The bill was a classic special interest sponsored bill, sponsored by the State Building and Construction Trades Council, AFL-CIO.

What does SB 7 do?

SB 7 compels charter cities to require prevailing wages on local projects they construct with local funds by withholding all state contracting funds from non-compliant cities. The result could mean that local governments simply forgo important infrastructure projects because they cannot afford to fund them.

SB 7, however, is arguably unconstitutional. In 2012, the California Supreme court confirmed, in State Building and Construction Trades Council of California AFL-CIO vs. City of Vista, that California charter cities would be able to maintain the autonomy to decide whether to pay prevailing wages for local construction projects. It was a step in the direction of the free market for local governments.

What is going on in California if the Legislature and governor ignore the constitution?

According to Russell Johnson, Associated Building and Contractors, Inc., the California Supreme Court decision meant that charter cities can operate as they see fit. “The Court said, 'Autonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity.’ We can think of nothing that is of greater municipal concern than how a city’s tax dollars will be spent; nor anything which could be of less interest to taxpayers of other jurisdictions,” Johnson told me in June.

“Whether a charter city pays prevailing wage with local funds is up to each city and not the Legislature,”  Johnson said.

Charter Cities

Of the 482 cities in California, 121 are charter cities; the rest are “general law cities” over which the Legislature exercises more control. But not all charter cities avail themselves of the prevailing wage exemption. There are 70 cities with no exemption, 10 cities with a partial exemption, and 41 charter cities with full exemption, according to the California Construction Compliance Group.

“In recent years, city councils have proposed charters and voters have approved charters in order to circumvent costly and unnecessary state mandates imposed by the California State Legislature on local governments,” Kevin Dayton wrote yesterday in the Flash Report. “Many of these mandates are pushed into state law by union lobbyists.”

“To stifle this little local rebellion, State Senate President pro Tem Darrell Steinberg and Republican Senator Anthony Cannella introduced a bill in 2013 sponsored by the State Building and Construction Trades Council of California,” Dayton said. “Senate Bill 7 cuts off state construction funding for charter cities that set contracting policies that deviate from state-mandated prevailing wage laws.”

“Supporters of Senate Bill 7 say it 'encourages' charter cities to abide by state prevailing wage law” Dayton said. “Others suggest that the term 'encourages' is somewhat Orwellian, as the term 'punishes' would be more accurate.”

By Katy Grimes

While reports of an improving California economy abound, many in the state aren’t buying it — particularly given how many anti-business bills are working through the Legislature.

Of particular interest is Senate Bill 7, by Senate President pro Tem Darrell Steinberg, D-Sacramento, and Sen. Anthony Cannella, R-Ceres. SB 7 would deprive charter cities of state funding and financial assistance for projects simply because some city charters do not require paying the prevailing wage.

The bill is sponsored by the State Building and Construction Trades Council, AFL-CIO.

“Continuing California’s economic growth depends on creating more middle class jobs, especially in the construction industry that was hit so hard during the Great Recession,” said Steinberg on his website. “Low wage contractors cut costs by cutting corners, but the data shows that they’re not saving public money. We can’t afford to shortchange workers and taxpayers by ignoring the economic net benefit of California’s prevailing wage law.”

What does SB 7 do?

SB 7 seeks to compel charter cities to require prevailing wages on local projects they construct with local funds by withholding all state contracting funds from non-compliant cities. The result could mean that local governments simply forgo important infrastructure projects because they cannot afford to fund them.

SB 7, however, is arguably unconstitutional. In 2012, the California Supreme court confirmed, in State Building and Construction Trades Council of California, AFL-CIO vs. City of Vista, that California charter cities would be able to maintain the autonomy to decide whether to pay prevailing wages for local construction projects. It was a step in the direction of the free market for local governments, as I wrote last September in “Push for charter cities enrages unions.”

“Whether a charter city pays prevailing wage with local funds is up to each city and not the Legislature,” said Russell Johnson, Associated Building and Contractors, Inc., California Government Affairs Director. “In this decision the court said, ‘Autonomy with regard to the expenditure of public funds lies at the heart of what it means to be an independent governmental entity.’ We can think of nothing that is of greater municipal concern than how a city’s tax dollars will be spent; nor anything which could be of less interest to taxpayers of other jurisdictions.”

According to Johnson, the ruling means charter cities now have a clear path to continue to operate as they see fit.

What is a California charter city?

