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Unions “Using Political Leverage to Punish Those Exercising Rights” in California Constitution

On October 13, 2013, California Governor Jerry Brown signed Senate Bill 7, which cuts off state funds designated for construction to any California city that exercises its right under the California Constitution to establish its own policies concerning government-mandated wage rates (so-called “prevailing wages”) on contracts. This was a major victory for the State Building and Construction Trades Council of California, the construction union umbrella lobbying organization that sponsored the bill.

There are 121 California cities that govern their own municipal affairs through a charter, a mini-constitution authorized in Article XI of the California Constitution. In its letter unsuccessfully requesting for a gubernatorial veto, the League of California Cities declared that “using political leverage to punish those exercising rights provided by the Constitution is unjust” and a veto was needed to “protect the integrity of our Constitution and the communities operating in lawful compliance with it.” (Coming from the professional association of California city officials, these statements cannot be easily brushed off by California Democrats and their union allies as irrelevant “Tea Party” rhetoric.)

In California, the “Progressive” movement is determined not to let the structural protections of constitutional government impede the quest for democratic socialism and societal justice. Passing Senate Bill 7 through the state legislature and getting it signed is the type of government activism that earns praise from the national news media, as it compares the State of California favorably against the “gridlock” in Washington, D.C.

Senate Bill 7 has a practical fiscal impact as well as a constitutional significance. Out of California’s 121 cities governed under a charter, 43 do not require construction companies to pay state-mandated prevailing wages on any city contracts, and 10 do not require construction companies to pay state-mandated prevailing wages on some kinds of city contracts. The cities of El Cajon, Bakersfield, and Newport Beach are the most recent cities to establish their own prevailing wage policies. Meanwhile, unions have successfully lobbied the city councils in San Diego and Mountain View in recent months to abandon their own wage rate policies and submit to state prevailing wage law.

A couple dozen “general law” cities have recently proposed charters to voters or plan to propose charters to voters. Evading the costly state prevailing wage mandate for construction contracts has been a primary motivation for these cities, and construction unions have been aggressive in lobbying and campaigning to undermine these local efforts. In 2012, voters in the cities of Auburn, Costa Mesa, Escondido, and Grover Beach rejected proposed charters.

It’s likely that a charter city or group of charter cities will file a lawsuit in 2014 to strike down Senate Bill 7, along with two similar laws implemented by Senate Bill 922 in 2011 and Senate Bill 829 in 2012. These two laws, also sponsored by the State Building and Construction Trades Council of California, cut off state construction funds to charter cities that adopt Fair and Open Competition policies prohibiting the cities from entering into contracts requiring construction companies to sign a Project Labor Agreement with unions.


Sources

Article XI of the California Constitution

Senate Bill 7 (2013) – to be California Labor Code Section 1782

League of California Cities – SB 7 (Steinberg) Undermining Constitutional Exercise of Municipal Affairs – Request for Veto

Information on Charters from League of California Cities (includes list of 121 charter cities)

State Building and Construction Trades Council of California, AFL-CIO v. City of Vista et al. – California Supreme Court decision of July 2, 2012 upholding constitutional right of charter cities to establish their own policies concerning government-mandated wage rates for municipal construction contracts.

Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? (3rd edition – Summer 2012) – the most comprehensive report ever published on California prevailing wage and charter city policies and an inspiration for advocates of fiscal responsibility and local control. (A 4th edition is in the works.)

Senate Bill 922 (2011) and Senate Bill 829 (2012) – punishing charter cities with prohibitions on city contracts that mandate Project Labor Agreements.

State-mandated prevailing wages for construction trades in all geographic regions of California

State Building & Construction Trades Council of California

News and Opinion Leading Up to and Following Gov. Brown Signing Senate Bill 7

SB 7: Cities Stand to Lose Home Rule over Municipal Affairs – www.PublicCEO.com – September 9, 2013

Three Bad Bills that Gov. Jerry Brown Should Veto – editorial – Sacramento Bee – September 9, 2013

Legislative Sampler: 2 to Sign, 2 to Veto – editorial – Riverside Press-Enterprise – September 18, 2013

Has Labor Leader Overreached? – columnist Dan Morain – Sacramento Bee – October 9, 2013 (The answer is “no.”)

Prevailing Wage Bill Deserves a Veto – editorial – UT San Diego – October 4, 2013

Governor Should Veto Wage Bill – editorial – Modesto Bee – October 11, 2013

If Gov. Brown Doesn’t Like Intrusion, He Should Veto SB 7 – editorial – Sacramento Bee – October 12, 2013

Jerry Brown Signs Prevailing Wage Bill for Charter Cities – Sacramento Bee – October 13, 2013

Governor Brown Signs Union-Backed Senate Bill 7 and Continues Erosion of Constitutional Checks and Balances – www.FlashReport.org – October 13, 2013

Brown Signs Prevailing Wage Bill – Capitol Weekly – October 14, 2013

Brown Signs Prevailing Wage Bill for Cities – Central Valley Business Journal – October 14, 2013

Governor Signs Prevailing wage Bill for Charter Cities – Sacramento Business Journal – October 14, 2013

Gov. Brown Signs SB 7 to Neuter Charter Cities – www.CalWatchdog.com – October 14, 2013

Prevailing Wage Law Could Raise Costs – UT San Diego – October 14, 2013

Unions Smile, Cities Frown at Prevailing Wage Law – Bakersfield Californian – October 14, 2013

Modesto Fears Harm from New Prevailing Wage Law – Modesto Bee – October 14, 2013

California Construction Unions Get Two Big Wins – columnist Dan Walters – Sacramento Bee – October 15, 2013

Charter Could Cost City Funding – Newport Beach/Costa Mesa Daily Pilot – October 16, 2013

Wage Law Costs Cities More Than Money – op-ed by El Cajon Acting Mayor Bill Wells – UT San Diego – October 25, 2013


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.

 

Something is Bothering California Union Leaders and Lobbyists

Something is bothering union leaders and lobbyists in California. A few unreconstructed troglodytes in the hinterlands still haven’t received the memo explaining how unions will lead the state in its evolution to a more Progressive society, under the firm but benevolent hand of government authority.

