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HomeMy WebLinkAbout10/07/1997, C-2 - GOVERNMENT COST SAVINGS AND TAXPAYERS PROTECTION (AKA PECG INITIATIVE) council j acEnaa Repopt CITY OF SAN LUIS OBISPO FROM: Mike McCluskey,Director of Public WorksO'\ Prepared By: Al Cablay,Public Works Manager SUBJECT: Government Cost Savings and Taxpayers Protection(aka PECG Initiative) CAO RECOMMENDATION Adopt a resolution electing to oppose the PECG Initiative DISCUSSION This proposed ballot initiative would prohibit the awarding of contracts for the engineering or design of projects that involve"State funds", except to State employees.The initiative proposes to add a new section to the California Constitution and which would restrict the State's ability to enter into contracts with either private or local public entities for engineering, architectural, landscape architectural,surveying,environmental or engineering geology services. This initiative also restricts private or local public agencies, including San Luis Obispo,when the service contract involves the expenditure of State fiords or relates to a program,project, or public work for which the State or any State agency has or will have ownership,liability,or responsibility for construction,operation,or maintenance.An analysis by the State Controller would have to be conducted to compare the cost of performing the work with State civil service employees with the cost of using a consultant or contractor. A more in depth look at a few of the provisions of the initiative and staff comments are as follows: I. Only State workers could perform the work if the State Controller finds that either: A. an outside consultant would cost more than the direct cost of performance of the work with State civil service employee;or B. the contract would not be in the pubic interest and would have an adverse impact on public health or safety;or C. would result in lower quality work than if performed by State civil service employees. Il. The Initiative prevents the awarding of contracts for design and engineering services involving State funds controlled by the State (pass-through finding from Federal Governmentagencies)if State civil service employees can do the work at a lower cost: A. Examples of these funds are: Gas Taxes, FEMA, and Seismic Bridge Retrofit, ISTEA/NEXTEA and Clean Water Act funds. Due to the way the Initiative is worded local jurisdictions,such as San Luis Obispo,would lose their ability to hire private consultants for design projects and it may actually impact the ability of City staff to design certain projects. Some examples of these project type fiords are as follows: Council Agenda Report-Government Cost Savings and Taxpayers Protection Page 2 Projects Funds Consultant/Staff A. SLO Creek Repair............... Use of FEMA fimds Consultant B. Higuera Bridge Project......... Use of HBRR funds Consultant C. WWTP Upgrade............... Use of SRF funds Consultant D. Handicap Ramp Program...... Use of CDBG funds Staff E. Street Overlay/Reconstruction... Use of State Gas Tax Staff F. Jennifer Street Bridge............ Use of Prop 116 funds Consultant 3. The criteria proposed in the Initiative to determine whether a private contract maybe awarded is a comparison of costs. The formula within the Initiative would effectivelyprevent competition of the private sector with employees of the State. A. This legislation allows competition;but only theoretically.When comparing"bids of private firms to that of State employees the State must only account for their direct costs,while the private firms must also account for direct,indirect as well as profit,into its cost estimate.Thus it would be no contest,the State would win every project. B. If the contract bid for the lowest qualified bidder happens to exceed the anticipated contract costs as determined from the Controller's analysis, the Controller would be required to prepare a revised analysis to determine whether or not State civil consultants and contractors would assume full responsibilityfor the contract 4. Longterm effects are predicted to reduce local authority and to cause signicantproject delays with anticipated increased costs. 5. All contracts in excess of$50,000 would be subject to a noticed competitive bidding process with award to the lowest qualified bidder. 