Bill raising broadband construction costs sent to Sacramento’s inner sanctum

by Steve Blum • , , , ,

A proposal to hike the cost of subsidised broadband projects in California is in the hands of legislative leaders, who will decide its fate behind closed doors.

On Wednesday, the assembly appropriations committee put assembly bill 2272 on hold via a procedural mechanism called the suspense file. It joins a long list of bills that will stay in legislative limbo until the state budget is passed. Senior assembly members will then meet in private to decide which bills go forward and which do not.

AB 2272 would impose union pay, benefits and work rules on construction subsidised, in whole or part, by California Advanced Services Fund (CASF) grants and loans, as is required for public works and many other types of state-funded projects. It’s called the “prevailing wage” rule, but in practice it means that the state department of industrial relations (DIR) applies the terms set in particular union contracts to all similar work in a region or, as is the case with many telecoms jobs, statewide. So regardless of what the going rate for a job in a given area might be, the higher union rate has to be paid and the ability to manage work assignments and control expenses is severely limited. As a result, CASF-funded projects will cost more and, because applicants have to pay up to 40% (or more, sometimes) of the total tab out of pocket, there will be fewer projects proposed.

Last year, DIR ruled that prevailing wage rules applied to one particular CASF project, the Central Valley Independent Network. The decision is under appeal right now; AB 2272 is an attempt by unions – so far successful – to preempt that process.

The chances of it passing are good. Democrats wouldn’t dream of voting against gifts to major campaign contributors when the money is there for the taking, but republicans court union support too and likely see little benefit in opposing the inevitable. Plus, it’ll be popular with incumbent telephone companies, who already pay union wages and would love nothing more than to hamstring competition by imposing their lumbering cost structures on nimble independents.