By Senator Leland Yee
Earlier this year, I authored and introduced legislation in Sacramento that close a loophole that allowed work to be done without prevailing wage on public infrastructure projects offered at so-called “no cost” by Energy Service Companies (ESCOs).
Typically, an ESCO conducts an audit in order to come up with a design to generate energy efficiency or develop energy on a public facility. Upon approval by the public agency, the ESCO typically pays for the design, construction management, and commission of the project with the understanding that whatever savings are realized from the project are then used to pay back the ESCO.
For example, if a school district can save $10,000 a year by installing energy efficient lighting and windows, the ESCO would front the cost of that upgrade, but the school district would transfer the savings to the ESCO for a fixed time period. Fortunately, Senate Bill 136, which was signed into law by Governor Jerry Brown. will ensure workers receive prevailing wages on energy service contracts of public agencies.
Despite the fact that the work is being completed on public infrastructure and will be paid back from energy savings that otherwise would have been utilized by the public agency, some have argued that such work is exempt from the prevailing wage requirements. SB 136 removes any doubt that prevailing wage must and should be paid on these types of public infrastructure improvements. This bill will ensure all public projects are completed using prevailing wage for workers. SB 136 will officially become state law on January 1, 2012.
While I am pleased the Governor signed the prevailing wage bill, it is very disappointing that he didn’t ensure corporations keep their promises. SB 364 is critical to holding big businesses accountable for job creation promises in exchange for any tax breaks.
Specifically, SB 364 would have required all future tax breaks related to job creation to have clear goals and performance measures. If a corporation failed to meet those promises, the state could recoup the tax credit.
A working mother on CalWORKS or disabled senior receiving in-home supportive services has to jump through numerous bureaucratic hoops to receive minimal life-sustaining benefits, but if you are a big corporation looking for scarce tax credits, no one asks any questions. California taxpayers deserve better.
Tax expenditures for corporations are often created with the argument that they will create jobs and fuel economic development. Yet under existing law, it is nearly impossible to track which companies are receiving tax credits and if those subsidies are meeting the goals of the expenditure. Corporations are even permitted to take taxpayer money and relocate to other states.
It is wrong for California to provide upwards of $14 billion in corporate tax credits without transparency and accountability. If a business fails to keep its word, or in some cases even moves out of the state, taxpayers should not have to foot the bill. This legislation was a win-win for Californians – corporations either help get people back to work or the state recoups the tax break and we can save our state’s safety net.
Many California businesses receive major credits and exemptions from dozens of state taxes. In fact, the tax credits passed as part of the September 2008 and February 2009 budget “solutions” will cost the state $8.7 billion in lost revenue from 2008-09 to 2014-15 and ongoing $2-2.5 billion yearly.
Typically, an ESCO conducts an audit in order to come up with a design to generate energy efficiency or develop energy on a public facility. Upon approval by the public agency, the ESCO typically pays for the design, construction management, and commission of the project with the understanding that whatever savings are realized from the project are then used to pay back the ESCO.
For example, if a school district can save $10,000 a year by installing energy efficient lighting and windows, the ESCO would front the cost of that upgrade, but the school district would transfer the savings to the ESCO for a fixed time period. Fortunately, Senate Bill 136, which was signed into law by Governor Jerry Brown. will ensure workers receive prevailing wages on energy service contracts of public agencies.
Despite the fact that the work is being completed on public infrastructure and will be paid back from energy savings that otherwise would have been utilized by the public agency, some have argued that such work is exempt from the prevailing wage requirements. SB 136 removes any doubt that prevailing wage must and should be paid on these types of public infrastructure improvements. This bill will ensure all public projects are completed using prevailing wage for workers. SB 136 will officially become state law on January 1, 2012.
While I am pleased the Governor signed the prevailing wage bill, it is very disappointing that he didn’t ensure corporations keep their promises. SB 364 is critical to holding big businesses accountable for job creation promises in exchange for any tax breaks.
Specifically, SB 364 would have required all future tax breaks related to job creation to have clear goals and performance measures. If a corporation failed to meet those promises, the state could recoup the tax credit.
A working mother on CalWORKS or disabled senior receiving in-home supportive services has to jump through numerous bureaucratic hoops to receive minimal life-sustaining benefits, but if you are a big corporation looking for scarce tax credits, no one asks any questions. California taxpayers deserve better.
Tax expenditures for corporations are often created with the argument that they will create jobs and fuel economic development. Yet under existing law, it is nearly impossible to track which companies are receiving tax credits and if those subsidies are meeting the goals of the expenditure. Corporations are even permitted to take taxpayer money and relocate to other states.
It is wrong for California to provide upwards of $14 billion in corporate tax credits without transparency and accountability. If a business fails to keep its word, or in some cases even moves out of the state, taxpayers should not have to foot the bill. This legislation was a win-win for Californians – corporations either help get people back to work or the state recoups the tax break and we can save our state’s safety net.
Many California businesses receive major credits and exemptions from dozens of state taxes. In fact, the tax credits passed as part of the September 2008 and February 2009 budget “solutions” will cost the state $8.7 billion in lost revenue from 2008-09 to 2014-15 and ongoing $2-2.5 billion yearly.
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