AB 1250: A Bad Idea on the Verge of Becoming Law

May 30, 2017
by Rick Cole

AB 1250: A Bad Idea on the Verge of Becoming Law

UPDATE: On Thursday, June 1, AB 1250 was amended to remove cities entirely from coverage by the legislation.  Months of persistent opposition from the League of California Cities and rising citizen attention convinced the author of the bill that it could not pass without this change (the bill will now only apply to counties.)  As amended, the bill passed the State Assembly with a vote of 43 – 26.

This week, the Legislature considers a controversial bill aimed at making it far more difficult for counties and cities to work with private businesses to do work and deliver services.  According to the non-partisan Legislative Analyst, AB 1250 “would require the county or city clearly demonstrate that the proposed contract will result in actual overall costs savings to the county or city and also to show that the contract does not cause the displacement of county or city workers.”  The goals are hard to argue with, but the onerous requirements to ensure they are met would force local governments to hire permanent in-house staff even if there were more cost-efficient options.

That’s why Mayor Ted Winterer on behalf of the City has called for the Legislature to scrap the bill – or at least hold it over so sensible amendments can be made.  The bill has since been amended to exclude charter cities like Santa Monica, so our concern is not how it would apply to our community.  All citizens, however, have a stake in cost-effective public services – and AB 1250 would be a lurch in the wrong direction.

Not surprisingly, the forces behind the bill are some of our state’s powerful public employee unions.  They have a legitimate worry: that governments will “outsource” their jobs to workers who are paid far less and don’t enjoy the protections and benefits of public employees in California.  While that is cheaper in the short run, in the long run the replacement of stable career jobs with low-paid mercenary private contractors can further erode our embattled middle class.

But there are far less draconian ways that the State can act to police the handful of local governments that might be tempted to pursue these illusory savings.  AB 1250 sets up such a bureaucratic set of standards and processes that virtually any contracting for services would be more trouble than it is worth – which appears to be the aim of the author.  Even a cursory reading of the actual bill reveals it is stacked to make contracting with an outside vendor a time-consuming paperwork nightmare – all subject to legal challenge, adding unknowable costs and delays even if the challenge is found to be without merit.

In the long run, discouraging legitimate contracting by public agencies is not only bad for taxpayers – it’s bad for public employees.  Right now, the structure of public employment is increasingly costly.   There are obvious places where the private sector can be more efficient. That’s not -- as some free market advocates claim -- because the private sector is always more efficient.  It’s because in some cases a private entity has specific advantages.  Such advantages could include specialized knowledge where a private business does one thing all day, every day that government only does occasionally.  For example, we employ a company that deals with the very detailed technical reporting requirements of specific Federal funds that mandate use of a database to track services.  That’s what they do – and hiring, training and supervising our own staff to do that specialized work is much more complicated for us than it is for a company that exists to do that very thing.

If public agencies are forced to do work that would be more efficiently and effectively contracted out because of the onerous documentation required by AB 1250, the services where government is clearly more efficient than the private sector will suffer.  There will simply be less money to go around.  It’s a principle of comparative advantage that economists discovered more than 200 years ago.  Imagine in your household if you couldn’t take your clothes to the dry cleaner or your car to a repair garage until you did a detailed analysis of whether you could do the work yourself and had to make a finding that no one in your household would lose chore time.  You’d be spending your money – and your time – on a counterproductive effort that wouldn’t save you money, but would make your life far more complicated. 

In the long run, the best deal for taxpayers and public employees is one where local governments make intelligent choices about what’s most efficient.  It’s fine for the State to set minimum standards for pay and benefits for work done on behalf of public agencies.  That’s only fair.  But there’s no need for the State to interfere in local governments looking for the most effective allocation of local resources. 

AB 1250 is a bad idea. If the bill isn’t approved by the Legislature by Friday, it will be held over until next year.  If you are interested in the best use of taxpayer dollars to deliver quality services in California counties and cities, let your legislator know your views on AB 1250 before Friday.

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