Higher costs for subsidised broadband projects in California will come out of rural ISP pockets

27 June 2014 by Steve Blum
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Unfinished business.

It seems the only question left to answer about whether union pay scales and work rules will be applied to projects subsidised by the California Advanced Services Fund is where the money will come from. Following Wednesday’s hearing in the senate labor and industrial relations committee, it seems all but certain that the California legislature will approve assembly bill 2272, which would unequivocally impose so-called prevailing wage requirements on CASF infrastructure projects.

On a 4 to 1 party line vote, the committee approved the bill (with some clean up language), but didn’t include an amendment requested by lobbyists representing rural telecoms companies that would give them a statutory basis for asking the California Public Utilities Commission to cover the difference for existing projects. As Yolanda Benson with the California Communications Association put it…

There are several projects that are underway right now that had no idea that they had to comply with the prevailing wage. We don’t know how much that is, part of the contract may be covered by the prevailing wage, but because it wasn’t required at the time when the application was put before the Public Utilities Commission there is no way to make up that potential difference in the increase in cost. We are asking for an amendment that at least would provide us with the ability to go back to the PUC, to be able to go and ask for that additional increase from the fund to be able to make sure that these projects do get completed. And that’s what we are asking for, it’s not about prevailing wage, it’s really about trying to make sure those projects get completed.

It wasn’t clear if they wanted the CPUC to pay all the extra construction costs or just the CASF share, usually 60% to 70% of the total. But Benson and her two colleagues didn’t even try to derail the proposed broadband construction cost increases for future projects.

The bill’s author, assemblyman Adam Gray (D – Merced) waffled about whether he’d eventually include the requested retroactive money in a future amendment, apparently not wanting to weaken the argument made by union supporters that prevailing wage rules have applied to CASF-funded construction work all along.

Besides CASF projects, the amended version also repeals a prevailing wage exemption for particular investment tax credits. It looks like it might be long expired, but it’s not my beat.

Next stop for the bill is the senate appropriations committee.