6. Consultants and contractors would assume full responsibilityfor their work and would be required to defend and indemnify the State and the contracting entityfrom all legal action resulting from the performance of the contract. The only exceptions to the proposed legislation that would be allowed are cases where a delay to a project would endanger public health or safety. It is unclear at this time whether this determination would be made by the city or a State agency such as the Department of Occupational Health and Safety(OSHA). It is staff s understanding that this issue also will need further clarification if the Initiative is passed. Analysis This Initiative is yet another example of the over use of California's Initiative process. Due to Governor Wilson's positive position on the usrof private consulting engineers and architects,the State Engineers Union,Professional Engineers in California Government(PECG)created an initiative that would change the California Constitution so as to practically guarantee all design work would be done by State employees. c-a Council Agenda Report-Government Cost Savings and Taxpayers Protection Page 3 While there is certainly much attention paid to the"big bucks"spent on consultants,staff feels they do have their place in the spectrum of the design field. The City allocates its use of consultants only for those projects which require certain expertise or for project timing issues. The City believes in keeping its staff competitive with the private sector. It is unfortunate that State employees are so afraid of competition that they have taken the extraordinary measure of writing an initiative that would essentially guarantee them job security for life. This is bad legislation that will negatively impact the State as well as the City if San Luis Obispo. CONCURRENCES The League of California Cities has taken an active position opposing this proposed legislation and together with approximately fifty (50) other organizations, such as the California Chamber of Commerce,California Taxpayer's Association,California Building Industry,American Institute of Architects,American Planning Association,American Society of Civil Engineers and the Associated General Contractors of Califomiahave united to oppose this Initiative. FISCAL IlOPACT This Initiative will have a major economic impact on the local economy by delaying the construction and repair of critically needed infrastructure. The biased cost comparison formula contained in the Initiative effectively halts private firms from engineering and designing any public works projects with State or Federal pass-through funding.In many Counties throughout the State, programs such as the earthquake recovery program could be delayed for many years as a result of the Initiative. Attachments Resolution Taxpayers Fed up With More Bureaucracy letter L-cou=H a wdarepor&pecg2.rpt RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO OPPOSING THE GOVERNMENT COST SAVINGS AND TAXPAYERS PROTECTION AMENDMENT(AKA PECG INITIATIVE) WHEREAS, every day billions of dollars of critical building, engineering and design projects are underway,from seismic retrofitting to flood control to schools and hospitals; and WHEREAS, state,regional and local governments are currently allowed the flexibility to contract with private firms, on a competitive basis,to design these projects; and WHEREAS,this process allows government the essential flexibility to use private firms to deliver a project on time and cost effectively;and WHEREAS,the so-called"Government Cost Savings and Taxpayers Protection Amendment"completely changes the process by giving the state bureaucracy a virtual monopoly on designing every project;and WHEREAS, this will thereby force the City of San Luis Obispo and other cities, counties, schools, special districts,regional governments and even many private businesses to use the state bureaucracy to design roads,parks,hospitals,health clinics, schools,water treatment facilities,flood control walls and other critical structures-including all engineering, design, geological and environmental work; and WHEREAS,local governments such as the City of San Luis Obispo would not be able to hold the state bureaucracy accountable. NOW,THEREFORE,BE IT RESOLVED,that the City Council of the City of San Luis Obispo opposes the"Government Cost Savings and Taxpayers Protection Amendment". Upon motion of , seconded by ,and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of . 