The first major votes on a raft of bills meant to address California’s housing crisis could come up for a vote Friday, with the Democrats who control the Legislature eager to demonstrate they know how much extreme housing costs are harming low- and middle-income families.

Gov. Jerry Brown has often been critical of plans to add new dollars to California’s traditional method of providing affordable housing – by building subsidized units that help a relatively small number of residents. He prefers to sharply streamline the housing approval process.

But after horse-trading this year with Democrats, Brown agreed to support two affordable housing initiatives, apparently in return for support for Senate Bill 35, a measure by state Sen. Scott Weiner, D-San Francisco. It would hasten approvals for new housing units in cities that aren’t creating the volume of units mandated under state law and make it significantly more difficult for local opponents to block construction.

Unlike Weiner’s measure, both the affordable housing initiatives require two-thirds support to win passage in the Legislature.

Real-estate fee struggles to win two-thirds support

One of the measures – SB3 by Sen. Jim Beall, D-San Jose – appears to have sufficient support. It would put $4 billion in general obligation bonds before state voters next year to fund construction of affordable rental units and to fund “smart growth” projects near transit centers and other housing projects. It would also provide $1 billion to the state’s veteran home loan program, which the San Francisco Chronicle reported would otherwise run out of money next summer.

The other affordable housing initiative – SB2 by Sen. Toni Atkins, D-San Diego – appears to be in trouble. It would add fees of $75 on some real-estate transactions to provide ongoing permanent funding for affordable housing, estimated at $250 million a year. The Los Angeles Times reported that in a bid to boost support, Atkins had made changes this week to her bill to provide some of the funds it would generate to local governments. But it is unlikely to win any GOP votes in the Assembly, meaning all 54 Assembly Democrats would have to support it.

Many of the 54 have already voted this year to raise gasoline and diesel taxes and to approve a continuation of the state’s cap-and-trade emissions trading program, which also makes fuel more expensive. For those in swing districts, backing SB2 may seem risky.

“My concern is that it looks and smells like a tax,” Assemblyman Al Muratsuchi, D-Torrance, told the Times.

Prevailing wage mandate in Weiner bill questioned

Weiner’s proposal reflects the Republican view that regulatory relief is the only way to build enough housing to stabilize rents and home prices. With two-bedroom apartments renting for more than $2,000 a month in most big cities – and double that in parts of the Bay Area and Silicon Valley – there’s a growing fear among California business executives that housing costs will drive off talented workers and make it difficult to recruit new ones.

But in recent days, a new GOP talking point has emerged that takes dead aim at the idea that Weiner’s bill would accomplish much. It notes that by requiring projects that win quick approvals to use “prevailing wages” – union-level pay – those projects would be far costlier than those built with non-union crews.

Earlier this year – in a fight over another bill before the Legislature seeking to require “prevailing wages” on construction projects – the Building Industry Association estimated the mandate would add $90,000 to the cost of building a 2,000-square-foot home in California.

State housing officials say California has added about 800,000 housing units over the past decade – 1 million less than needed.

Overtime for nannies and domestic workers

The “Domestic Workers Bill of Rights,” Assembly Bill 241, by Assemblyman Tom Ammiano, D-San Francisco, “would specially regulate the wages, hours, and working conditions of domestic work employees,” according to the bill’s language. And it would “include childcare providers, caregivers of people with disabilities, sick, convalescing, or elderly persons, house cleaners, housekeepers, maids, and other household occupations.”

It also would mandate pay for “travel time spent by a personal attendant” and regulate “accommodations for a domestic work employee who is required to sleep in a private household.”

In 2010, the State Legislature passed a Resolution for a Domestic Workers Bill of Rights, which spawned a study by UCLA on the issue. What was promised in the Legislature as just a resolution recognizing this group of the workforce morphed into AB241.

According to Ammiano:

“The campaign to adopt a California Domestic Worker Bill of Rights attempts to address one core principle: domestic workers deserve equal treatment under the law. Unfortunately, California suffers from a unique and confounding contradiction: Domestic workers who care for property such as landscaping or housekeeping are generally entitled to overtime. Those domestic workers who care for children, the infirm, the elderly, and those with disabilities do not.”

