BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
SB 733 (Price)
Hearing Date: 05/23/2011 Amended: 05/11/2011
Consultant: Mark McKenzie Policy Vote: T&H 6-3
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BILL SUMMARY: SB 733 would require the High Speed Rail Authority
(HSRA) to include a strategy for ensuring small business
participation in contracts for the high speed rail project in
its January 1, 2012 business plan, or an addendum to that plan
by March 1, 2012. The bill would also require the HSRA to work
with the Employment Development Department (EDD) to develop a
strategy to ensure that at least 25 percent of the workforce on
any high speed rail work site is from the local workforce. This
local workforce participation strategy would also be included in
the business plan.
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Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Small business strategy$25-$50 Bond*
Local workforce strategy $25-$50, and $100 in ongoing
staff pressures Bond*
EDD assistance/contracts $25-$50 General/
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Federal
* High-Speed Passenger Train Bond Fund
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STAFF COMMENTS: This bill meets the criteria for referral to the
Suspense File.
Existing law establishes the High-Speed Rail Authority to plan,
design, construct, operate, and maintain a high-speed train
system in California, and requires the HSRA to adopt a business
plan by January 1, 2012 and every two years thereafter. The
business plan must include specified elements, including
patronage forecasts, estimates of costs and projected state,
federal, local, and private financing, an assessment of risks,
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and proposed chronology for construction. Existing law, the
Small Business Act, establishes a small business preference
within the state's procurement process designed to increase
small business participation in state contracts.
SB 733 would require the HSRA to work with the EDD to develop a
strategy to ensure that 25 percent of the workforce on
high-speed rail job sites is from the local workforce, defined
as residents of the local workforce investment area (LWIA).
Existing law charges the EDD with administering federal
Workforce Investment Act (WIA) funds allocated to the state.
These funds are distributed to each of the state's 49 LWIAs,
governed by local boards that use the funds for job training,
one-stop employment services, and operational costs. EDD does
not currently track residency of individual workers that use
these services and is not involved in hiring and recruitment
activities. As such, EDD's role and value in developing the
required strategy appears to be limited. Since the strategy
would be included in the business plan or addendum to that plan,
as specified, HSRA and EDD would have an accelerated schedule to
develop the strategy, or possibly hire consultants to perform
the work, with some guidance. Staff estimates that this effort
may require the equivalent of one fulltime staff person at both
HSRA and EDD for 1/4 of a year (to meet the March 1, 2012
deadline), plus any necessary outside contracting. Total costs
to develop the strategy may be in the range of $50,000 to
$100,000.
HSRA notes that it will be difficult, if not impossible to meet
the 25 percent local workforce requirement in most job
categories. Any strategy would likely need to include ongoing
recruitment and training, possibly through the LWIAs, and HSRA
staff to track, measure, report, and enforce the requirements,
creating ongoing cost pressures. The magnitude of these cost
pressures would depend upon the ultimate administrative
requirements of the program. Staff estimates these ongoing
staff pressures could be in the range of $100,000 annually for
the equivalent of 1 personnel year in the project construction
stage, which is expected to begin in 2012. If LWIA resources
are needed for recruitment or job training from the local
workforce, the bill could also create a redirection of federal
WIA funds from current activities to HSRA project purposes.
SB 733 also requires HSRA to include a small business
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participation strategy in the January 1, 2012 business plan, or
an addendum to that plan by March 1, 2012. HSRA notes that it
is currently working on the development of strategies for
including small business contractors in the high-speed rail
project. Therefore, any new costs associated with including
this strategy in the business plan would be relatively minor and
would primarily be associated with accelerating any such
strategy. Staff estimates HSRA staff and consultant time of .5
PY equivalent, or roughly $25,000 to $50,000 in 2011-12 to
complete any work on the strategy for inclusion in the business
plan.