1997. ATTEST: Bonnie L. Gawf, City Clerk Allen Settle, Mayor APPROVED AS TO FORM: A rney ry c -a- � ATAX ERS FEd U WIThl OR PY P STATEBUREAUCRACY tiewaived caraomia chamber of Commerce June 25, 1997 California TaxpayedAssociation JUN 3 0 1997 California Schad BoardsAssodabon Coabm forAdequate School California tleaftareAssociation City Qf S.L.O. League of California cities Dear City Manager: Administration Associated General Contractors of Caldoma Association of carcoma Water There will be a measure on the next statewide ballot(June, 1998)that Agencies atidirV Industry would adversely impact your city. We need your city council's opposition to Assodation this proposition which would eliminate your council's control over local CafforniaTransitAssocialian California ManufacturemAssodafion infrastructure.projects and would cause years of delays in building vitally California llhgliwayUsers Conference needed jails,parks,roads and other key projects. Any park,public works,road c0°5UeEngineers and Lane Surveyors otCaroma or ail project is captured by this initiative if any state funding is involved Amedcdn Inshwle dAnihitects, including bond funding—or if the state has any ownership, liability or cammm comma LalinBusinessAssocialim responsibility for construction, operation or maintenance. California Business Properties Catito�AAsssoca6ondsanhatan The League of California Cities has joined with the California School Agencies Boards Ass'n, California Taxpayers' Ass'n and California Chamber of catirome Contract CaesAssociation Commerce anion others to oppose this initiative which is sponsored b a state AssocationforCaftr aTodRdomh g PP P Y Alliance of California Taxpayersand bureaucrats group known as Professional Engineers in California Government mVdvea Voters (PECG). California Minority and Women Businesses Coalition AsanAmencanArchitectsEngx'eersAssociarlon The core issue with the PECG Initiative is a simple one: Should Amed=PannhvAssociation, virtually all design and engineering project development work be done by state Caffornia ChapterAmerican Society of CvEniree� employees instead of contractors hired and managed by Your cit 5 California land Surveyors ton mobblele Responsible Voters for Lower Tam The initiative would eliminate local control over infrastructure StructiaalEmineersAssociati°nof projects.It would create a rigged bidding system that effectively means most California American Co=M y Engireers infrastructure projects would be designed only by the State of California,not coved private contractors who are accountable to the needs of local cities. Pa'mting 8 Decorating Co ntiactars d California Pdntq mma,mofCardo= It would also create a new layer of state bureaucracy ultimately LwAMelesCountyeoabd delaying important local projects. Building new projects already takes too Supervisors RiversideConnlyTransporta0ar long. But this initiative would add a whole new layer of bureaucracy.The c0`""'eC01 San Jose City Caved initiative requires that each and every local project be reviewed by the State San J=Unified Scrod Dacia Controller's Office along with tens of thousands of other state, local and private Sa"'alionDistrichdLosmgeles building projects.Because the measure specifies no deadline by which this Santa Clam County cores office must act, it would become a project bottleneck further delaying projects Ass00aiu that are needed now. City and CountyAssodation or Governments of San Mateo County Contra Costa vaueymanubonAutihody Normal contract conditions such as delivering a project on schedule and saR>a eras Vasey AnanrdaraRirg , Group within the budget are conspicuously missing from this initiative and,what's Orange County Business Coved more,local city councils would have no say in the process. United Chambers of Comrtwn2 West San Bernardino County water t» parvallar TAXpAyERS FEd Up Wilk MORE STATE BUREAUCRAcy (Ffd Up)!A COALITION Of BUSINESS, ENGINEERS, ARckITECTS And TAXPAYERS. III ANxA SoutEVArid,SUITE 406 BURIiNgAME,CA 94010 • (415)340-0470 • FAX: (415)340-1740 • TAx ID#960380 n ., ddr Who is behind the initiative? A state engineers' union,Professional Engineers in California Government(PECG)has spent$2.1 million to put it on the ballot. This initiative is part of a decade-long strategy by PECG to prevent private sector competition on design and engineering projects. Who is opposed? A large and growing coalition including the League of California Cities, California School Boards Ass'n, Coalition for Adequate School Housing(CASH), California Minority and Women Businesses Coalition,Associated General Contractors of California, California Transit Ass'n, California Taxpayers Ass'n, Ass'n of California Water Agencies, California Healthcare Ass'n, Consulting Engineers and Land Surveyors of California,American Institute of Architects, California Council, California Chamber of Commerce,Los Angeles County, City of San Jose and many others. Please act as quickly as possible to officially oppose this initiative(a sample resolution is enclosed),and fax your resolution to Dana Rambo at(415)340-1740. If you have questions,please call Dana at(415)340-0470. Thank you for your immediate consideration. fteerely, r D�vid Fogarty Deputy Campaign Director Taxpayers Fsd Up VYith More State $�reaucracy his of 6/24/97 Statewide Organizations Alliance of California Taxpayers and