The California Chamber of Commerce explained its opposition:

“The wage-and-hour burden that AB241 creates on individual homeowners as well as third-party employers is significant, and unprecedented. …

“Failure to comply invokes costly statutory penalties and litigation, including an employee’s right to attorneys’ fees. The detrimental impact of this potential liability will either discourage the employment of ‘domestic work employees,’ thereby increasing the unemployment rate in California; or force such homeowners and ‘third-party employers’ into the underground economy.”

Expanding the prevailing wage

Senate Bill 7 is by state Senate President pro Tem Darrell Steinberg, D-Sacramento. It expands the prevailing wage law to the projects of charter cities. According to the California Department of Industrial Relations, the “prevailing wage” is determined by several factors in each sector, but is heavily dependent on wages from union contracts.

Before SB7, state law already mandated that the prevailing wage be paid by “general law” cities, which have less autonomy than the state’s 121 charter cities. (Charter cities tend to be larger, such as Los Angeles and Anaheim.)

The California Constitution guarantees California’s charter cities broad authority over their municipal actions, including setting prevailing wage laws. According to the state Senate floor analysis of SB7, several court cases have upheld the charter cities’ rights in this matter. That’s why SB7 does not outright order charter cities to pay the prevailing wage. Instead, it withholds state funds from charter cities that refuse to pay the prevailing wage.

According to an analysis by the Haight Brown & Bonesteel law firm, “The fight about SB7 will likely now turn to the courts given the constitutional ramifications of the legislation.”

If SB7 remains the law, charter cities might have to forego important infrastructure projects because of higher costs. The League of California Cities had asked Governor Brown to veto the bill, noting that “using political leverage to punish those exercising rights provided by the Constitution is unjust.”

The bill was sponsored by the powerful State Building and Construction Trades Council, AFL-CIO, which would benefit from SB7’s punishment of construction firms using non-union labor. SBCTC President Robbie Hunter explained why he thought the bill was needed:

“Low-ball contractors have used charter cities as a loophole to get around the state policy of requiring prevailing wage on public works projects. SB7 makes it clear that such tactics are not in the best interest of California, and cities who permit these substandard wages on their projects won’t be rewarded with state funds.”

Prevailing wage in private businesses

SB54 is by Sen. Loni Hancock, D-Berkeley. It expands the payment of prevailing wages to privately financed refinery construction projects. “We have people dying in the refineries,” said Hancock at a September hearing. “We need a skilled work force, they need to be trained in a state-accredited program.”

Catherine Reheis-Boyd, president of the Western States Petroleum Association, explained industry opposition:

“Despite a strong and vocal opposition from oil industry workers, small businesses, labor, safety officials, and regional newspapers, California Governor Jerry Brown yesterday [Oct. 13, 2013] signed into law SB54. The bill requires refiners to pay prevailing wages to contract workers and restricts their ability to hire qualified employees to a limited pool of applicants.”

Assemblyman Tim Donnelly, R-Twin Peaks, said at the September hearing.

“This bill is going to make it harder to build another refinery in California. We need at least two more. If we want to lower gas prices for the average hard-working Californian, we need to get off the backs of those who are refining the fuels that operate the vast majority of vehicles in this state. This is the government coming in and interfering in the name of safety in a private contract. We need to make it easier for those who are willing to go through the inordinate amount of regulation we already have on them to put a refinery in to refine the special fuels we use in California. We need more refineries. This is not going to add refineries.”

Hancock’s response to these objections, according to the state Senate floor analysis of SB54:

“[T]he author’s office states that ensuring that outside contractors that work at chemical refineries have properly trained workers through approved apprenticeship programs will reduce public health and safety risks. The author’s office states that outside contractors at these facilities should be using a qualified workforce, not unskilled, low-wage workers hired off the street or brought in from other states to save money.”

New whistle-blower protections

SB496 is by Sen. Rod Wright, D-Los Angeles. Starting Jan. 1, employers will be prohibited from engaging in anticipatory retaliation, or taking action against an employee based on the belief he or she might report suspected illegal activity. The new law also expands employee whistleblower protections to prohibit retaliation by any person acting on behalf of the employer.

