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Governor Approves Gas Swap Plan to Save Transportation Projects

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Gov. Jerry Brown signed Assembly Bill 105 into law this week, which is expected to protect $2.5 billion to $3.5 billion of transportation funds essential to the survival of state, regional and local transportation programs.

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The Associated General Contractors of California were lobbying hard for the passage of the governor’s budget proposal asking for approval of the transportation tax swap. Proposition 26, approved by the voters in the November 2010 election, invalidated the 17.3-cents of gasoline excise taxes and a 1.75% sales tax rate on diesel, both of which were enacted to replace Proposition 42 revenues eliminated in the “gas tax swap” adopted by the legislature and signed by the governor back in March of 2010. Further, Proposition 22 limited the use of gas taxes or Highway User Tax Account (HUTA) funds for bond debt and general fund relief as agreed to in the swap, says the AGC.

AGCC and California’s transportation stakeholders lobbied for a comprehensive solution that retained these replacement revenues of $2.5 billion annually and also will provide nearly $1 billion in state general fund relief, according to the AGCC.

According to a statement, AGCC says “Passage of these two elements together was critical, not only to maintain the parameters of the agreement in the transportation swap, but to preserve a bare bones revenue stream that is already meeting less than half of annual state and local maintenance and safety improvement project needs.”

Meanwhile, AGCC’s legislative committee met last week in Sacramento to review over 300 legislative bills affecting the construction industry and received an update on the state’s budget negotiations.

AGC is sponsoring or co-sponsoring four measures in the 2011 legislative session. These bills include:

• AB 780 (Charles Calderon, D-City of Industry), would allow sales tax reimbursement to contractors who entered into a fixed-price contract prior to an extension or increase in the state sales tax rate after July 1 of this year. The intent is to protect contractors who were not able factor the sales tax increase into their bids and contracts.

• SB 438 (Anthony Cannella, R-Ceres), would provide that workers working in a yard, shop or plant off the site of construction shall only be deemed to be employed on a public works and paid prevailing wages if that yard, shop, or plant is specifically established for that public work project. AGC says that this bill addresses a recent court decision that significantly expands the application of prevailing wage. (Co-sponsored with the Construction Employers Association.)

• SB 293 (Alex Padilla, D-Pacoima), would specify that requiring a preliminary notice to enforce a claim against a payment bond does not apply to a laborer who is exempt from the requirement of giving a preliminary notice. This provision is sponsored by the State Council of Laborers and was part of legislation sponsored by AGC during the 2010 legislative session.

• AB 720 (Isadore Hall, D-Los Angeles), will limit the authority of county road commissioners to use “force account” authority to perform road construction with their own county forces and not put road projects out to bid to the private sector. (Co-sponsored with the Construction Industry Force Account Council and the State Council of Laborers.)

Other bills reviewed by the committee covered issues including local hire ordinances, construction liability, public works retention, prevailing wage law, infrastructure development, worker’s compensation, transportation financing, and streamlining of state regulations.

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