Future of broadband subsidies in hands of California’s governor

by Steve Blum • , , ,

It’s up to California governor Jerry Brown, to decide whether or not to double labor costs and effectively cut broadband construction subsidies from the California Advanced Services Fund in half by requiring all projects it funds to follow union work rules and pay scales.

In lopsided votes that included both democrat and republican support, the California senate and assembly approved assembly bill 2272 last week. According to its author, assemblyman Adam Gray (D – Merced)…

AB 2272 codifies a decision already handed down by the department of industrial relations [DIR] to pay prevailing wage on projects funded by the California Advanced Services Fund.

Except the decision isn’t final, as a summary of opposing arguments points out…

Overall, opponents argue that the Legislature should not codify the DIR’s erroneous determination both in light of the pending legal arguments and because this bill would undermine a critical state public policy goal in promoting broadband deployment.

That same analysis by legislative staff pinpoints one of the reasons why…

The bill would result in unknown cost pressures, likely in the tens of millions of dollars, to the CASF as a result of increased projects costs for existing and future projects.

AB 2272 would also double the cost to grant recipients, who have to pay 30% to 40% of the increased cost as matching funds, and make them responsible for tracking and documenting all the bureaucratic details that go along with the so-called prevailing wage rules – a substantial and expensive task.

Governor Brown has until the end of September to decide whether to approve or veto the bill.