And it protects employees who disclose, or may disclose, information regarding alleged violations “to a person with authority over the employee or another employee who has authority to investigate, discover or correct the violation.” The bill was passed unopposed in both the state Senate and the Assembly.

Explained attorney Laura Reathaford, writing for the Society of Human Resource Management:

“Because a violation of California’s general whistle-blower statute can have serious consequences for employers — not the least of which are civil penalties of up to $10,000 per violation — California employers would be well advised to update their whistle-blower protection policies to reflect the changes effected by SB496 and to train managers and supervisors about the new retaliation provisions applicable to their conduct. Of particular concern to employers should be the fact that they can now be found liable for ‘anticipatory retaliation’ if they, or any person acting on their behalf, take adverse action against an employee based on the mere belief that the employee has disclosed or might disclose information about a reasonably-believed violation of federal, state, or local law.”

Sacramento’s publicly funded arena deal has been billed as “the largest redevelopment project in city history” in Sacramento, which should make every tax payer shudder.

A publicly funded arena will mean Sacramento taxpayers can expect a giant toilet flushing publicly funding. Other people’s money is so easy to recklessly spend.

City-created the blight

The blighted Downtown Plaza in downtown Sacramento is entirely the fault of the city, through eminent domain, and its lousy property management. As the largest slumlord on the street, the city is responsible for driving the downtown K Street Mall area from a once-bustling pedestrian mall filled with independently owned shops and department stores, into a crime laden, blighted area replete with abandoned buildings and homeless people — after spending hundreds of millions of dollars in redevelopment money on the space.

Sacramento Police Department has had to cut cops. There are no road repairs. Park maintenance is dwindling. City services overall have been cut already. The publicly funded arena will just usher in massive debt. And when the team can no longer pay its bills, the city, already sinking under huge debt and unfunded pension liability, will file for bankruptcy.

Publicly funded arena deals are public sinkholes, and a bad deal for taxpayers.

New York arena bust

The Wall Street Journal just reported the New York City Barclays Center arena is not producing nearly the revenue projected. The Barclays Center is not only losing money, it made only one-third the first year projected revenue, and can’t pay the annual debt service.

Sacramento’s bad deal

Officials claim the Sacramento arena deal would require the city to commit “$258 million in value, or 58 percent of the arena cost,” according to reports in the Sacramento Bee. “Of that, $212 million would come from selling bonds backed by future revenues from city downtown parking garages. The city’s contribution is the same as it was in last year’s aborted project to build an arena at the downtown railyard.”

But that’s just part of the public’s contribution. Public policy watchdog Eye on Sacramento, says the public’s contribution is actually $375 million, when all of the publicly owned assets being thrown into the deal are accounted for.

What else is being thrown into the pot? The city also agreed to give the arena private development group the city’s empty 100-acre plot next to Sleep Train Arena in North Natomas, as well as six other city properties, five of them adjacent to or near the downtown arena site.

And Sacramento officials are giving away the city’s parking lot and metered parking revenue, after claiming the parking lots have no value.

Is it any wonder economists think arenas make bad investments for taxpayers?

Arenas and sports stadiums a bust

“The basic idea is that sports stadiums typically aren’t a good tool for economic development,” said Victor Matheson, an economist at Holy Cross who has studied the economic impact of stadium construction for decades, reported the Atlantic. “When cities cite studies (often produced by parties with an interest in building the stadium) touting the impact of such projects, there is a simple rule for determining the actual return on investment, Matheson said: ‘Take whatever number the sports promoter says, take it and move the decimal one place to the left. Divide it by ten, and that’s a pretty good estimate of the actual economic impact.’”

“The main problem, I think, with the public financing of sports stadiums isn’t that they happen, but that they happen so often because of how they are sold to taxpayers.”

Ohio arena bust

“Nearly 20 years after county officials promised that public financing for a pair of professional sports stadiums would help usher in a new era of economic vitality, the reality is somewhat different,” the Huffington Post reported in March about Drake Center. “The county’s agreement to build new stadium facilities for the Cincinnati Bengals and the Cincinnati Reds has been described as ‘one of the worst professional sports deals ever struck by a local government’ by the Wall Street Journal.”

