BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON GOVERNANCE AND FINANCE
                         Senator Robert M. Hertzberg, Chair
                                2015 - 2016  Regular 

                              
          
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          |Bill No:  |SB 1360                          |Hearing    |4/27/16  |
          |          |                                 |Date:      |         |
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          |Author:   |Bates                            |Tax Levy:  |No       |
          |----------+---------------------------------+-----------+---------|
          |Version:  |3/31/16                          |Fiscal:    |No       |
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          |Consultant|Weinberger                                            |
          |:         |                                                      |
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                 Local government:  municipal service agreements:  law  
                                enforcement services



          Prohibits a city that contracts with another city to provide  
          police services from charging for the overhead costs of police  
          protection that the city would incur in the absence of the  
          contract.


           Background 

           State law allows a county or a city to provide police services  
          to a city that enters into a contract to receive those services  
          from the county or city. 

          State law requires a county that provides police services to any  
          city pursuant to a contract to charge the city all those costs  
          which are incurred in providing the police services (SB 747,  
          Ayala, 1983).  A county is prohibited from charging a city  
          contracting for police service, either as a direct or an  
          indirect overhead charge, any portion of those costs which are  
          general overhead costs of operation of the county government.   
          General overhead costs are those costs which a county would  
          incur regardless of whether or not it provided police services  
          under contract to a city.  State law requires that any  
          determination of general overhead costs must be subject to court  
          review as to the reasonableness of such determination.  








          SB 1360 (Bates) 3/31/16                                 Page 2  
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          By contrast, state law does not impose similar requirements on a  
          city that enters into a contract to provide police services to  
          another city.  State law only requires that a contract between  
          two cities for providing police services must be for "valuable  
          consideration."  Some county officials worry that, read broadly,  
          this language may allow a city police department to structure a  
          bid in ways that would give it an unfair advantage over a county  
          sheriff's office that is competing for a police services  
          contract.  They want the Legislature to impose the same  
          requirements on cities' contracts for municipal police services  
          that current law already applies to counties' contracts.


           Proposed Law

           Senate Bill 1360 requires a city that provides law enforcement  
          services through its appropriate departments, boards,  
          commissions, officers, or employees to another city pursuant to  
          a contract or any other agreement authorized by specified  
          statutes must charge that city all the costs that are incurred  
          in providing those law enforcement services.  SB 1360 prohibits  
          the costs charged from including any costs that the city  
          providing the services reasonably determines are general  
          overhead costs.  The bill defines "general overhead costs" as  
          those costs that a city would incur regardless of whether or not  
          it provided law enforcement services pursuant to a contract or  
          agreement to the other city.

          SB 1360 specifies that any determination of general overhead  
          costs made by a city providing law enforcement services shall be  
          subject to judicial review as to the reasonableness of that  
          determination.

          The bill's provisions only apply to contracts or agreements  
          entered into, or renewed, on and after January 1, 2017.


           State Revenue Impact

           No estimate.


           Comments









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            Purpose of the bill  .  SB 1360 creates a level playing field for  
          cities and counties that compete to provide police services to a  
          city through a contract.  Because current law allows a city to  
          provide police protection services to another city without  
          limitation on the amount of overhead costs that can be  
          reimbursed under the contract, but does not allow counties to do  
          the same, counties have less flexibility in how they structure  
          their bids for municipal police services contracts.  SB 1360  
          responds to this lack of parity by imposing on cities the same  
          restrictions that current law imposes on counties, prohibiting  
          them from recovering general overhead costs through a police  
          services contract.


           Support and  
          Opposition   (4/21/16)


           Support  :  Association of Orange County Deputy Sheriffs.


           Opposition  :  Unknown.



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