The typical political, business, and community leader in California today holds fast to the hope that if he feeds the crocodile enough, the crocodile will eat him last. The Establishment often discusses the challenges facing the state’s future without mentioning union political power and the vigorous ideological visions of union leadership.

But a few stubborn fanatics have declined to leave for Texas and instead stick around to harp on outdated, embarrassing notions such as “fiscal responsibility,” “limited government,” “free markets,” and “constitutional doctrines.” These insidious rebels are constantly figuring out clever ways to subvert and circumvent the Left.

Here are some recent critical reports about these people from union officials and union sympathizers. Many of these reports contain inaccuracies about strategies and logistics of the resistance, but the reports are valuable in showing the nature of the resistance.

This Week in the War on Workers: Fending Off the ALEC of the Construction Industry in California – Daily Kos – August 24, 2013

  • “The Associated Builders and Contractors, AKA the ALEC of the construction industry, doesn’t like this so much. So it’s been turning its attention to charter cities, which can make their own laws, trying to get cities to adopt charters and to eliminate the prevailing wage.”
  • “This push employs some ridiculous myths, like the claim that cities can save 20 percent on their construction costs by eliminating the prevailing wage.”
  • “As with most of the ABC’s efforts, it’s important to understand that these are low-road contractors.”
  • “Defenders of the prevailing wage have been doing a good job fighting off city by city attacks, but ABC is relentless, bringing up and helping to fund the same charters in city after city.”

CEO Comes Out Swinging in Favor of SB7, Prevailing Wages, and the Race to the Top – We Party Patriots – August 22, 2013

  • “In recent years, anti-union groups have supported ballot initiatives throughout the state that would designate cities as charter cities specifically to avoid paying prevailing wages on public works projects.”
  • “a subject that has been trumpeted by anti-prevailing wage crusaders time and again: alleged savings associated with gutting wages.”
  • “SB7 is a response to lobbying attempts by contractor associations who wish to change California law for the worse.”

CEOs and Business Leaders for Prevailing Wage – Modesto Bee (op-ed) – August 19, 2013

  • “some Charter Cities have exempted prevailing wages in a shortsighted effort to save money, but the true costs outweigh any perceived benefit.”
  • “out-of-state lobby groups have recently mounted an effort — city by city — to encourage local leaders and politicians to place charters on the ballot in order to eliminate prevailing wage.”
  • “They promise savings of as much as 30 percent on projects.”
  • “The lobbyists making these arguments either don’t know what they are talking about, or they are being deliberately misleading.”
  • “The idea for SB7 didn’t appear out of the blue. It was a logical response to lobby groups trying to convince more cities to make the mistake of eliminating prevailing wage.”

Just What is a ‘Prevailing Wage?’ – Pomerado News (op-ed) – August 24, 2013

  • “Don’t count on the support of most contractors, or developers, or anti-worker politicians for a living wage.”
  • “‘It costs too much, it’s taxpayers’ money,’ they scream.”
  • “Of course, detractors trot out examples of someone being paid an exorbitant rate for a menial job, but those incidences are few.”
  • “With the exception of San Diego, whose original charter dates from the 1800s, the rest of these cities adopted charters relatively recently, for the most part, to avoid paying prevailing wages.” (Note: San Diego has maintained a policy of no government-mandated wage rates for construction contractors since 1980 – see the July 30, 2013 www.UnionWatch.org article After 33 Years, San Diego Submits to State Prevailing Wage Law.)

Prevailing Wage: Moving Forward in California, Backward in Other States – From the President, State Building and Construction Trades Council of California – July 2013

  • “Here is some of what the Building Trades are doing. The hallmark bill for 2013 is Senate Bill 7, to make charter cities eligible for state funding for public works projects only if they pay prevailing wage. Charter cities may choose to exempt themselves from prevailing wage, and some do. This measure would provide a strong financial incentive for those cities to stop shortchanging working men and women with substandard wages.”
  • “Speaking of charter cities, Senate Bill 311 requires that charter city conversion elections be held in a statewide general election, where voter participation is highest, in order to protect workers from the tactic of passing conversion measures in lower turnout municipal elections.”
  • “We are also protecting prevailing wage with Senate Bill 776, to prevent anti-union contractors from defining sham labor compliance committees as a fringe benefit, which can then be deducted from workers’ wages as a portion of the prevailing wage. The Associated Builders and Contractors, the anti-union group, have been using these deductions to fund themselves for their relentless drive to destroy construction unions.”
  • Assembly Bill 26 requires that contractors that do work in refineries carry a workforce that has been trained and graduated in state-approved construction apprenticeship programs, and requires those workers be paid the prevailing wage for construction workers in the area.” (A push to require prevailing wage on private projects! Note: see Senate Bill 54 for the current manifestation of this proposal. It will knock the Steelworkers union out of California refineries as well as non-union industrial contractors – see the August 26, 2013 Los Angeles Times article Two Unions Wage Turf Battle Over Oil Refinery Workers: A state bill would help the State Building & Construction Trades Council of California grab control of thousands of United Steelworkers jobs.)
  • “California’s working people have fought together with a tenacious resolve and unity in recent election cycles to elect forward-looking individuals to our Legislature and statewide offices…When we compare these worthy actions with the sad developments in many other states, we see the clear benefits of our unity and activism…”

Governor Jerry Brown signed Senate Bill 776 into law today (August 27, 2013), cutting off funding to the one independent labor compliance investigative program among several dozen union-affiliated labor-management cooperation committees operating in the state. Will these bills finally allow the “forward-looking individuals” aligned with unions in state and local government to advance their agenda unimpeded?


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.

Union Influence in the California Democratic Party’s 2013 Convention Resolutions

Can you guess which special interest group influenced many of the resolutions approved at the California Democratic Party convention on April 14, 2013?

That’s right, unions.

Here’s my annotated collection of the 2013 resolutions and the clean version of the resolutions on the California Democratic Party web site. (As the party web site says, “Click here to view the full repot.”)

