How Unions Undermined the Rights of California's Charter Cities

In recognition that the municipal needs of people in the City of Needles might be different than the needs of people in the City of San Francisco, the California Constitution gives cities the right to control their own municipal affairs through a charter. These charters – approved by voters – are mini-constitutions that allow “home-rule.” Matters of statewide concern remain under the authority of the state.

Since the early 1930s, charter cities have been using their authority over municipal affairs to deviate from costly state mandates regarding so-called prevailing wages and apprenticeship requirements for purely municipal public works projects and private projects that get public funding (only) from the municipal government. Such laws imposed on public works projects effectively establish the wage and training terms and conditions for each trade in each county based on the applicable union Master Labor Agreement.

In other words, unions have quasi-regulatory power in California to determine contract bid specifications for government-funded projects (in most cases, for contracts of $1000 or more), whether built by a government or by a private developer. As a general rule, these specifications tend to disproportionately increase costs for taxpayers as the location of the project gets more distant from California Department of Industrial Relations headquarters in San Francisco.

During the truncated administration of Governor Gray Davis (1999-2003), union lobbyists succeeded in changing the legal definition of public works and the criteria used to calculate prevailing wage rates. This motivated more cities to ask voters to approve a charter with the intent of setting their own policies for purely municipal projects and private developments getting municipal financial assistance. In addition, other cities that already had charters were choosing for the first time to set their own policies.

Studies, anecdotes, and common sense showed that exercising this Constitutional right allowed charter cities to save money for taxpayers and build projects that would otherwise be economically infeasible. More could be built for less.

By the end of 2012, voters of 121 California cities had approved charters. Some charter cities chose to ignore the state mandates in their entirety and allowed construction contractors to choose wages and training practices based on market conditions. Other charter cities required contractors to follow most of the state mandates but set their own policies for some matters. And other charter cities did not exercise their authority at all for public works wages and training and simply included the state mandates in their project bid specifications.

The choice was left to the cities. See a status report of prevailing wage policies for charter cities at the end of 2012 in Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?)

Union Lobbyists and Lawyers Stomp Down the Charter City Rebellion

Obviously construction union leaders had become increasingly concerned about charter cities evading the provisions in their collective bargaining agreements when advertising contracts. In 2007, the State Building and Construction Trades Council of California sued the City of Vista, arguing that prevailing wage was a matter of statewide concern. The California Supreme Court sided with the City of Vista in 2012.

It was time for unions to use political campaigns and the state legislature to undermine the intellectual underpinnings of charter city authority and stop cities from ignoring the laws enacted at the State Capitol for unions. An organization called “Smart Cities Prevail” was created to discourage charter cities from deviating from state law. A new state law was passed to restrict the ability of voters to enact or amend charters. To exert political leverage, unions filed a lawsuit against the City of Oceanside claiming it violated the California Voting Rights Act of 2001 and had to redraw its districts. And unions heavily financed a campaign in the City of Costa Mesa to defeat a proposed charter.

But the strategy that proved completely effective in shutting down charter cities was a new law enacted in 2013, Senate Bill 7. Language in Senate Bill 7 was based on language in two earlier union-backed bills (Senate Bill 922 in 2011 and Senate Bill 829 in 2012) that cut off state funding for construction to any charter city that banned public contracts requiring companies to sign union Project Labor Agreements.

Senate Bill 7 declared that any charter city that deviated from state labor laws for public works contracts (such as prevailing wage and apprenticeship) would no longer be eligible to obtain state funding for construction. Several charter cities filed a lawsuit challenging the constitutionality of this law, but a San Diego County Superior Court judge upheld the right of the state to cut off the cash.

By the end of 2014, almost every charter city (perhaps every charter city) had passed an ordinance proclaiming their adherence to state prevailing wage law. Unions actually had the chutzpah to claim that charter cities had changed their policies because they learned about the value of prevailing wage laws, as if local governments had evolved toward ultimate enlightenment rather than being threatened with losing state funding.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

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