BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1508| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1508 Author: Roger Hernández (D) Amended: 3/26/15 in Assembly Vote: 21 SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 6/22/15 AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez, Jackson, Mendoza, Wieckowski SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/27/15 AYES: Lara, Beall, Hill, Leyva, Mendoza NOES: Bates, Nielsen ASSEMBLY FLOOR: 77-2, 6/1/15 - See last page for vote SUBJECT: Underground economy: policy adviser SOURCE: Author DIGEST: This bill requires the Governor to designate an independent policy adviser for the underground economy. ANALYSIS: Existing law: 1)Establishes an enforcement division in the Contractors State License Board (CSLB) and requires the unit to rigorously enforce the Contractors Law prohibiting all forms of unlicensed activity. (Business and Professions Code (BPC) § 7011.4 (a)) AB 1508 Page 2 2)Authorizes the CSLB enforcement division to have free access to all places of labor when participating in the enforcement activities of the Joint Enforcement Strike Force on the Underground Economy (JESF). (BPC § 7011.4 (c)) 3)Authorizes an unlicensed contractor to advertise for construction work only if the advertisement states that he or she is not licensed. (BPC § 7027.2) 4)Makes it a misdemeanor for an unlicensed contractor to advertise for construction or work of improvements or act in the capacity of a contractor. Imposes specified civil penalties, including fines and imprisonment against the unlicensed contractor and authorizes CSLB to cite the unlicensed contractor. (BPC § 7028) 5)Establishes the JESF to coordinate efforts in targeting tax evasion and cash-pay violations, and authorizes the sharing of investigative and enforcement capabilities between JESF participants. (Unemployment Insurance Code § 329) This bill: 1)Requires the Governor to designate an independent chief policy adviser for the underground economy. Specifies that the adviser's responsibilities shall include, but not be limited to, the following: a) Monitoring the state's existing underground economy task forces and interagency partnerships to ensure that they are organized efficiently. b) Evaluating whether any task forces and partnerships should be eliminated or restructured to improve effectiveness. c) Evaluating whether existing task forces and partnerships have sufficient resources and whether gaps or overlaps exist in combating the underground economy. d) Reviewing enforcement staffing and funding levels and developing recommendations to adequately fund enforcement. e) Developing recommendations to eliminate barriers that AB 1508 Page 3 prevent task forces and partnerships from being fully effective. f) Leading a strategic planning process to develop performance outcomes for combating the underground economy. 1)Requires the adviser, on or before than January 1, 2017, to submit a report to the Governor and the Legislature that summarizes the adviser's findings and recommendations, with a particular emphasis on any recommended administrative or legislative changes. Background In March 2015, the Little Hoover Commission released a report entitled, "Level the Playing Field: Put California's Underground Economy Out of Business." That report made a number of findings and recommendations. Among these, the Commission found that although numerous government organizations focus on tackling the underground economy, no one is directly in charge. Hardworking government employees do their best to combat the problem, but often without adequate resources or the data or equipment to effectively do their jobs. There are four major state task forces focused on the underground economy, but it is not clear, overall, what the outcomes have been. The Commission recommended the Governor appoint an independent leader, in consultation with state leaders who have jurisdiction over the underground economy, with clear authority to untangle any overlaps in responsibilities, bridge silos and move efficiently toward results. The Commission recommended that this leader should report back on administrative or legislative changes needed to overcome the obstacles. This bill aims to implement the Commission's recommendations. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Senate Appropriations Committee, this bill will result in General Fund costs, likely in the low hundreds of thousands of dollars annually, to establish a chief policy adviser, evaluate the various task forces and partnerships, and AB 1508 Page 4 submit a report to the Legislature. SUPPORT: (Verified8/29/15) California Pool and Spa Association California Professional Association of Specialty Contractors Pacific Association of Building Service Contractors Plumbing-Heating-Cooling Contractors Association of California State of California Auto Dismantlers Association The Little Hoover Commission OPPOSITION: (Verified8/29/15) None received ARGUMENTS IN SUPPORT: Supporters state that an unfair playing field undermines state laws that protects consumers and workers, harms law-abiding businesses, and defrauds the state of significant tax revenue. ASSEMBLY FLOOR: 77-2, 6/1/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gipson, Gomez, Gonzalez, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NOES: Chávez, Gatto NO VOTE RECORDED: Gordon Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-4104 AB 1508 Page 5 8/30/15 19:27:53 **** END ****