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Budget delay impacts
construction
For more than a month, California leading
lawmakers have sought to negotiate a solution to the state's $19.1
billion budget gap for Fiscal Year 2010-2011. With the budget overdue
and the state bleeding money, the California Department of
Transportation (Caltrans) unveiled its plan in the event that the budget
impasse continues into September.
"Funding for transportation projects worth over $2.1 billion that are
contingent on the approval of the state budget may either be deferred or
delayed," according to a Caltrans press release. "In addition, the
department cannot award over $900 million in new contracts to
construction firms, and payments to contractors on $9.5 billion of
current construction may be delayed in the coming months due to the lack
of available cash."
Caltrans is receiving funds from sources including the gas tax, but
lacks the authority to use these funds without a state budget explicitly
providing for it. Further, it is unclear whether said funds are adequate
to Caltrans' needs.
While Caltrans did not mention the usage of IOUs, state controller Jon
Chiang said on August 18th that the government could begin using IOUs in
lieu of paying its bills in the coming weeks. Last year the state was
forced to issue $2.6 billion in IOUs as a result of a similar budget
standoff.
The Associated General Contractors of California has issued an alert
recommending that "all contractors working on public works projects must
contact the public agency contracting the work and confirm payment
status for the project."
The Engineering and Utility Contractors Association has also issued an
alert and is calling on its members to contact their representatives in
the Assembly and Senate and urge them to compromise on a budget
solution.
The Democrats' presented a deficit-reduction proposal earlier this
month, but the non-partisan Legislative Analyst's Office declared that
its planned tax swap would not, as claimed, lower the tax burden for
many citizens. For their part, Legislative Republicans and the Governor
have said that tax increases are a non-starter and are demanding deep
cuts to state programs, some of which the Democrats are trying to
preserve.
California's budget problem is compounded by the fact that state brought
in almost 2% less revenue than was forecasted in July - amounting to
some $91 million - and overspent what was forecast for July by close to
a billion dollars.
To read the Caltrans press release
and memorandum on the overdue budget's impact, visit:
http://www.dot.ca.gov/hq/paffairs/news/pressrel/10pr48.htm
To read the Engineering and Utility Contractors Association's
Legislative Alert, visit:
http://www.euca.com/displaycommon.cfm?an=1&subarticlenbr=469
To read the AGC's Budget Alert, visit:
http://www.agc-ca.org/newslisting.aspx?id=9418
Legislative Watch
California's
legislators have until August 31st to send bills from the 2009-2010
Fiscal Year to the governor for his consideration. Below are three bills
that, if approved, will alter contracting and procurement regulations in
California.
SB 1484: An
act to add and repeal Section 14838.8 of the Government Code, relating
to public contracts.
SB 1484 would prevent the "bundling" of state contracts, where
"bundling" refers to awarding a single contract for the provision of
goods or services in which the contractor is providing an agency with a
wide array of goods and services that it is only able to provide due to
the economies of scale that come with being a large company. This
practice of bundling, due to the complexity of the heavy demands it
makes on the supplier, can crowd out small businesses. Bundling will now
only be possible under a state of emergency or after a complicated
negotiation with the California Small Business Advocate. However,
language stating that large companies subcontracting work to small
companies constitutes "bundling" has been struck out.
SB 967: An act to add Article 7 (commencing with Section
10390) to Chapter 2 of Part 2 of Division 2 of the Public Contract Code,
relating to public contracts.
SB 967 would give a preference amounting to 5% of the bid price to a
company bidding on a contract that has employees who are 90% California
residents. This provision applies only to bids that: are over $1
million, related to the ARRA, and take place on or before July 1, 2011.
AB 2627: An act to amend Sections 10115.1, 10115.4, 10115.10,
and 10115.15 of the Public Contract Code, relating to state contracts.
AB 2627 requires disabled veterans to have at least a 10%
service-related disability to be considered disabled for the purpose of
disabled veteran contracts. It also establishes penalties for defrauding
the state's minority/disabled programs, changes the small business
utilization plans that contractors have to submit to cover minority- and
women owned-businesses, and removes disabled veteran businesses from
this requirement.
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