Arizona arena bust

In June 2012, the city council of Glendale, Arizona, decided to spend $324 million on the Phoenix Coyotes, an ice hockey team that plays in Glendale’s Jobing.com Arena.

“As the city voted to give a future Coyotes owner hundreds of millions of taxpayer dollars, it laid off 49 public workers, and even considered putting its city hall and police station up as collateral to obtain a loan, according to the Arizona Republic,” the Atlantic reported. “The latter plan was ultimately scrapped.”

Glendale is on the hook for $15 million per year over 20 years to a potential Coyotes owner, but also committed to $12 million annual debt payment for construction of its arena. In return, the city receives only $2.2 million in annual rent payments, ticket surcharges, sales taxes and other fees.” The city will still lose $9 million annually.

The art of the deal

The pubic cost of Sacramento’s current arena subsidy plan will require payments of $25 million per year for 27 years after the initial 8 years of “interest only” payments.  The state recently prohibited school districts from using similar long-term “capital appreciation” bonds.

Arena projects rarely make economic sense because of the flawed way they are structured. Stadiums and arenas are financed with long-term bonds, sticking cities with the debt for unusually long periods of time. Sacramento’s arena bond debt will be around for at least 30 years.

By Chris Reed

You don’t have to be a union hater to be amazed at all the different ways labor decides to make its Sacramento puppets jump through hoops. The latest example is legislation that would require charter cities to use “prevailing wage” policies on construction projects in which any state funds were used. Last spring, the Legislature passed a law banning charter cities with PLA bans from receiving state funds for construction projects in a heavy-handed attempt to persuade San Diego voters to reject an anti-PLA measure on the June ballot. The bullying didn’t work.

But the latest example of labor power-flexing has a bipartisan flavor. A GOPer is co-sponsoring the bill along with a top Dem, and he’s touting union myths in the doing. This is from the press release announcing the legislation:

“(Sacramento) – Senate President pro Tempore Darrell Steinberg (D-Sacramento) and Senator Anthony Cannella (R-Ceres) will co-author a measure on prevailing wage to increase middle-class jobs, sustain a skilled workforce, and ensure cost efficient and high quality public works projects. Senate Bill 7 would make charter cities eligible to receive or use state funds for a public works project only if the city has a policy of requiring contractors on all its municipal projects to comply with the State’s prevailing wage law. The bill is sponsored by the State Building and Construction Trades Council, AFL-CIO. ….

“’As a civil engineer and former mayor, I am proud to co-author SB 7. It is important that we close this loophole that allows certain firms to game the system. Those firms know that they can marginally undercut prevailing wage to win a contract,’ said Senator Anthony Cannella (R-Ceres).

“Several economic studies show that prevailing wage contracts save tax dollars through higher productivity, better quality workmanship, and a faster rate of project completion.”

Cannella puts lipstick on a pig

Yes, prevailing wage isn’t the same thing as a PLA, and sometimes isn’t nearly as onerous. Still, prevailing wage is just one more way that organized labor tries to distort wages — to push up compensation from what the free market would pay.

But Cannella won’t admit this. Instead, he makes the same claim that is made for PLAs: that it is good for everyone if a contractor for a construction project is forced to pay workers more.

Oh, please. Businesses act in rational ways. Those that want to maintain good images for the long haul don’t cut corners or cut costs mindlessly. If there were a business model in the construction industry that showed a “prevailing wage” job scale led to better results, business owners would flock to it. That’s how capitalism works. (The construction business owners that do adopt high-wage models in California do so because they know state politicians whom they contribute money to will force jobs their way. That’s how Sacramento works.)

So Cannella shouldn’t have to force this policy onto charter cities if prevailing wage is a win-win on all fronts. But that’s what he’s trying to do — while mouthing union talking points.

I’m sure my old pal Bob Huff is just thrilled about this.

By Katy Grimes

In what strange world do janitors get paid $45 per hour? In California, the land of the prevailing wage.

The dirty secret is that janitors often are not really getting paid $45 per hour, but the taxpayers are being charged this amount on public works projects.

