Legislative Updates

Editor’s note: One of the proposals is from Gov. Jerry Brown. It is not as far along as a different revenue plan put forth by a group of very wealthy individuals whose plan is due out soon. The coalition backing this plan goes by the name Think Long Committee for Calif. Here’s our analysis & commentary…

 

…Brown’s idea first. He’s still in the drafting stage. The Think Long group already has a 23-page report ready to be released very soon. Brown is tussling with several different options: the type of taxes voters might agree to; a temporary hike in the sales tax; and expanding the sales tax to products and services that are not now covered…

 

…And lastly, and most important, Brown needs to assemble a coalition of supporters (labor, business) to help raise money for such a campaign. And he needs to hire a campaign team…

 

…Think Long is further along with their deep pocket supporters. They have been working on this project for more than a year.. It’s bipartisan and includes former officeholders and many familiar names. Former Assembly Speaker Bob Hertzberg is a member of the committee. He’s a go-to guy and something like this appeals to Hertzberg. “As Washington is in gridlock, maybe Calif.. can lead the way again by showing that we know how to fix things,” Hetzberg told the Sacto BEE. Optimistic and upbeat…

 

 …The Think Long plan has huge backing from billionaire investor Nicolas Berggruen. He has agreed to put up $20 million dollars of his own. There are other deep pocketed individuals who also plan to help with the money…

 

…There are two parts to the Think Long proposal. One measure is aimed at an overhaul of Calif.’s tax system. This part of the plan could raise $10 billion dollars for the budget, according to a draft which the Sacto BEE obtained. The critical part of this plan is that all Calif. residents and visitors would pay sales tax on all services – except health care and schools – beginning in 2013. Part of these funds would help to erase bond debt and then go for schools…

 

…TheThink Long proposal would also simplify person taxes in 2014. Some people wouldn’t have to pay if their income was $45,000 for joint filers. A 2% tax on income between $45,000 and $95,000 and a 7.5% tax on those with income above $95,000. Deductions would be eliminated on everything except mortgage payments, property taxes, charitable contributions and R&D…

 

…Does this Think Long plan have opponents? The Calif. Republican Party is on record as opposed. CRP Chair Tom Del Beccaro issued a statement, saying in part, “Facing double-digit, structural unemployment, and its corresponding weak consumer purchasing power, those businesses won’t be able to simply pass on the tax increases to consumers and it will amount to a tax on those employers. In turn that will create more unemployment and lower revenues not higher.” Don’t know yet if the Calif. Teachers Assn. will support this. When Calpeek finds out, we’ll pass it to our readers…

 

…FYI: Where there are attempts to raise taxes, you’ll find Grover Norquist and his anti-tax pledge. Don’t think you’ll find too many Calif. GOP officeholders supporting either plan. It’s just to risky to cross Norquist. Stay tuned…

 

 

 

By Sam K. Abdulaziz

& Kenneth S. Grossbart

Abdulaziz, Grossbart and Rudman

 

Each year, our Legislature creates numerous proposed new laws, which are called Bills. If these Bills pass through both the Senate and the Assembly, they are then sent to the Governor to be signed or vetoed. If the Governor vetoes a Bill, then we do not hear about it again, or at least not for a while. However, if the Governor signs a Bill, it becomes a new law. New laws usually become effective in January of the next year, but not always.

 

As most of you have heard, in 2010, SB 189 became law. SB 189 was a result of years of study by the California Law Revision Commission, as well as various members of the construction industry, the Legislature, and other interested parties, including our firm. It revamps the entire Mechanic’s Lien, Stop Notice and Payment Bond scheme as it is set forth in the California statutes. Although SB 189 was passed (signed into law) in the fall of 2010, it does not go into effect until July 1, 2012. In the interim, there have been additional Bills in the 2011 Legislative session affecting the Mechanic’s Lien procedures. SB 190 was also passed into law but it merely “cleans-up” some of the language that was passed with SB 189. These new laws renumber and recast every statute pertaining to Mechanic’s Liens, Stop Notices, and Payment Bonds as well as other statutes that relate to recovery by contractors. There are additional changes besides the renumbering of the statutes that are effective; in the grand scheme of things they are minimal but will still need to be taken into account come the effective date of the laws. 

 

Although SB 189 and SB 190 do not go into effect until July 1, 2012, there are some other Bills that have become law that will go into effect beginning January 1, 2012. We will cover the changes effective July 2012 in another article. Following are some of the more pertinent laws effective January 1, 2012, that affect the construction industry.

 

AB 456 makes slight changes to the Notice of Mechanics Lien that went into effect last year. This is a notice that is required to be included with any Mechanic’s Lien according to Civil Code section 3084. The changes are very minor, as a matter of fact; it is simply removing the apostrophes from the word “mechanic’s” in the entire notice as well as slight changes on the proof of service affidavit with respect to whom is served. Currently, it is necessary to indicate “the person” that is being served. Effective January 1, 2012, the affidavit should indicate “the owner or reputed owner” that is being served. Again, these are minimal changes but important to comply with.

 

SB 944 adds one word to the notice titled “Information about the Contractors’ State License Board (CSLB)” required by Business and Professions Code section 7030(b). The word “Internet” is added in the contact information for the CSLB. The particular line in question should read “Visit CSLB’s Internet Web site at www.cslb.ca.gov”

 

 

SB 293 changes the time within which a contractor has to pay a subcontractor (or a subcontractor pay a subcontractor) progress payments from ten (10) days to seven (7) days after receipt of each progress payment unless otherwise agreed to in writing on all private works and on certain public works.

 

SB 293 also limits retention between the public entity and an original contractor to five percent (5%) of the contract price, except in instances where the public entity has specifically made a finding that was noticed prior to putting the project out for bid that the project is substantially complex and therefore requires a higher retention amount than the five percent (5%).

 

As between the prime contractor and its subcontractors, the new law limits that right of the contractor to withhold more retention from its subcontractor than is withheld by the owner of the project. This is not true, if prior to the bid time, the contractor has notified potential subcontractors that bonds are required from the subcontractors and the subcontractor is unable or refuses to furnish the contractor with a performance and payment bond issued by an admitted surety. In that instance, the limitation on retention does not apply.