BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNANCE AND FINANCE Senator Robert M. Hertzberg, Chair 2015 - 2016 Regular ------------------------------------------------------------------ |Bill No: |SB 1360 |Hearing |4/27/16 | | | |Date: | | |----------+---------------------------------+-----------+---------| |Author: |Bates |Tax Levy: |No | |----------+---------------------------------+-----------+---------| |Version: |3/31/16 |Fiscal: |No | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant|Weinberger | |: | | ----------------------------------------------------------------- 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 of ? 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 SB 1360 (Bates) 3/31/16 Page 3 of ? 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. -- END --