HomeMy WebLinkAbout10/07/1997, C-2 - GOVERNMENT COST SAVINGS AND TAXPAYERS PROTECTION (AKA PECG INITIATIVE) council
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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.
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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
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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
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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
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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
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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.
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