In California, charter cities are under a unique protection in the State Constitution, and are allowed autonomy from the state when it comes to “municipal affairs.” This means when local dollars are used, charter cities get to make local decisions.

“In the Vista case, the California Supreme Court unambiguously upheld the right of charter cities to establish their own contracting policies for public works projects paid for with local funds,” Russell explained. “Local projects built with local funds are not subject to prevailing wage.”

The bill

Passage of SB 7 would establish a disturbing road map for future state intrusion on charter city laws and policies by withholding state funds as leverage to attempt to force changes to voter-approved city charters and ordinances.

“Cities recognize that exercising the power of a charter can free their municipal affairs from the grip of the state legislature and the special interest groups entrenched at the capitol,” Kevin Dayton, CEO of Dayton Public Policy Institute, said in a recent op ed on UnionWatch.org.

Dayton wrote:

“A staff report about city charters to the Murrieta City Council for its October 2, 2012 meeting was blunt about the need for cities to enact charters:

“‘…a knowledgeable, involved electorate should both propel and constrain the direction of its own city. Local control has always been a paramount matter of residents, businesses and the Murrieta City Council. Yet state legislators and previous gubernatorial administrations continue to impose far greater mandates, while at the same time hindering the ability of local governments to operate successfully. With little ability to protest, local governments have watched as the state government continues to balance its budget deficits on the backs of fiscally responsible local jurisdictions…The voice of cities in Sacramento has become mute due to a combination of special interest groups, influential political campaign contributions and tone-deaf lawmakers passing unfunded mandates. This process has left cities with little ability to petition the state government…’”

Of the 482 cities in California, 121 are charter cities; the rest are “general law cities” over which the Legislature exercises more control. But not all charter cities avail themselves of the prevailing wage exemption. There are currently 70 cities with no exemption, 10 cities with a partial exemption, and 41 charter cities with full exemption, according to the California Construction Compliance Group.

“But there are aggressive opponents who regard cities’ exercise of their charter authority to be an attack on their hegemony,” Dayton said. “In 2011 and 2012, unions spent jaw-dropping amounts per voter on campaigns to convince voters to reject reasonable proposed charters.”

Charter cities and Project Labor Agreements

This isn’t the first time unions have been at the dance to crush charter city authority. The unions backed SB 922 in 2011 and SB 829 in 2012, both by former state Sen. Michael Rubio. These two laws cut off state money to charter cities that adopt policies prohibiting those cities from requiring construction contractors to sign a Project Labor Agreement with unions as a condition of work. Both bills were signed into law by Gov. Jerry Brown.

“SB 7 just adopts the same concept of overpowering charter city authority,” Dayton said.

Dayton anticipates the Democratic legislative supermajority and Brown, also a Democrat, will advance even more union-backed efforts to chip away at Article XI, Section 3 of the California Constitution, which allows cities to govern their own municipal affairs under a charter.

Dayton said, “It would be an effective way to eliminate another one of the diminishing number of checks and balances that interfere with utopian schemes planned under the benevolent and enlightened one-party state.”

By Katy Grimes

SACRAMENTO — At Assembly Transportation Committee hearings in the Capitol on Monday, Assemblywoman Bonnie Lowenthal, D-Long Beach, cut the microphone of two speakers during the three minutes left for public comment at the end.

The two members of the public raised some real concerns about discriminatory language contained within the hiring agreements of the California High Speed Rail Authority Project Labor Agreements.  But Lowenthal, the committee chair, wouldn’t hear it, nor would she allow anyone else to hear it.

By the end of the hearing, when Lowenthal wrapped up legislators’ questions, it was 2:27 p.m. and time for public comment. Lowenthal announced that they had the committee room until 2:30. She told those wishing to make public comment to make it quick.

Eric Christen, a representative for fair employment in construction, said there was discriminatory language in the construction Project Labor Agreement the CHSRA is responsible for.  Christen said the PLA was a “give-away to the unions.”

Christen explained the CHSRA required in recent bid specifications that the winning design-build entity and its subcontractors sign a Project Labor Agreement with unions in the State Building and Construction Trades Council of California.

Lowenthal cut off Christen’s microphone.

A draft Project Labor Agreement for the first segment of the California High-Speed Rail was included as Addendum 8 in the Request for Proposal to the five pre-qualified design-build consortiums for the initial construction segment from Madera through Fresno, according to Christen. It contains the standard boilerplate language used in most Project Labor Agreements that contractors must sign with unions to work on government projects in California. Christen provides the information at California High-Speed Rail Scam.