Designed to help the worker, the prevailing wage was created to set a minimum hourly rate paid on all public works projects, primarily for construction workers. But the classification has been expanded and greatly abused.

One contractor’s saga

I recently met with a Southern California contractor who has owned a final construction cleanup business for more than 25 years. Final cleanup on government construction projects is always the last task in the project, and usually takes place within days of the occupants moving in, depending on the size and scope of the cleanup. The contractor said that the work he and his crews do includes cleaning the construction dust off of walls, washing and polishing floors, cleaning windows and mirrors, power-washing all surfaces, wiping down fixtures and hosing down the roof and parking lots.

He is hired as a subcontractor by large general contractors on all kinds of public works construction projects: school construction sites, police department construction, state, city and county office buildings and the like.

However, this contractor is in a pickle. There is no Department of Industrial Relations prevailing wage classification for this specific type of janitorial work. He said the going rate in the private sector for a basic janitorial job is between $10 and $15 per hour. But the Department of Industrial Relations states that the prevailing wage rate is $45 per hour for construction-project janitors.

Kevin Dayton, an expert on Project Labor Agreements and prevailing wage issues, told me that because vacuuming up the sawdust at a construction site is considered part of a construction trade, the DIR considers such work within the work assignments listed in the applicable collective bargaining agreements of the union, the Southern California District Council of Laborers.

Although there are slight differences between prevailing wage laws in Northern and Southern California, they generally are the same. Dayton explained, “For Northern California, the state-mandated total straight time hourly ‘prevailing wage’ rate for a journeyman in the Laborers Group 4 trade classification applies to the following: ‘Final cleanup on building construction projects prior to occupancy only. Cleaning and washing windows (new construction only), service landscape laborers (such as gardening, horticulture, mowing, trimming, replanting, watering during plant establishment period) on new construction.’

“Under Section 1773 of the California Labor Code and Title 8, Subchapter 3 of the California Code of Regulations, the State of California determines ‘prevailing wage’ rates in most cases by obtaining the union collective bargaining agreements for each trade in each geographical region of the state, adding up all of the payments indicated in these agreements, and declaring the total to be the ‘prevailing wage.’”

He added, “In negotiating their collective bargaining agreements, construction trade unions actually enjoy a kind of quasi-regulatory authority, because their final agreements are the basis for the state-mandated construction wage rates. They are loath to compromise this power.”

The contractor I met with said he’s in trouble because the general contractors which hire him calculate the prevailing wage rate of $45 per hour in their bids to the government, but refuse to pay him that rate. He said the general contractors have been charging the state, and ultimately the taxpayers, $45 per hour for janitors on public works projects, but only pay their subcontractors $10 to $15 per hour for their final clean up janitors.

The contractor told me the labor compliance program of the DIR is cracking down on him for not paying the prevailing wage of $45 to his employees. Then he is punished and forced to abandon final cleanup jobs, and charged back the cost of the replacement final cleanup crew, at prevailing wage rates. He said that he is not only out of a job, but he then has to pay the additional cost of the final cleanup to the general contractor.

This contractor said he follows the letter of the law in running his business, and makes sure all of his employees are paid properly and legally through his payroll service. But when a general contractor refuses to pay him the legal prevailing wage rate for his crew, he cannot pay his employees the prevailing wage rate either.

Legislation to fix this mess

Assemblyman Curt Hagman, R-Chino Hills, announced last week he has introduced legislation to address this problem, but only after trying to work directly with the Department of Industrial Relations himself to no avail. He said that the DIR will not discuss the prevailing wage classification problem, and continually referred him to the DIR website.

Hagman told me that if the prevailing wage actually worked in California, employees would be getting paid the prevailing wage. “But the system is broken and is being abused,” Hagman said. He said that the $45 per hour prevailing wage for janitorial cleanup is just one example of why public construction projects in California cost so much.

Hagman said some contractors pay the janitorial employees between $10 and $15 per hour to perform the final cleanup, then pocket the difference. “On the books it looks as if everyone is making a ton of money, but the worker is not getting the pay or benefits they are legally entitled to,” he said.

Hagman’s bill would require the Department of Industrial Relations to establish a new specific group classification for final cleanup laborers, and set appropriate prevailing wages.