Involved Voters American Planning Association,California Chapter Associated General Contractors of California Association for Cardbmia Tort Reform *Association of California School Administrators Association of Cardomia WaterAgencies California Association of Sanitation Agencies California Building Industry Association JE7 Cardomia Business Properties Association California Chamber of Commerce California Contract Cities Association California Healthcare Association California Highway Users Conference California Land Surveyors Association California Manufacturers Association California Minority&Women Businesses Coalition California School Boards Association California Taxpayers'Association Califomia TransitAssociation Coalition for Adequate School Housing Engineering&Utility Contractors Association Latin Business Association League of California Cities Painting&Decorating Contractors of California Printing Industries of Cardomia Professional Services Management Association Responsible Voters for Lower Taxes Waste Watchers Local Government and School Districts Alum Rock School District *Baldy Mesa Water District Barstow City Council Broadview Water District Cachuma Operation and Maintenance Board City and County Association of Governments of San Mateo County Contra Costa Transportation Authority Cupertino City Council Delhi County Water District Desert WaterAgency Eastem Municipal Water District Fair Oaks Water District *Hefix Water District Hidden Valley Lake Community Services District Indian Wells City Council Los Angeles County Board of Supervisors *Oakdale Irrigation District Olivenhain Municipal Water District Pleasanton City Council Rancho California Water District Rancho Mirage City Council Rolling Hills Estates City Council *MoAlto Water District Riverside County Transportation Commission San Gabriel Valley Water District San Jose City Council San Juan Unified School District San Pasqual Union School District Sanitary District No.1 of Marin County Sanitation Districts of Los Angeles County Santa Clara County CitiesAssoclation Santa Cruz County Board of Supervisors Sebastopol City Council Sonoma County Board of Supervisors South Lake County Fre Protection District South Tahoe Public Water District Sunnyvale City Council West San Bemardino County Water District Regional and Local Organizations American Public Works Association of San Diego Apple Valley Chamber of Commerce Bay Counties Civil Engineers and land Surveyors Association, Inc. Building IndustryAssociation of Southern California Contra Costa Council Engineering Contractors Association,Northern California Chapter Engineering&General Contractor Association of San Diego Mechanical Contractors Council of Central California Orange County Business Council Pleasanton Chamber of Commerce San Diego Chamber of Commerce *.San Rafael Chamber of Commerce Santa Clara Chamber of Commerce Santa Clara Valley Manufacturing Group Shasta County Taxpayers Association COUNTY OF LOS ANGELES DEPARTMENT OF PUDLIC WORKS 900 SOUTH FREMONT AVENUE ALHAMHICA.CALIFORNIA 91103.1331 HARRY W. STONL,DIrec2or TelepAooc(i11)ISi-0100 ADDRESS ALL CORRESPONDENCE TO: FABOX 1460 ALHA1a"CALffORMA 91903-1480 April 9, 1996 IN REPLY PLEASE REFER TO FILE: AS-0 League of California Cities 1400 K Street Sacramento, California 95814 OPPOSE PROPOSED BALLOT INITIATIVE ON DESIGN AND ENGINEERING CONTRACTS On April 2 , 19961 the Los Angeles County Board of Supervisors voted 4-0 to oppose the proposed ballot Initiative that would prohibit the awarding of contracts for design and engineering services involving State funds . The Board requests that your organization join them in opposing this Initiative, and that you urge your members and other interested parties to join in opposition to this Initiative and not to sign or circulate the initiative petition, This Initiative would prohibit Counties from contracting with a private company for engineering or design services if the State Controller determined that State employees could perform the work at less cost than the cost of the contract, based on biased criteria specified in the Initiative. In such cases, the County would be required to contract with the State to perform the engineering work. Enclosed is a one-page summary of the issues and impacts of this proposed Initiative . Although the stated goal of the Initiative is to obtain the. lowest . cost to taxpayers for design and engineering services, we are concerned that this vehicle will have the opposite effect . Additionally, the Initiative would be expected to reduce local control, create major potential delayg-for County projects, affect . local jobs and economies, and increase State Controller costs by about $1 million annually. c -� - 9