Officials: Prevailing wage bill is an overreach by California
April 23, 2013
A California Senate bill that would require charter cities, like Grass Valley and Truckee, to impose a minimum pay for workers on locally funded public works projects, or risk losing other funds, has leaders in those towns rallying in opposition.
“We oppose this measure due to its undercutting of local charter authority. Creating greater conflict between the state and local government is a disservice to those we represent,” wrote Grass Valley City Manager Dan Holler in a March letter of opposition.
The bill, SB 7, would require charter cities to adopt prevailing wage practices, which are already used on projects with state or federal funding, on public works projects financed with local funds as well. If charter cities do not, they would be ineligible to receive or use state funds for other public works projects.
Prevailing wages are the basic hourly rate, including benefits and overtime, paid to the majority of workers on public works projects in a particular craft or type of work within an area and the nearest labor market area.
On state prevailing wage projects, all bidders are required to use the same wage rates when bidding on a public works project.
The purpose of California’s prevailing wage laws prohibit a public works contractor from underbidding competitors by cutting the wages of their workers.
“It can affect us for a city-funded project; it would and could greatly increase the cost,” said Jan Arbuckle, a Grass Valley city councilwoman who sits on the board of directors of the League of California Cities.
The bill’s co-authors, Senate President pro Tempore Darrell Steinberg (D-Sacramento) and Senator Anthony Cannella (R-Ceres), argue the bill would increase middle-class jobs, sustain a skilled workforce and ensure cost-efficient and high-quality public works projects.
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,” Steinberg said in a statement announcing the bill.
“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.”
The majority of Grass Valley’s projects use multiple funding sources and, to the extent other funds are used or a state-wide concern is addressed, prevailing wage is often utilized, Holler notes.
But when no such outside funds are used, local agencies should be able to continue to be exempt from prevailing wage mandates, SB 7’s opposition attests, including the League of California Cities.
“The higher cost of a prevailing wage project reduces the number of projects that can be completed and diminishes the ‘on the ground’ effectiveness as seen by our residents as these local revenues are used for local projects,” Holler said.
The legislation was reviewed by the state appropriations committee earlier this month and will remain with that agency until it prioritizes bills based on funds in the next two months.
“This is a bad thing for our city. The state is once again trying to take away our local control, this time on how we award local contractors,” Arbuckle said. “Fundamentally, that is what this is about. Retaining local control.”
Part of Truckee’s decision to enact a city charter in 1995 was to allow for local prevailing wages, said Town Manager Tony Lashbrook.
“Yes, we are concerned,” Lashbrook said. “One of the reasons Truckee incorporated was the relatively poor condition of roads.”
In fact, the second article of the city’s charter starts out by asserting its right to establish standards, procedures, rules and regulations to define and control all aspects of bidding, award and performance of any public works contracts.
Specifically, this introductory section of the second article references the compensation to be paid for the performance of such works.
“The interest in the charter was stretching the dollars as far as possible” Lashbrook said. “(SB 7) is really contrary to the charter the Truckee voters enacted almost 18 years ago.”
Despite Lashbrook’s sentiments, Truckee’s city council has not taken a formal stance on the legislation. Nevada City, a general law city, would not be effected by SB 7. Roseville has also opposed the legislation, Arbuckle said.
To bolster its opposition, the League of Cities points to a decision the California Supreme Court made just eight months ago involving one of the bills sponsors, Building and Construction Trades Council, and the city of Vista over a provision in the state constitution.
“We need a strong prevailing wage throughout our state to encourage young people to enter apprenticeships and tackle the next generation of infrastructure and public works,” said Robbie Hunter, president of the State Building and Construction Trades Council of California, in a statement.
In that ruling, the courts held that the state cannot require a charter city to exercise its purchasing power based upon “some indirect effect (of the charter city’s purchasing power) on the regional and state economies,” the League cites.
It also upheld that the construction of a city-operated facility for the benefit of the city’s inhabitants with city funds is “quintessentially a municipal affair.”
“This measure tries to leverage a different outcome than the court’s ruling by withholding vital state construction funds, derived from all of the state’s taxpayers, from charter cities that fail to adopt prevailing wage requirements for projects they build with local funds,” noted Daniel Carrigg, the League’s legislative director, in an April 3 letter to the appropriations committee.
“Such a condition is unlawful because the state is seeking to accomplish indirectly what it cannot achieve directly.”
Chris Rosacker is a reporter for The Union, the Sierra Sun’s sister newspaper in Grass Valley.