Prevailing wage limits competition

A 2010 Cato Institute study concluded the purpose of prevailing wage laws was to limit competition, as well as provide significant benefits to labor unions. These policies come at the expense of taxpayers, who are forced to pay far more for projects that require prevailing wage mandates.

“Those laws mandate that on government construction projects, the labor component will not be subject to competitive bidding; rather, the wages paid to the various classes of construction labor are set by government officials at rates determined to prevail in the job site’s locality—typically, prevailing union wages,” wrote Cato author George Leef. “Labor wages and benefits are thus removed from competition by operation of law.”

Déjà vu all over again

Almost one year ago exactly, in the first committee hearing of the New Year, the Assembly Labor and Employment Committee killed two prevailing wage reform bills by Assemblywoman Shannon Grove, R-Bakersfield. AB 987 and 988 would have reformed and updated state prevailing wage laws by changing the calculations for prevailing wages, and would have allowed local governments to determine their own prevailing wage policies.

“The reforms in these bills are bold and significant steps to reviving our dire economy and putting Californians back to work,” Grove said at the hearing on the bills.  “Forcing citizens to pay amounts for projects beyond what the local free market would otherwise dictate is a misuse of taxpayer dollars.  Unfortunately, the powerful union interests benefit at this taxpayer expense.”

At wit’s end

The contractor I met with is at his wit’s end, and rapidly losing business because he can no longer play the prevailing wage game. He took matters into his own hands, and together with two other subcontractors met with several general contractors’ project managers, recording the meetings. In a video I saw posted on YouTube, the project manager admitted that, as the general contractor, he cheats on the prevailing wages for public works projects.

One of the project managers said that it doesn’t matter what the rate per hour is as long as the subcontractors provide invoices that match. “I can give you a contract, and you will have to price everything out, or you give it to me right now on a Purchase Order. You are set up as my water guy,” the general contractor told the final cleanup subcontractors.

When asked what the prevailing wage for the final cleanup workers was, the project manager just shrugged, and never answered. This happened several times with different project managers during the videos.

In another segment of the video, the general contractor’s project manager explained that the subcontractor can change his invoices as long as the general contractor is able to claim that “the bulk of the work falls into the other category.”

Changed invoices

The final clean up contractor I met with said that, for many years, he has been told to change his invoices to take out the work detail, and just include one total price.

But he said that not only is the re-invoicing illegal because it ignores the prevailing wage rate, his crews are often scheduled to work on weekends when overtime is supposed to be paid. Overtime for a final cleanup worker makes the $45 per hour rate go to $63 per hour for time-and-one-half, and $78 per hour on a Sunday.

“We are often told to come in after hours and on weekends,” he told me. “I don’t want to be followed around by the unions; I just want the industry to be cleaned up. The prevailing wage is messing up the industry.”

Sept. 30, 2012

By Katy Grimes

SACRAMENTO — The November election is shaping up to be a biggie, and probably even a game changer. In addition to California’s tax increase ballot initiatives and the paycheck protection measure, voters in three California cities will decide whether to approve the proposed city charters.

Escondido, Costa Mesa, and Grover Beach, currently general law cities under the California Constitution, are asking voters to allow the change to charter cities.

The change from a general law city to a charter city is technical, even obscure, but very powerful. Charter cities have significantly more autonomy and flexibility than general law cities to protect taxpayer funds through more careful spending, and exemptions from state-mandated prevailing wage agreements and Project Labor Agreements.

Many Californians believe that the only for cities way to wrestle control away from powerful public employees unions is to file municipal bankruptcy. But Charter Cities are a much better way to accomplish this.

Charter Cities

“A charter needs to give a city full control of its municipal affairs, so it can implement lower taxes, reasonable regulation, fiscal responsibility, limited government, local control and more freedom from corrupt urban legislators,” according to Kevin Dayton, CEO of Dayton Public Policy Institute, an employment and labor specialist, and charter city expert.

There are 121 charter cities in California out of 482 cities. 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.

The 70 cities with no prevailing wage exemption even include many of the state’s more politically liberal cities: Alameda, Berkeley, Los Angeles, Oakland, Sacramento, Santa Barbara, Santa Cruz and Santa Monica. Included in the list are Stockton, San Bernardino and Vallejo — three of California’s cities to file for bankruptcy.

