to compensate
regulated telephone corporations for their costs of providing
universal service.
3.Requires the prevailing wage rate to be paid to all workers on
"public works" projects over $1,000 and defines "public work"
to include, among other things, construction, alteration,
demolition, installation or repair work done under contract
and paid for in whole or in part out of public funds.
4.Exempts from the definition of a public work certain projects
including work done directly by any public utility company
pursuant to an order of the PUC or other public authority and
some affordable and low-income housing projects.
5.Defines "awarding body" or "body awarding the contract" to
mean department, board, authority, officer or agent awarding a
contract for public work.
This bill:
1.Establishes that infrastructure projects funded by the CASF
are "public works" projects.
2.Specifies that the PUC is not the "awarding body" or "body
awarding the contract."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
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Annual costs of approximately $280,000 from the General Fund
to the Department of Industrial Relations for increased
enforcement of prevailing wage laws.
One-time costs, estimated at $75,000 to the CASF (special) to
the PUC to determine any necessary changes to existing CASF
infrastructure grants.
Unknown cost pressures, likely in the millions of dollars, to
the CASF as a result of increased project costs both for
existing and future projects.
SUPPORT : (Verified 8/14/14)
California-Nevada Conference of Operating Engineers (source)
California Labor Federation
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California State Council of Laborers
National Electrical Contractors Association
OPPOSITION : (Verified 8/14/14)
California Association of Competitive Telecommunications
Companies
California Communications Association
California's Independent Telecommunications Companies
Consolidated Communications Inc.
ARGUMENTS IN SUPPORT : According to the author:
The [PUC] authorized the [CASF] in 2007 to provide grants to
telephone corporations to bridge the digital divide in
unserved and underserved areas of the state. The Central
Valley Next Generation Broadband Infrastructure Project
(CVNGBIP) is a 1,371 mile fiber-optic infrastructure project
encompassing 18 counties that will serve a population of 4
million people when completed. The $66.6 million project is
funded through federal, state, and local funds, and receives
10% of its total budget from the CASF. The CVNGBIP petitioned
the Department of Industrial Relations (DIR) with the belief
that prevailing wage requirements do not apply to the project,
because state funds constitute only 10% of the project's total
budget. In November 2013, Director Christine Baker determined
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that, because the CVNGBIP is partially funded by state monies,
the project is subject to California's prevailing wage
requirements.
AB 2272 simply codifies Director Baker's determination in
statute to avoid confusion and legal questions in the future
and will give clarity to contractors who are bidding CASF
funded-projects, and to labor standards officers who are
responsible for enforcing labor laws on the project.
ARGUMENTS IN OPPOSITION : The California's Independent
Telecommunications Companies writes in part:
There is simply no business case for providers to build in
these areas without the grant funding because the potential
customer base is too small to cover the infrastructure
deployment costs. Applicants for CASF grants must supply
thirty to forty percent of the capital required to complete a
proposed project, and are hard pressed to achieve the
financial margins for projects to pencil out.
Unlike the [American Recovery and Reinvestment Act of 2009]
Broadband Technology Opportunities Program, the CASF rules and
solicitations did not state that projects are public works
subject to prevailing wage requirements. As such, grant
recipients did not include these requirements in their cost
estimates. With estimated margins already razor thin,
existing projects could easily be stalled or shelved by the
cost of complying with public works requirements.
ASSEMBLY FLOOR : 56-17, 5/27/14
AYES: Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta,
Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Cooley, Dababneh, Daly, Dickinson, Eggman, Fong, Fox,
Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray,
Hall, Roger Hernández, Holden, Jones-Sawyer, Levine,
Lowenthal, Medina, Mullin, Muratsuchi, Nazarian, Nestande,
Pan, Perea, John A. Pérez, V. Manuel Pérez, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Weber,
Wieckowski, Williams, Yamada, Atkins
NOES: Achadjian, Chávez, Conway, Dahle, Donnelly, Beth Gaines,
Grove, Hagman, Harkey, Jones, Logue, Maienschein, Mansoor,
Melendez, Wagner, Waldron, Wilk
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NO VOTE RECORDED: Allen, Bigelow, Linder, Olsen, Patterson,
Quirk-Silva, Vacancy
JG:k 8/19/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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