Avid readers of www.UnionWatch.org articles will recognize the union objectives behind many of these resolutions, even though the resolutions often don’t explicitly state the ultimate legislative, executive, or judicial goal.

California Democratic Party Resolutions for 2013 with Obvious Union Influence

1. Resolution 13-04.3C opposes proposals to restrict “public participation” in environmental review for projects and activities under the California Environmental Quality Act (CEQA). A co-sponsor of this resolution is the State Building and Construction Trades Council of California, an organization active in identifying environmental problems with potential construction projects until the owner agrees to sign a Project Labor Agreement.

Mailers Expose Union CEQA “Greenmail” Against Solar Developers – September 26, 2012

Unions Defy CEQA Reformers with Taunting Resolution – February 12, 2013

The resolution refers to a “quantative analysis” of CEQA that allegedly shows how this law encourages economic prosperity in California. Readers of www.UnionWatch.org will recognize this study because of its connections to the California Construction Industry Labor-Management Cooperative Trust. See this article:

Opponents of CEQA Reform Cite New Study with Union Connections – March 12, 2013

2. Resolution 13-04.11 complains about the capitalists (“Captains of Industry” and others) who allegedly control the University of California and California State University systems. It calls for “representation of the public” on the boards of regents. Public means officials of unions representing faculty and staff.

3. Resolution 13-04.16 demands “all actions” to ensure that California’s 121 charter cities lose state funding if they exercise their right under the state constitution to establish their own policies concerning government-mandated construction wage rates on purely municipal government projects or private projects that only receive government assistance from that municipality. Several articles in www.UnionWatch.org have reported on charter cities freeing themselves from costly so-called “prevailing wage” mandates, as well as the union effort in 2013 through Senate Bill 7 to suppress local government authority through financial disincentives.

California Supreme Court Supports Rights of Charter Cities Over State Legislature – July 3, 2012

With Senate Bill 7, California Unions Advance Plot to Neuter City Charters – February 28, 2013

4. Resolution 13-04.35 calls for Congress to help unions that represent U.S. Postal Service workers.

5. Resolution 13-04.37 complains about a U.S. Supreme Court decision that fouls up some plans for class action lawsuits against employers for labor law violations. It decries how corporations are “increasing forcing their employees to unwittingly sign mandatory arbitration agreements.” (How can force be involved if the employee is unwitting?) Nothing is mentioned about union organizers “increasing forcing employees to unwittingly sign union representation cards” for card check purposes.

California Democratic Party Resolution Against StudentsFirst and Democrats for Education Reform

California Democratic Party Resolution against StudentsFirst and Democrats for Education Reform.

6. Resolution 13-04.47 attacks education reform organizations such as StudentsFirst (a group led by Michelle Rhee) and Democrats for Education Reform (a group led by Gloria Romero). Ironically, the resolution is poorly written and includes several grammatical errors and even a spelling error. It tries to encompass too many ideas and overreaches in its bombast. A grade of “D” for writing (but an “A” for promoting social justice) goes to the sponsors: the California Teachers Association (CTA), the California Federation of Teachers (CFT), and the California Faculty Association (CFA).

California Democrats Blast Efforts to Overhaul SchoolsLos Angeles Times – April 14, 2013

State Democrats Decide Who’s a REAL DemocratLos Angeles Times (op-ed by Karin Klein) – April 16, 2013

Breaking News! California Democratic Party Blasts Corporate Education Reform: UPDATE – Diane Ravitch’s Blog – April 15, 2013

LA Times Defends Wall Street Hedge Fund Reformers – Diane Ravitch’s Blog – April 16, 2013

7. Resolution 13-04.77 rejects the Keystone XL pipeline. It cites two unions opposed to the project and a study critical of the project prepared by the union-oriented Global Labor Institute at the Institute for Labor Relations at Cornell University. This issue divides unions: many construction unions support the Keystone XL pipeline because all contractors will be required to sign a Project Labor Agreement to work on it.

If you are a “Captain of Industry,” one of those dastardly “Republican operatives,” a citizen of “the old Confederacy,” or tend to “blame educators and their unions for the ills of society,” these hostile resolutions are directed at you. But everyone will find them entertaining, and avid readers of www.UnionWatch.org might even agree with a few of them.

In the meantime, to avoid being the target of future resolutions, pay your “fair share,” avoid “the race to the bottom,” “stabilize the planet’s climate,” protect the “culturally binding fabric,” and – of course – be a socially responsible, Democrat-supporting billionaire.

More News Coverage of California Democratic Party Resolutions for 2013

CA Democrats Take Aim at Efforts to Overhaul Education, CEQA – Sacramento Bee – April 14, 2013

Calif. Dems Back Gun Control, Prop 13 Reforms – San Francisco Chronicle (Associated Press) – April 14, 2013

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.

Unions Will Control Mid-Sized Cities with California Voting Rights Act

Unions firmly control the political agenda in California’s largest cities, but civic leaders and citizens in some of the state’s smaller cities are still resisting the union political machine.

Some of these cities, with populations from 100,000 to 250,000, include Escondido, Oceanside, Murrieta, Costa Mesa, Huntington Beach, Anaheim, Santa Clarita, Thousand Oaks, Simi Valley, Clovis, Elk Grove, and Roseville. These are cities where a dominant faction of elected and appointed officials generally puts a priority on efficiently providing basic services at a reasonable cost to their citizens.

Not surprisingly, city councils in some of these cities have attempted to enact home-rule charters or have exercised rights under their home-rule charters to free themselves from costly state mandates. This greatly agitates unions, which have long worked to attain their unchecked control of the agenda at the capitol.

Union officials want California’s cities to submit fully to state laws regarding collective bargaining for public employees and government-mandated wage rates (“prevailing wages”) for construction contractors. As reported in www.UnionWatch.org throughout 2012, public employee unions and construction trade unions spent huge amounts of money to convince voters in some of these cities to reject proposed charters.

