On July 2, 2012, the California Supreme Court ruled 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 funds.  In State Building and Construction Trades Council of California, AFL-CIO v. City of Vista, the court made clear that charter cities in California have the autonomy to decide individually whether to pay prevailing wages for local construction projects. This decision may tempt cities not organized as charter cities to change their legal status, as the city of Vista did in this case, in order to avoid the prevailing wage law.

That led the unions to induce the Legislature to pass a variant on this bill that banned charter cities from using state funds for public works projects unless they paid prevailing wages — and the tweaked version on Wednesday was upheld by a San Diego court. This is from the U-T San Diego:

An attempt by several cities to overturn a state law that forces them to choose between paying generally higher or “prevailing” wages on most public works projects or lose state construction dollars has been turned aside in a tentative court ruling.

San Diego County Superior Court Judge Joel Wohlfeil rejected arguments from the cities of Oceanside, Vista, Carlsbad and El Cajon [and El Centro and Fresno] that the requirement violates the state constitution. …

Wohlfeil wasn’t swayed in his tentative decision, ruling the law “appears to legitimately influence local governance by attaching conditions on the receipt of discretionary state funding.” He also said pursuing state policy objectives through financial incentives is generally constitutional.

But as I pointed out in a U-T San Diego editorial …

Wohlfeil cited the law’s purported objective — “the statewide concern of creating and maintaining a skilled construction work force” — but not the real one: helping unions.

The cities are expected to appeal if Wohlfeil doesn’t change his mind before issuing a final decision.

So much for spirit of CA Constitution

While I have blamed the unions and the Legislature in this post, it’s worth noting this never would have happened had Gov. Jerry Brown not signed the two bills into law.

It’s impossible to look at the intent of the charter city provision in the California Constitution and think these two bills bullying charter cities honor the spirit of the provision’s goal of local autonomy.

Who knows this? Yale Law School graduate Edmund G. Brown Jr.

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.