BILL ANALYSIS
AB 2181
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Date of Hearing: May 5, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2181 (Hagman) - As Amended: April 12, 2010
Policy Committee: Business and
Professions Vote: 9-2
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill:
1)Increases the dollar limit for state agency minor capital
outlay projects from $400,000 to $800,000.
2)Requires the Department of Finance (DOF) to adjust the minor
capital outlay limit every two years based on the change in
the California Construction Cost Index (CCCI) over that time
period.
FISCAL EFFECT
Negligible fiscal impact, as the bill only impacts the budgeting
and administration of state capital outlay projects.
COMMENTS
1)Background . State capital outlay projects are budgeted as
either major or minor projects. Major capital outlay projects
are those with a total cost exceeding $400,000. Each major
capital outlay project is budgeted to an agency as a separate
line item and in one or more phases-i.e. land acquisition,
preliminary plans, working drawings, construction, and
equipment. With the exception of some state agencies that
have delegated authority, major capital outlay projects are
administered by the Department of General Services (DGS) on
behalf of the various state agencies. Minor capital outlay
projects are those with total costs of $400,000 or less, and
are typically budgeted in a lump sum appropriation to the
state agency. For example, in the 2009-10 Budget Act, the
AB 2181
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California Department of Corrections and Rehabilitation (CDCR)
minor capital outlay appropriation totaled $3.9 million. In
general, state departments can contract directly for minor
capital outlay projects without using the DGS's management
services. The $400,000 limit for minor capital outlay was
established in statute in 2001.
2)Purpose . This bill is sponsored by CDCR. According to a CDCR
analysis, due to the rising costs of construction materials
and projects at correctional facilities, construction costs
for many projects exceed the current minor capital outlay
limit. In 2008-09, approximately 28 proposals considered for
minor capital outlay projects exceeded the existing limit due
to the added costs associated with correctional facility
construction. This bill increases the minor capital outlay
limit to $800,000, and directs DOF to henceforth adjust the
limit biennially based on construction cost inflation.
3)Recommended Amendment . Staff recommends the bill be amended
to make the new minor capital outlay limit $600,000 rather
than $800,000. CDCR indicates that, adjusting for
construction cost inflation alone would bring the limit to
$750,000. However, the CCCI has actually increased by only
38% since January 2001, thus adjusting the current limit for
this increase yields $560,000. Therefore, a $600,000 limit
seems reasonable. Per the bill, this limit would henceforth
be increased biennially according to changes in the CCCI.
4)Opposition . According to the California Association of
Professional Scientists, "Increasing these cost limits at a
time when the state needs to scrutinize every contract entered
into to save as much money as possible is, in our opinion,
irresponsible."
This opposition does not appear to be on point, however, as
the bill only affects the budgeting and administration of
capital outlay (public works) projects, the construction of
which are advertised for bid and awarded to the lowest
responsible bidder.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081
AB 2181
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