Obviously unions don’t want to spend $1 million in dozens of cities every two years to defeat proposed charters, as they did in Costa Mesa before the November 2012 election. And soon they won’t have to spend any more money.

Unions are now implementing a tactic to alter political control of these smaller cities. It is likely to succeed in turning almost every California city with a population of 100,000 or more from fiscal responsibility to “progressive” governance based on theories of social justice.

Unions and their attorneys are masters at exploiting the California Environmental Quality Act (CEQA) to attain unrelated economic objectives that benefit unions. And now unions are using the California Voting Rights Act of 2001 (Election Code Section 14025 et seq.) as a tool to ensure the adoption of union-backed public policies at local governments.

Governor Davis signed Senate Bill 976 into law in 2001 as a way to address what the bill’s author called “racial block voting.” The law tries to end situations in which a class of relatively prosperous white community leaders has complete or nearly complete political control of a local government, even though the local government also represents a substantial number of relatively poor residents who are historically victims of racial discrimination in education, employment, and health.

According to this law, such a circumstance results from “the dilutive effects of at-large elections” in which candidates run together in a pool and the candidates who get the most votes take office. To give “protected classes” a better chance to have their own community representatives on an elected board, the Voting Rights Act of 2001 allows the implementation of “appropriate remedies, including the imposition of district-based elections” that end democratic practices that “hinder their ability to participate effectively in the political process.”

Californians have passionate views about the rationale for this law, the implications of enforcing this law, and the assumption that citizens vote and will vote based on appeals to class consciousness and race consciousness. But the completely party-line vote on Senate Bill 976 (all Democrats in support, all Republicans in opposition) showed that every state legislator recognized how political power at local governments would change.

What district-based elections mean in actual political practice is that union-backed candidates get a better chance of winning a majority or a substantial majority of a local government’s elected board. The elected board shifts politically to the Left.

Escondido City Hall

Escondido City Hall

The State Building and Construction Trades Council of California (a Sacramento-based umbrella group for construction unions) saw an opportunity to use this law to derail a plan that it opposed in the City of Escondido. It was among the plaintiffs who filed a lawsuit against the City of Escondido in December 2011 alleging that the city violated the California Voting Rights Act of 2001 by not having city council districts designed to elect more Latinos to the city council. (Demetrio Gomez v. City of Escondido, Case #37-2011-00060480-CU-CR-NC).

An article published by www.CaliforniaWatch.org on March 9, 2012 (White-Dominated Boards Face Legal Threats Over Racial Makeup) was surprisingly blunt about the true motivation for the union involvement in the lawsuit:

But labor unions and other groups also could use the law as a weapon in disputes with cities and school boards.

The first such case came in December, when the State Building & Construction Trades Council of California sued the city of Escondido, in San Diego County, alleging that at-large elections leave Latinos without fair representation. The union targeted Escondido because officials there have been trying to lower wages on public construction projects.

At that time, the Escondido City Council was developing a proposed charter for its citizens to consider enacting in 2012. That charter would have allowed the city to establish its own policies concerning government-mandated construction wage rates on municipal projects and on private projects receiving municipal financial assistance. It also would have prevented the city from entering into contracts that required construction companies to sign Project Labor Agreements with unions as a condition of work.

The brief submitted by the State Building Trades can be found here. Of course, it says nothing about the underlying objective of the lawsuit: dissuading Escondido and other cities from adopting home-rule charters that could erode the union political agenda.

A more honest union perspective about the lawsuit is revealed in excerpts below from the State Building Trades web site:

Members of SBCTC Affiliates Demand Fair Elections by Bob Balgenorth, head of the State Building and Construction Trades Council – January 2012

It’s not surprising that a city council that treats its Latino citizens disdainfully also has plans to worsen the quality of life for all construction workers. As the San Diego Union-Tribune reported in its coverage of the lawsuit, the current council will try to convince voters to make Escondido a charter city, in hopes of lowering construction wages on public works projects – for all workers, Latino and non-Latino alike.

“They want to take away the prevailing wage,” Demetrio Gomez, the lead plaintiff, told the paper. “They want to take away the things that make the average worker’s life worthwhile. We believe that’s wrong. And we believe if we had the ability to elect Latinos we would have better representation.”

(Also, see Members of SBCTC Affiliates Demand Escondido Change to District-Based Elections on the State Building and Construction Trades Council of California web site.)

In response, the City of Escondido asked a San Diego County Superior Court judge to dismiss the State Building Trades as a plaintiff because it lacked standing to sue: see here. The judge ruled on March 16, 2012 (Superior Court Decision – Gomez v. City of Escondido) that the State Building and Construction Trades Council of California did NOT have standing to be a plaintiff in this lawsuit:

In addition, Plaintiff Council does not satisfy the requirements for associational standing because voting rights are not germane to its purpose. The purpose of the Council is to protect the members’ rights with relation to their work and trade in construction. Voting rights are separate and distinct. Registering members to vote and providing voter education does not make members’ voting rights germane to the Council’s purpose.

Nevertheless, the lawsuit continued with the remaining plaintiffs. On March 22, 2013, after spending about $200,000 in legal fees, the City of Escondido submitted a settlement agreement to San Diego County Superior Court.

As explained by the city, “Escondido will be divided into four districts with each district to be represented by a Council member living within that district. The Mayor will continue to represent the entire City.” District boundaries “will respect the geographic neighborhoods and communities of interest, including any racial, ethnic, or language minorities.”

Retired judges will select a seven-member commission to draw the district boundaries. Union officials and their allies in local groups such as the Escondido Democratic Club will surely apply for appointments.

As a topping, the city will reimburse the plaintiff for attorneys’ fees of $385,000. It would be reasonable to assume that construction unions paid some of those legal costs.

But this is not the only union victory. After all of this union-backed litigation provoked by the proposed charter, Escondido voters ended up rejecting it in the November 2012 election. They chose to let the state legislature supersede local control over municipal affairs.

The City’s explanation of the settlement agreement concludes with this sentence: “Getting this litigation out of the way will enable the City to continue focusing on economic development and job creation – the issues that matter to all Escondido residents.”

