Court backs cities on prevailing wage

July 6, 2012

By Joseph Perkins

The California Supreme Court ruled this week that the state’s prevailing wage law does not apply to public works projects financed entirely by taxpayers residing in one of the state’s 121 chartered cities.

The decision is a huge win for chartered cities. It enables them to save millions of dollars in construction-related labor costs.

The case in question involved the city of Vista, where voters in 2006 approved a half-cent sales tax to fund several municipal projects. That included a seismic retrofit of an existing fire station, as well as construction of a new civic center, a new sports park and a new stage house for the city’s amphitheater.

In 2007, Vista’s city attorney submitted a report to its city council recommending that Vista, then a general law city, take steps to become a charter city.

That would give the San Diego County municipality the latitude, the report determined, not to pay state-mandated prevailing wages on its planned public works projects, which would result “in millions of dollars in savings over the next few years and beyond.”

Indeed, in a study of low-income housing construction in California, UC Berkeley researchers found that the state’s prevailing wage mandate drove up costs of such projects by an average 21 percent.

That’s because the state formula for calculating the prevailing wage for a given locality is based not on the average wage rate at actual construction sites, but on higher, union wage rates. 

That’s why Vista’s city council heeded the recommendation of its city attorney and placed a measure on the city ballot to convert to a charter city. And that’s why an overwhelming two-thirds of the city’s electorate approved the conversion.

Not long after officially becoming a charter city, Vista’s city council promptly amended an existing city ordinance to prohibit city contracts requiring payment of prevailing wages unless mandated under terms of a state or federal grant, specifically authorized by the city council or unrelated to a municipal affair.

Legal battle

Vista’s moves did not set well with the State Building and Construction Trades Council of California, an umbrella group for construction unions, which in 2007 filed suit in San Diego County Superior Court to compel the new charter city to compel with the state’s prevailing wage law.

The legal battle took five years to wend its way through the courts.

The union maintained that the matter of prevailing wages was a “statewide concern,” and, therefore, the state had authority over the city of Vista. Vista countered that the matter of wages paid to workers on construction projects financed by local revenues was a municipal affair and, therefore, governed by city ordinance.

“We agree with the city,” the state Supreme Court declared this week, in its 5-2 decision.

Vista Mayor Judy Ritter said the city’s legal victory was critical not only for her charter city, but for every other such city throughout the state that aims to control the cost of local public works projects.

Had the court sided with the union, she said, “it would have required the taxpayers of even the poorest charter city in the state to pay the highest possible wages to build their municipal facilities.”

That may not matter to the State Building and Construction Trades Council, which believes that unionized workers have an entitlement to artificially inflated wages on public works projects.

But it matters a great deal to cities like Vista that endeavor to be fiscally responsible; that do not want to find themselves in a similar position to the woebegone city of Stockton.