As the calendar dictates, the 2015-16 California State Legislature officially came to an end, and the 2017-18 Legislature officially began. Now is a good time to look at the highlights, both good and bad, of the Legislature in 2016, the 2016 state election, and the important items we expect to see in 2017.
California Legislature – 2016
There were several bills of particular interest to the architectural profession introduced in 2016.
- Duty to Defend: The most significant bill was SB 885, sponsored by our friends at ACEC California. SB 885 would have prohibited the uninsurable and unfair contract clause that requires design professionals to provide up-front defense costs to their clients, even when the design professional was not at fault. The AIACC strongly supported this measure, and generated over 1,000 contacts between AIA Members and their Legislators. The good news: SB 885 passed the State Senate. The bad news: SB 885 did not have the votes to pass its first hearing in the State Assembly, so the bill was dropped. Even though the necessary support was not there in the State Assembly, the recognition that there is a problem exists. We expect this effort to continue next year (more on that below).
- Sales Tax on Services: For the second consecutive year, legislation was introduced to impose a sales tax on most services, including architectural services. And, for the second consecutive year, the legislation was never heard or voted on. This is a pretty good indication that Legislators, at least those in the 2015-16 Legislature, did not view this proposal favorably.
- Architect-in-Training Title: The AIACC sponsored SB 1132 to allow many of those who are on path to licensure in California to call themselves an “architect-in-training.” SB 1132 passed the Legislature without a single “No” vote, in large part because of the good efforts of the California Architects Board, 2017 AIACC President Jana Itzen, AIA, and AIACC EVP Paul W. Welch, Jr., Hon. AIA, to develop strong and workable language. Unfortunately, Governor Brown vetoed SB 1132, stating that only those who are licensed should be able to call themselves an architect.
- Resilience: AB 2800 was signed into law to require state agencies to take into account the current and future impacts of climate change when planning, designing, building, and investing in state infrastructure. AB 2800 creates the Climate-Safe Infrastructure Working Group to recommend design suggestions for climate change resiliency in state infrastructure. This Working Group, as initially proposed, included state scientists and state engineers, but it did not include architects. The AIACC argued that architects should be included in the Working Group, and the final version of AB 2800 includes architects.
November Election
The California ballot included two propositions that are important to the architectural profession.
- Income Tax: Proposition 55 was approved by the voters and extends the higher income tax rate on high income earners by 12 years. 55 is expected to generate an extra $4 billion to $9 billion annually from 2019 – 2030. The passage of Prop. 55, and the continued source of revenue it provides, should significantly weaken the need for new tax revenue and thus the argument for a sales tax on services.
- School Bonds: Proposition 51 was approved by the voters and authorizes $9 billion in bonds for the design, construction, and modernization of K-12 and Community College facilities.
- State Government: The Democratic Party is in complete control of California government. All statewide offices are held by Democrats, from Governor to Insurance Commissioner, and quite significantly, both houses of the California State Legislature are controlled by a supermajority (two-thirds) of Democrats. This means that the Democrats in the Legislature, if they remain unified, can pass any legislation without Republican support, including legislation that requires a two-thirds vote (e.g. tax increases and urgency measures). Additionally, working with Governor Brown, the California Legislature will continue to lead the country on promoting sustainability and combating climate change.
California Legislature – 2017
The 2017-18 Legislature was sworn into office at the beginning of December, and they have until February 17, 2017 to introduce legislation. So, we will not know for a couple of months what issues will be considered in 2017. But, a small number of bills have been introduced, and one in particular may be of concern to some AIA Members.
AB 43 imposes a privilege tax of an unspecified percentage on those who provide goods or services to the Department of Corrections and Rehabilitation, or the Department of General Services to provide goods or services to a state prison. The revenue generated from this tax would fund the State Incarceration Prevention Fund to provide services to prevent people from being incarcerated. AB 43 specifically states that “the tax imposed … shall not be passed through to the state by way of higher prices for the goods or services in the contract.”
Additionally, here are some issues we think may be introduced as legislation in 2017.
- Deviation from Plans: Subject to approval by the AIACC Board of Directors, the AIACC will sponsor legislation to clarify that an architect is not responsible for construction that deviates from an approved set of plans.
- Sales Tax on Services: As discussed above, AIACC staff does not believe the environment is good for a sales tax on services to be enacted, with the passage of Proposition 55. However, there are influential people and institutions that are calling on the new Legislature, with its two-thirds Democratic majority, to look at reforming and modernizing our tax laws to reflect our current economy.
- Duty to Defend: There is a good chance our friends at ACEC California will once again pursue legislation to prohibit the uninsurable and unfair duty to defend contract clause. While ACEC California has not shared any language with us, we anticipate it would be beneficial to the profession and will strongly encourage the AIACC Membership to actively lobby their legislators to support the ACEC California proposal.
- Interior Design: We anticipate legislation to place into law a scope of work that can be performed by interior designers. We expect that legislation will expand the scope of work they are allowed to perform.
Please contact AIACC Director of Legislative Affairs Mark Christian, Hon. AIACC if you have any questions. Mark can be reached at mchristian@aiacc.org or 916-642-1708.
