On October 13, 2013, California Governor Jerry Brown signed Senate Bill 7, which cuts off state funds designated for construction to any California city that exercises its right under the California Constitution to establish its own policies concerning government-mandated wage rates (so-called “prevailing wages”) on contracts. This was a major victory for the State Building and Construction Trades Council of California, the construction union umbrella lobbying organization that sponsored the bill.

There are 121 California cities that govern their own municipal affairs through a charter, a mini-constitution authorized in Article XI of the California Constitution. In its letter unsuccessfully requesting for a gubernatorial veto, the League of California Cities declared that “using political leverage to punish those exercising rights provided by the Constitution is unjust” and a veto was needed to “protect the integrity of our Constitution and the communities operating in lawful compliance with it.” (Coming from the professional association of California city officials, these statements cannot be easily brushed off by California Democrats and their union allies as irrelevant “Tea Party” rhetoric.)

In California, the “Progressive” movement is determined not to let the structural protections of constitutional government impede the quest for democratic socialism and societal justice. Passing Senate Bill 7 through the state legislature and getting it signed is the type of government activism that earns praise from the national news media, as it compares the State of California favorably against the “gridlock” in Washington, D.C.

Senate Bill 7 has a practical fiscal impact as well as a constitutional significance. Out of California’s 121 cities governed under a charter, 43 do not require construction companies to pay state-mandated prevailing wages on any city contracts, and 10 do not require construction companies to pay state-mandated prevailing wages on some kinds of city contracts. The cities of El Cajon, Bakersfield, and Newport Beach are the most recent cities to establish their own prevailing wage policies. Meanwhile, unions have successfully lobbied the city councils in San Diego and Mountain View in recent months to abandon their own wage rate policies and submit to state prevailing wage law.

A couple dozen “general law” cities have recently proposed charters to voters or plan to propose charters to voters. Evading the costly state prevailing wage mandate for construction contracts has been a primary motivation for these cities, and construction unions have been aggressive in lobbying and campaigning to undermine these local efforts. In 2012, voters in the cities of Auburn, Costa Mesa, Escondido, and Grover Beach rejected proposed charters.

It’s likely that a charter city or group of charter cities will file a lawsuit in 2014 to strike down Senate Bill 7, along with two similar laws implemented by Senate Bill 922 in 2011 and Senate Bill 829 in 2012. These two laws, also sponsored by the State Building and Construction Trades Council of California, cut off state construction funds to charter cities that adopt Fair and Open Competition policies prohibiting the cities from entering into contracts requiring construction companies to sign a Project Labor Agreement with unions.


Sources

Article XI of the California Constitution

Senate Bill 7 (2013) – to be California Labor Code Section 1782

League of California Cities – SB 7 (Steinberg) Undermining Constitutional Exercise of Municipal Affairs – Request for Veto

Information on Charters from League of California Cities (includes list of 121 charter cities)

State Building and Construction Trades Council of California, AFL-CIO v. City of Vista et al. – California Supreme Court decision of July 2, 2012 upholding constitutional right of charter cities to establish their own policies concerning government-mandated wage rates for municipal construction contracts.

Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? (3rd edition – Summer 2012) – the most comprehensive report ever published on California prevailing wage and charter city policies and an inspiration for advocates of fiscal responsibility and local control. (A 4th edition is in the works.)

Senate Bill 922 (2011) and Senate Bill 829 (2012) – punishing charter cities with prohibitions on city contracts that mandate Project Labor Agreements.

State-mandated prevailing wages for construction trades in all geographic regions of California

State Building & Construction Trades Council of California

News and Opinion Leading Up to and Following Gov. Brown Signing Senate Bill 7

SB 7: Cities Stand to Lose Home Rule over Municipal Affairs – www.PublicCEO.com – September 9, 2013

Three Bad Bills that Gov. Jerry Brown Should Veto – editorial – Sacramento Bee – September 9, 2013

Legislative Sampler: 2 to Sign, 2 to Veto – editorial – Riverside Press-Enterprise – September 18, 2013

Has Labor Leader Overreached? – columnist Dan Morain – Sacramento Bee – October 9, 2013 (The answer is “no.”)

Prevailing Wage Bill Deserves a Veto – editorial – UT San Diego – October 4, 2013

Governor Should Veto Wage Bill – editorial – Modesto Bee – October 11, 2013

If Gov. Brown Doesn’t Like Intrusion, He Should Veto SB 7 – editorial – Sacramento Bee – October 12, 2013

Jerry Brown Signs Prevailing Wage Bill for Charter Cities – Sacramento Bee – October 13, 2013

Governor Brown Signs Union-Backed Senate Bill 7 and Continues Erosion of Constitutional Checks and Balances – www.FlashReport.org – October 13, 2013

Brown Signs Prevailing Wage Bill – Capitol Weekly – October 14, 2013

Brown Signs Prevailing Wage Bill for Cities – Central Valley Business Journal – October 14, 2013

Governor Signs Prevailing wage Bill for Charter Cities – Sacramento Business Journal – October 14, 2013

Gov. Brown Signs SB 7 to Neuter Charter Cities – www.CalWatchdog.com – October 14, 2013

Prevailing Wage Law Could Raise Costs – UT San Diego – October 14, 2013

Unions Smile, Cities Frown at Prevailing Wage Law – Bakersfield Californian – October 14, 2013

Modesto Fears Harm from New Prevailing Wage Law – Modesto Bee – October 14, 2013

California Construction Unions Get Two Big Wins – columnist Dan Walters – Sacramento Bee – October 15, 2013

Charter Could Cost City Funding – Newport Beach/Costa Mesa Daily Pilot – October 16, 2013

Wage Law Costs Cities More Than Money – op-ed by El Cajon Acting Mayor Bill Wells – UT San Diego – October 25, 2013


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

 

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