It’s more likely that the City of Escondido will soon be focusing on social justice programs, generous concessions in contract negotiations with public employees, and requirements for construction contractors to sign Project Labor Agreements with unions.

In the meantime, surely California unions will again manipulate the California Voting Rights Act of 2001. At the National Federation of Independent Business (NFIB) in California “Day at the Capitol” program on April 18, 2012, I asked a bipartisan panel of three California elections experts if they thought unions and other special interest groups would routinely use the California Voting Rights Act of 2001 as a weapon to achieve their political objectives at local governments. The unequivocal answer was YES.

“Absolutely,” said Paul Mitchell, a political consultant with Redistricting Partners, a firm based in Sacramento. He agreed with me that “that’s exactly what happened” at the City of Escondido and noted that the California Voting Rights Act of 2001 is “a card able to be played.” He expressed surprise that police, firefighters, and other public employee unions in cities such as Stockton had not already used this powerful weapon to win concessions from governments during negotiations for collective bargaining agreements.

Can Escondido avoid the fate of Stockton and San Bernardino? Only if Republicans can convince Latino voters in Escondido that limited government and fiscal responsibility are better for their communities than higher taxes, bigger government, and more regulatory restrictions on commerce. These are two conflicting philosophical views about the role of government and the relationship between government and commerce. Right now the latter is ascendant in California.

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.

Opponents of CEQA Reform Cite New Study with Union Connections

A broad coalition opposing any changes to the California Environmental Quality Act (CEQA) held a press conference today (March 12, 2013) that included the findings of a newly-released study, The Economic and Environmental Impact of the California Environmental  Quality Act.

The study was written by a University of Utah professor with a long history of academic work biased toward the construction union agenda. It was funded by the union-affiliated California Construction Industry Labor-Management Cooperation Trust. Study results were summarized at the press conference by Bob Balgenorth, chairman of the California Construction Industry Labor Management Cooperation Trust and the former head of the State Building and Construction Trades Council of California.

This March 11, 2013 Associated Press article Coalition Forms to Defend California Environmental Law reports on what happened:

Common Ground, the new coalition group opposing reforms, commissioned a report as part of its effort to emphasize the importance of the law.

The study by Peter Philips, a University of Utah economics professor, points to the state’s record in building alternative-energy projects and maintaining construction jobs as evidence that the law is working.

“Has CEQA actually hindered construction? Far from it,” said Bob Balgenorth, chairman of the California Construction Industry Labor Management Cooperation Trust. “If anything, it’s facilitated greater construction, a cleaner environment and a better quality of life for Californians.”

Brown and the Legislature’s Democratic leaders are negotiating changes after an attempt to pass a bill failed last year.

The governor’s office had no comment on the report, but Brown has advocated for more consistent standards in reviewing development projects.

It’s unlikely that Governor Brown is ever going to comment on the report. And the business coalition in support of CEQA reform appears to be strategical avoiding any references to unions and their abuse of CEQA to obtain labor agreements and other economic concessions. So far I haven’t seen any news reports taking a critical look at this study or its origins.

So here’s the scoop about this study, courtesy of www.UnionWatch.org:

The Author of the New CEQA Study

The Economic and Environmental Impact of the California Environmental  Quality Act was written by Peter Philips, Professor of Economics at the University of Utah. Professor Philips has specialized in research on construction labor issues, with particular attention to California.

For example, in 2012 Professor Philips had his paper The Effect of Prevailing Wage Regulations on Contractor Bid Participation and Behavior: A Comparison of Palo Alto, California with Four Nearby Prevailing Wage Municipalities published in Industrial Relations: A Journal of Economy and Society. This journal is published by the Institute for Research on Labor and Employment at the University of California, an affiliate of the University of California Miguel Contreras Labor Program. It is hosted on the web site of the union-backed California Construction Academy, a project of the UCLA Labor Center established within the Institute for Research on Labor and Employment, which (as stated earlier) is an affiliate of the University of California Miguel Contreras Labor Program. If this tangle of programs at the University of California confuses you, that’s probably the intent.

This paper is part of an ongoing lobbying campaign of the Santa Clara-San Benito Building and Construction Trades Council and a union-affiliated organization called www.SmartCitiesPrevail.org to convince the Palo Alto City Council to repeal its own policy concerning government-mandated construction wage rates (so-called prevailing wages) on purely municipal construction projects. This is a right granted under Article XI of the California Constitution to Palo Alto and 120 other California cities that operate under their own charters. For more information on this home-rule right, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

As shown in his curriculum vitae, Professor Philips was the keynote speaker at the California International Brotherhood of Electrical Workers (IBEW) conference in 2012. He has spoken repeatedly at conferences about Project Labor Agreements, including the State Building and Construction Trades Council of California annual conference in 2008.

While this background doesn’t necessarily mean that Professor Philips has inaccuracies in his research and reports, one should be aware that he holds certain presuppositions and biases about economics and labor relations that may be reflected in his work.

The Sponsor of the New CEQA Study

Page 2 of The Economic and Environmental Impact of the California Environmental  Quality Act indicates that “This study was sponsored by a grant from the California Construction Industry Labor Management Cooperation Trust.” This mysterious group was described last year in www.UnionWatch.org (see Mysterious Union Slush Fund Spends $100,000 Against Costa Mesa Charter).

This is an arcane type of union-affiliated trust authorized by the obscure Labor-Management Cooperation Act of 1978, a law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service. Inspired by the decline of unionized manufacturing in the Northeast, this federal law was meant to help industrial management and union officials build better personal relationships and cooperate against the threat of outside competition. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards. This is an ambiguous and forgotten law that’s ripe for abuse.