Open competition

Nicole Goehring, with Associated Builder and Contractors, said they had been advocating for a fair and open competition policy all along, but Lowenthal cut her off as well.

Goehring later told me that, without critical changes, the discriminatory language will remain in the PLAs and prevent qualified California workers from competing for work on the project. Goehring said the PLA not only shuts out Merit Shop Contractors, but seriously limits California workers, including the nearly 1,800 students that are currently enrolled in ABC’s craft and apprenticeship programs, from working on this project.

Goehring said the PLA was created to benefit only the construction unions and not the 83 percent of California workers who choose not to be in a union. She said, “This section puts the unions in control of all craft labor for the project despite the fact that they represent only 17 percent of California’s construction workforce.”

That was just at the tail end of the hearing. The first 57 minutes displayed the Legislature’s continued refusal to grill CHSRA executives about what’s really going on.

Rail Authority CEO

“Early on, the High-Speed Rail Authority stumbled in its projections, its estimates and its outreach, and the Legislature responded with countless hearings, inquiries, and reporting requirements,” Lowenthal said during her opening statement.

Lowenthal said the purpose of Monday’s hearing was to “move forward,” leaving past worries and concerns behind.

But she did not say it was only when the CHSRA lied about ridership projections and job creation, and got caught, that the full Legislature was forced to respond. Up to that point, legitimate concerns over the high-speed rail debacle came primarily from the Republican minority.

High Speed Rail Authority CEO Jeff Morales proved once again that he can kill time during the mandatory hearings, and barely say anything of substance. At Monday’s hearing, Morales was allowed by Lowenthal to drone on, while most of the committee members tossed him softball questions. I have attended nearly every committee hearing on High-Speed Rail, whose officials rarely are asked to answer anything in detail.

Who is Jeff Morales?

Morales came to the CHSRA from California’s largest agency, Caltrans, where he worked for 3-1/2 years under Gov. Gray Davis. Morales resigned when Davis was voted out of office in the historic 2003 recall election. Many question the conflict of interest in Morales’s role as CEO at the rail authority. Morales is a former senior vice president at Parsons Brinckerhoff, an international transportation consulting firm, and also the primary contractor on the rail project.

The choice of Morales reinforced “a long tradition of inside dealing within the authority,” California Rail Foundation president Richard Tolmach said at the time. “An outside observer could be excused for thinking the CEO’s job is to grease payments for Parsons Brinckerhoff.”

Morales is supposed to receive a $25,000 bonus on top of his $365,000 salary if he meets a few goals: establishing a management plan to oversee CHSRA contractors; filling the vacant positions among the senior staff; appointing a risk-management officer; successfully awarding contracts for the first construction projects at or below engineering cost estimates; meeting goals for including small businesses and businesses owned by minorities, women and disabled veterans in construction contracts; and making major improvements to the agency’s outreach to the public, communities, property owners and other stakeholders along the route.

And Morales discussed the outreach the rail authority has done with land owners in the Central Valley.

Legislators’ questions

Assemblyman Jim Patterson, R-Fresno, asked Morales to explain the CHSRA calculation used to claim 20,000 jobs will be created by high-speed rail. “In the business plan, it appears there is a multiplier used; one job equals one year,” Patterson said. “This inflates the number. How many real long term jobs are there?” Patterson asked.

Morales said, “20,000 are job years. It’s an industry standard used.”

“Without the multiplier, how many jobs will there be?” Patterson asked again.

“The multiplier is used over many years, created by the level of investment,” Morales said, dodging the answer.

According to the Assembly Republican Caucus, “HSRA uses a highly misleading methodology to inflate job estimates. Estimates of jobs created are represented in ‘job-years.’ One year of full employment equals a job-year. One person employed for 20 years equals 20 ‘jobs’ under this system.”

After Patterson asked another question about the lack of private investment involved, Lowenthal interrupted him to take questions from other committee members.

Fortunately, Vice Chairman Eric Linder, R-Corona, was next. “Who will be responsible for inspecting the building?” Linder asked.

“Many layers of state employees,” answered Morales. “It’s consistent with how design-build work is done around the state. State people need to make state decisions, and public people need to make public decision. They need to be accountable.”

Morales said the rail authority is “holding meetings on-the-record” to involve private sector people and companies. And they are holding “informal discussions with investors to help shape the best path forward.”