“Defenders of the status quo prefer California’s advocates of economic and personal freedom to be apologetic, mealy-mouthed, submissive and ineffective. I noted that an ideal charter, with its ‘defiance of excessive state authority,’ would enrage numerous special interest groups,” Dayton said.

That is exactly what has happened.

Dayton said that unions have steamrolled right over smaller cities’ efforts to adopt a charter. “Union leaders get very testy when someone points out that a charter city can establish its own policies concerning government-mandated construction wage rates,” Dayton said.

“Did you know that, under certain home rule provisions in California’s state constitution, voters can exercise a greater degree of local control than that provided by the California Legislature?” the League of California Cities explained. “Becoming a charter city allows voters to determine how their city government is organized and, with respect to municipal affairs, enact legislation different than that adopted by the state.”

Labor Smackdown

A recent California Supreme Court decision will actually help taxpayers bring some balance to the extreme positions coming out of state government.

The Supreme Court upheld the right of California’s 121 charter cities to establish their own policies about government-mandated prevailing wages in municipal construction projects.

This is big, and it is a smack down to California’s arrogant labor unions.

Charter cities

California’s 121 charter cities maintain a governing system defined by the city’s own charter document rather than by the state.

The Supreme Court ruling is significant because it upheld that the state’s charter cities are not required to pay prevailing wages under state law for local public works projects that are funded by local taxpayer funds.

In State Building and Construction Trades Council of California, AFL-CIO vs. City of Vista, the court confirmed that California charter cities maintain the autonomy to be able to decide whether to pay prevailing wages for local construction projects. It’s a step in the direction of the free market.

While some of the recent California cities to file for bankruptcy, including Stockton and San Bernardino, are charter cities, being a charter city does not lead to insolvency as many in the media would have Californians believe.

Los Angeles and San Francisco are also charter cities. Plenty of California’s cities, other than charter cities, are facing financial meltdown. However, being a charter city allows flexibility.

California’s charter cities first were established in the 1870s during difficult economic times, and in response to the state meddling in city affairs. A constitutional revision granting municipalities the charter option was approved and cities revised their own charters.

The beauty of charter cities is that, when used properly, the charter allows them more flexibility to cut costs and use revenues wisely, unlike most state mandates, which always favor certain special interests. This gives a city more control in making decisions more in line with local issues and needs.

But not everyone agrees.

“With a majority of the state’s largest cities chartered and thus suffering from unchecked wages, workers are being hurt statewide,” a story in the Daily Kos reported. “The high court of California had the opportunity to right this wrong but instead sided with the cities and bucked the Building Trades Council which represents 131 local unions in California.”

To understand this thinking, it is important to read further. “Prevailing wage laws are meant to protect wages across the industry, not just for union workers or workers in a given region,” the Daily Kos writer reported. “Republicans argue that such laws are outdated, but it is difficult to argue that preventing unscrupulous contractors from underbidding on contracts only to make up the difference on the backs of workers is a concept with an expiration date.”

What is difficult is to argue that supply and demand don’t matter, or that different regions and locals don’t have differing pay scales and needs.

However, Stockton and San Bernardino were not availing themselves of the ability to not pay higher prevailing wages, whereas most charter cities seek to pay wages more in line with the local economy.

“Significant and recent developments in proposed city charters in California have been related to explicit provisions concerning the establishment of policies for government-mandated prevailing wages, prohibitions on requiring contractors to sign Project Labor Agreements with unions, and requirements for unions to get permission from city employees to deduct money from their paychecks to use for political purposes,” Dayton explained. “In addition, some charters have contained provisions meant to prevent the kind of corruption among city council members and city staff that occurred in the City of Bell in the late 2000s.”

Dayton said that voters need to seriously consider approving the charter city proposals. “If you support lower taxes, reasonable regulation, fiscal responsibility, limited government, local control and more freedom from corrupt urban legislators, vote yes on the charters. If you believe citizens are not yet giving enough of their money to the government, vote no on the charter.”

Look for Part 2 of this Charter Cities series soon.