Here are some of the recent top recipients of funding from the California Construction Industry Labor Management Cooperation Trust:

  1. $1,095,000 – Taxpayers to Preserve Community Jobs, No on Measure A, sponsored by labor and management organizations (June 5, 2012 election in City of San Diego)
  2. $770,000 – UCLA Labor Center (aka UCLA Center for Labor Research and Education), part of the University of California Miguel Contreras Labor Program
  3. $250,000 – No 98/Yes 99 – A Committee of City and County Associations, Taxpayers and Environmental Groups, League of California Cities, Californians for Neighborhood Protection, Coalition of Conservationists
  4. $164,550 – “Other” (?)
  5. $100,000 – Committee for Costa Mesa’s Future – No on V, sponsored by labor and management organizations (November 6, 2012 election in City of Costa Mesa)
  6. $100,000 – Apollo Alliance
  7. $100,000 – Paxton-Patterson Construction Lab/Shop in San Joaquin County
  8. $50,000 – Taxpayers to Preserve Community Jobs, No On Measure G, sponsored by labor and management organizations (June 8, 2010 election in City of Chula Vista)

But what’s more interesting is the source of at least some of this money, if not all of it.

It’s Not Union Members that Give the Money to the California Construction Industry Labor-Management Cooperative Trust: It’s Utility Ratepayers and Contractors Working for Extorted Power Plant Owners

Since the 1990s, whenever an energy company or public utility submits an application to the California Energy Commission seeking approval of a new power plant, an organization called California Unions for Reliable Energy (CURE) often “intervenes” in the licensing process. Represented by the South San Francisco law firm Adams Broadwell Joseph & Cardozo, CURE submits massive data requests and environmental objections to the California Energy Commission. The applicant by law is required to answer CURE’s submissions, at significant cost and delay. The chairman of California Unions for Reliable Energy (CURE) was Bob Balgenorth (see above).

If the power plant owner agrees to require its construction contractors to sign a Project Labor Agreement with the State Building and Construction Trades Council of California or its regional affiliates, CURE’s objections fade away and the power plant proceeds unhindered through the licensing process. If the company or utility does not surrender to CURE’s demand, then CURE’s interference and lawsuits continue.

This racket – sometimes called “greenmail” because it’s the use of the California Environmental Quality Act (CEQA) and federal environmental laws to pressure developers to sign Project Labor Agreements – is well-known to the energy industry in California and has been extensively reported in the news media over the past dozen years. (For example, see Labor Coalition’s Tactics on Renewable Energy Projects Are Criticized – Los Angeles Times – February 5, 2011 and A Move to Put the Union Label on Solar Power Plants – New York Times – June 18, 2009.) It is also documented in www.PhonyUnionTreeHuggers.com.

For cases in which the power plant applicant succumbs to CURE’s harassment, the Project Labor Agreement that the power plant owner signs usually contains a provision requiring the owner or its contractors to make a lump-sum payment or series of payments to the California Construction Industry Labor-Management Cooperative Trust.

For example, the Project Labor Agreement signed by the Northern California Power Agency (a conglomerate of publicly-owned utilities) for the construction of the Lodi Energy Center required the agency to shell out $90,000 to the California Construction Industry Labor-Management Cooperative Trust. That amount was dutifully mailed to Bob Balgenorth on August 17, 2010. (For more on this payment, see High Energy: Lodi Center Designed to be a Powerhouse for Chunk of State – Stockton Record – October 4, 2011; also, the union rebuttal on the California Building Trades Council web site – ABC Falsehoods Refuted in Letter to Stockton Record.)

And Section 13.1 of the Project Labor Agreement signed by the Southern California Public Power Authority (another conglomerate of publicly-owned utilities) for the construction of the City of Anaheim’s Canyon Power Plant required the agency to shell out $65,000 to the California Construction Industry Labor-Management Cooperative Trust.

The California Construction Industry Labor-Management Cooperative Trust reports these payments as “membership dues” to the Internal Revenue Service. Which brings up a question: are the local elected officials who serve as commissioners for the Northern California Power Agency and the Southern California Public Power Authority exercising their responsibilities as “members” to approve its expenditures?

It’s a tangled conspiracy. Especially intriguing is that one union official was the head of the State Building and Construction Trades Council of California, the California Construction Industry Labor-Management Cooperative Trust, and California Unions for Reliable Energy. For more information, see the investigative report of the Coalition for Fair Employment in Construction at this September 23, 2011 post at www.TheTruthaboutPLAs.comA Genuine California Union Conspiracy: Senate Bill 790 and the California Building Trades Council’s Ratepayer Funded Political Slush Fund

Confused about the Conspiracy? Here’s a Chart.

A public utility or private energy company applies to the California Energy Commission for approval to build a power plant.

California Unions for Reliable Energy (CURE) uses its “intervenor” status at the California Energy Commission to submit massive data requests and environmental complaints about the proposed power plant, as a result gumming up the licensing process and causing costly and lengthy delays for the applicant.

 ↓

Applicant for prospective power plant surrenders and agrees to sign a Project Labor Agreement with the State Building and Construction Trades Council of California or its regional affiliates. California Unions for Reliable Energy releases its grip of legal paperwork and the project moves forward unimpeded and acclaimed as environmentally sound.

 ↓

The Project Labor Agreement contains a required payment or payments to the California Construction Industry Labor-Management Cooperative TrustCalifornia Public Utilities Code Section 3260 – enacted by Senate Bill 790 in 2011 – allows public utilities to pass costs through to ratepayers.

 ↓

The California Construction Industry Labor-Management Cooperative Trust reports those payments to the IRS as “Membership Dues,” creating questions about the rights inherent for dues-paying members.

 ↓

The California Construction Industry Labor-Management Cooperative Trust makes contributions to political campaigns and studies, including The Economic and Environmental Impact of the California Environmental Quality Act.

Solutions

Is there any way this racket can be stopped? Yes. The U.S. Department of Labor’s Office of Labor Management Standards could promulgate regulations that establish restrictions and reporting guidelines for committees authorized by the Labor-Management Cooperation Act of 1978. Even better, Congress could pass legislation amending or repealing the law, and the President could sign it. Neither solution is viable for the next four years.

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.

With Senate Bill 7, California Unions Advance Plot to Neuter City Charters

More than 30 California cities are likely to defy top union officials by asking their citizens in 2014 to vote on enacting a “home rule” charter for local control.

