Special interest union bill may die in Assembly

May 29, 2013

By Katy Grimes


Occasionally the Legislature gets it right and kills a bad bill. Today may be one of those days.

AB 1333 by Assemblyman Roger Hernandez, D-West Covina, is an ugly piece of special interest legislation. The bill would require city councils to review all contracts with a total value of $250,000 or more, and contain automatic renewal clauses called “Evergreen clauses.” And the bill requires prevailing wage agreements.

But hidden in the bill was a special exemption benefitting the bill’s sponsor from this scrutiny, according to Democratic Assemblyman Marc Levine.

“This bill exempts public contracts while subjecting the rest to even more regulations,” Assemblyman Marc Levine, D-San Rafael, said on the Assembly floor today, arguing against the bill. Levine said “the bill would allow for exceptions for the types of contracts the bill’s sponsor engages in.”

Sponsored by the American Federation of State, County and Municipal Employees, Hernandez’s bill would require the contract to be rescinded unless the review of the contract contains findings that the private party pays prevailing wages to its employees. Additionally, the bill would require the contract to be rescinded if the private party has been cited by the National Labor Relations Board for an unfair labor practice or if the National Labor Relations Board has ruled that an unfair labor practice has been committed.

As if that isn’t enough heavy handed government intervention, allowing for exceptions of the types of contracts the bill’s sponsor engages in is about as special interest as it gets.

Government speak

An “evergreen contract” is a contract provision that automatically renews the length of agreement between two parties. The length of these contracts could be a year or last several years. Evergreens are commonly used for long term agreements such as memberships or maintenance contracts. They provide automatic contract renewals, unless notice for termination is given by either of the parties.This is not only more state intrusion into local business and contracting practices, the Legislature should not be micromanaging cities.

While local governments make plenty of bad decisions, they are capable of managing contracts as well as terminating bad contracts.

The bill analysis, by the American Federation of State, County and Municipal Employees, a labor union and the bill’s sponsor, argues that automatic renewal clauses “do not always serve the best interests of the people of a city, county, or district, especially when the private party does not pay their employees adequately.”

But there are legitimate reasons for automatic renewal clauses according to the League of California Cities.

In analysis of AB 1333, the League of California Cities, in opposition, stated, “waste recycling is a very capital-intensive industry” and that “long-term contracts with waste contractors have been a particularly important tool for cities as lending agencies provide low interest on extended term financing that builds the necessary infrastructure to provide the service.  Without these arrangements, low-cost financing cannot be guaranteed…Several of our cities use some form of rolling term or evergreen contract…for the benefit of lower rates…The conditions this bill imposes …suggest that local governments are incapable of properly managing their own affairs and that…State oversight is required into what has traditionally and purely been a local affair…Evergreen contracts are entered into voluntarily and all of these contracts can be converted to a fixed term contract if the local government believes that is necessary or can be terminated for cause at any time.”

“AB 1333 will promote competition for government contracts, and will ensure ratepayers are receiving the best services at the best rates,” Hernandez said. “In addition, the bill ensures that employees of government contractors are compensated fairly and treated with dignity.”

Hernandez denied that AB 1333 favors or exempts certain contracts, but his own colleagues did not agree with him. The bill stalled 36-23 in the vote today, with six Democrats voting against it.

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