Cities want to free their purely municipal affairs from costly union-backed state mandates, for reasons revealed in these recent articles:

Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Redding – www.LaborIssuesSolutions.com – February 15, 2013 and Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project – www.LaborIssuesSolutions.com – January 31, 2013.

Stanford Professor Warns Costa Mesa about Pension DebtOrange County Register – February 27, 2013 and City’s Pension Outlook Called ‘Stark’ – Newport Beach/Costa Mesa Daily Pilot – February 27, 2013. (With the failure of the Measure V charter in November 2012, Costa Mesa is now in the union paradigm with a proposed solution to raise taxes.)

A Former Mayor of a Southern California City Provides an Intellectual Argument for City Charters and Local Government Authority – www.LaborIssuesSolutions.com – February 19, 2013 (a commentary on Reasons to Consider Becoming a Charter City – San Diego Union-Tribune – February 19, 2013).

For a powerful example of how charter cities are saving money and being more cost-effective in their city operations and services, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? 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. 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…

A city charter is a unique document that acts like a constitution for a city adopting it. Overall, this puts more control into the hands of the residents instead of state legislators and gives a community greater independence to determine its own destiny. Cities typically enter the process to become a charter city to become more autonomous. A charter city has more flexibility and has ultimate authority over municipal affairs. The charter city provision of the state Constitution, commonly referred to as the “home-rule” provision, is based on the principle that a city, rather than the state, is in the best position to know what it needs and how to satisfy those needs. The home-rule provision allows charter cities to conduct their own business and control their own affairs. Therefore, a charter maximizes local control. Such benefits of a charter city are greater flexibility on public works contracts and other changes in the procurement process, more control over economic development practices, and less reliance on the state.

Right now there are 121 charter cities in California, up from 107 in 2007. But there are aggressive opponents who regard cities’ exercise of their charter authority (as cited above from the Murrieta staff report) to be an attack on their hegemony. In 2011 and 2012, unions spent jaw-dropping amounts per voter on campaigns to convince voters to reject reasonable proposed charters.

Charters were defeated in Rancho Palos Verdes, Auburn, Costa Mesa, Escondido, and Grover Beach, to the dismay of civic leaders whose local grassroots efforts were rolled over by well-funded union-backed professional campaign operations. Unions are now ready to crush California’s federalist rebellion once and for all in 2013 and 2014.

As one strategy, they are infiltrating and trying to neutralize the League of California Cities as an organization that provides information to cities looking at charters. A union-affiliated group called www.SmartCitiesPrevail.org is trying to influence the League of California Cities through sponsorship, partnership, and participation in the League’s Transportation, Communication & Public Works Committee.

Unions are aggressively opposing charters when proposed on the local level and are trying to derail proposals through charter review commissions (a strategy that worked for unions in Elk Grove, Redding, and other cities). See the newspaper articles listed below for evidence.

Union lobbyists also have a bill now in the California State Legislature (Senate Bill 7) introduced by Senate leader Darrell Steinberg and a Republican State Senator, Anthony Cannella. It will cut off state funding for cities that use their constitutional charter authority to establish their own policies concerning state-mandated construction wage rates. (See Bill Introduced in State Senate to Suppress Authority of California’s Charter Cities to Establish Their Own Policies on Government-Mandated Construction Wage Rates – www.LaborIssuesSolutions.com – February 20, 2013.)

This bill adopts the same concept of crushing charter city authority as did the union-backed Senate Bill 922 in 2011 and Senate Bill 829 in 2012 (two bills pushed by Senator Michael Rubio, who just resigned to take a lobbying position with Chevron). 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.

Threatening to withhold money as a tactic to force a government to submit to centralized authority may remind you of warnings in the dissent in the U.S. Supreme Court decision in June 2012 concerning the constitutionality of Obamacare:

Structural protections – notably, the restraints imposed by federalism and separation of powers – are less romantic and have less obvious a connection to personal freedom…The fragmentation of power produced by the structure of our Government is central to liberty, and when we destroy it, we place liberty at peril…[The] practice of attaching conditions to federal funds greatly increases federal power…This formidable power, if not checked in any way, would present a grave threat to the system of federalism created by our Constitution…Coercing States to accept conditions risks the destruction of the “unique role of the States in our system.”

While the same principles would seemingly apply to the relationship of state and local governments, forces at the state capitol seem to prefer an overbearing centralized government that can solve problems with broad strokes of alleged social justice.

With bills such as SB 922, SB 829, and SB 7 deemed as acceptable modes of governance by the legislative supermajority and the governor, I anticipate a union-backed effort in the future to repeal outright the section of the California Constitution (Article XI, Section 3) that allows cities to govern their own municipal affairs under a charter. 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.

Then there is the strange case of Republican Senator Anthony Cannella, who is so proud of undermining local control and raising costs for taxpayers that he used the Senate Republican Caucus communications operation to proclaim his legislative achievement to a gullible press. Here’s a Tweet:

It didn’t go unanswered. I responded with this Tweet:

Senator Cannella may not realize (or may not care) that he represents two cities – Modesto and Merced – that use their charter authority to set their own policies concerning government-mandated construction wage rates (so-called “prevailing wages”). Here is the Modesto policy, set by a 1995 resolution: Modesto Prevailing Wage Policy and Staff Report. Here is the Merced practice: Merced Exempts Rental Housing Preparation from State-Mandated Government Wage Rates (Prevailing Wage). Oh well, sometimes the union lobbyists in Sacramento are a more important constituency than the people back home in the Central Valley.

With the help of Senators Steinberg and Cannella, union lobbyists intend to direct their legislative puppets from Los Angeles and San Francisco to suppress the small and medium-sized cities trying to determine their own financial destinies. To protect union power, these cities must submit to centralized power exercised by the state legislature and Governor Jerry Brown.

In the meantime, the local federalist rebellion continues. In addition to the cities of Temecula and Murrieta, the following California cities are now publicly moving forward on asking their citizens to approve a charter in 2014 (with several more soon to begin public discussion):

Costa Mesa

Outsourcing Back in for Costa MesaOrange County Register (editorial) – February 6, 2013

…passage of Measure V would have made the privatization task easier. But the union outspent Measure V proponents by more than seven-to-one. However, Mr. [Councilman Jim] Righeimer said he hopes a new charter measure will be put on the June 2014 ballot…Within 60 days the council will hold a study session on how to set up the independent committee for the new charter measure.

Escondido

Escondido Mayor Touts Urban Renewal, Embracing DiversitySan Diego Union-Tribune – February 20, 2013

Delivering his annual State of the City address to nearly 300 residents and business leaders gathered at the city’s arts center… [Mayor Sam] Abed said he also wants the city to take another shot at becoming a charter city, which would increase Escondido’s independence from Sacramento and reduce the cost of some city construction projects.

Moreno Valley

Moreno Valley: City to Explore Becoming Charter City – Riverside Press-Enterprise – February 26, 2013

The Moreno Valley City Council on Tuesday, Feb. 26, unanimously approved establishing a subcommittee that would explore becoming a charter city and appointing two council members to it.

Moreno Valley: Charter City Committee Could Be Created  – Riverside Press-Enterprise – February 25, 2013

The Moreno Valley City Council on Tuesday, Feb. 26, is to follow through on plans to determine whether to become a charter city. The council is set to vote on whether to establish a charter exploratory subcommittee and appoint two council members to it.

Buellton

Buellton Continues “Home Rule’ Talk – Santa Ynez Valley News – February 7, 2013

The idea of changing Buellton to a “home-rule” city is on hold again after City Council members decided to set up a workshop for more discussion about a draft plan…City Manager John Kunkel said the committee wants voters to be comfortable with the measure and, if the council wants to have a dialogue with unions, there is no rush.

Charting Best Path to Buellton’s Future – Santa Ynez Valley News (editorial) – February 7, 2013

…being a charter city does mean that local elected officials and voters can make more of their own decisions, and are therefore better able to tailor policy to fit specific local needs…Being a charter city also lets local government off the hook for paying a prevailing wage. Labor unions don’t like that possibility…

Arroyo Grande
Arroyo Grande Considering City Charter – www.CalCoastNews.com – January 28, 2013

The Arroyo Grande City Council has created a committee to explore the idea of becoming a charter city in order to cut costs…Many union members oppose city charters because they allow exemptions from state-mandated prevailing wage agreements. City staff says adopting a charter could save Arroyo Grande $50,000 to $300,000 annually.

Study Under Way to Find Out if Arroyo Grande Should Try to Become a Charter CitySan Luis Obispo Tribune – January 27, 2013

A committee has been convened to study whether Arroyo Grande should try to become a charter city, a move that officials say could save money and give it more local control. The idea, however, faces stiff opposition from local union members…

California cities have two choices about their financial futures: enact a charter as an way to become more cost-efficient, or raise taxes. Guess which choice the unions want?

Kevin Dayton is the President and 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.

Tracking California’s November 2012 Elections Related to Labor Issues

California’s Proposition 32 is the country’s most high-profile election in November 2012 directly related to labor unions and labor policy issues. There are also several California local elections – particularly Measure V to enact a charter in the City of Costa Mesa – that will potentially strengthen or weaken union control of government. Here’s a summary of the elections to watch in California.

Proposition 32 – “Stop Special Interest Money” – Requires Union Leaders to Get Permission Before Taking Workers’ Money for Political Purposes

The statewide ballot measure Proposition 32 includes a requirement for union officials to get annual permission from a union member (or represented non-member) before extracting money from that worker’s paycheck for political purposes. Under current law, unions can simply take money from employee paychecks when desired in order to influence legislation or elections. For more information on how this coercive power is implemented in practice, see My Outline of the June 21, 2012 U.S. Supreme Court Decision on a California Union’s Mandatory Fee Assessment on Non-Members to Fight Governor Schwarzenegger’s 2005 Ballot Measures.

A common description of Proposition 32 is “game changer” and the $70 million spent against it by union leaders proves this moniker is not political exaggeration. Jon Coupal, president of the Howard Jarvis Taxpayers Association, asserts that Proposition 32 is “the most important political reform measure to be placed before California voters in decades. If passed, it would surpass Governor Scott Walker’s successful ballot measure in Wisconsin last year. Moreover, it would be the ‘shot heard ‘round the political world’ as it would fundamentally change the way special interests are required to operate in the realm of California politics.”

Proposed Charters Would Allow Three California Cities to Set Their Own Policies for Municipal Affairs and Circumvent Costly Union-Backed State Mandates

Union leaders are clearly concerned that many of the state’s medium-sized suburban cities and smaller towns are exercising their right under the California Constitution to use charters to escape the tight grip of the state legislature, where union lobbyists basically set the agenda.

A 4-1 majority of the city council of Costa Mesa (in Orange County) is asking city voters to approve Measure V, which would enact a charter so the city can control its own municipal affairs, such as contracting-out of government services and government-mandated construction wage rates. Measure V would give the city authority to free itself from costly and inflexible union-backed mandates from the state legislature.

A professor of public administration at Chapman University (in Orange County) describes Costa Mesa as the ideological “ground zero for virtually everything taking place in the country” and the proposed Measure V charter as “a political manifesto of how government should be organized in the 21st century.” The $500,000 spent against Measure V by union leaders proves this assessment is not political hyperbole.

For more information, see my www.UnionWatch.org article Mysterious Union Slush Fund Spends $100,000 Against Costa Mesa Charter and Gee , Do You Think a Charter Is a Meaningful Way for California Cities to Pursue Fiscal Responsibility? $500,000 of Union Opposition Confirms It.

A second city proposing a charter to voters is Escondido (in San Diego County), with Proposition P. This charter essentially provides the City of Escondido with the same power and authority as the proposed charter in Costa Mesa, but union opposition has been minimal. Perhaps San Diego County union leaders concluded it was a waste of limited campaign resources to try to undermine Proposition P: since 2007, voters in the San Diego County cities of Vista, Santee, Carlsbad, Oceanside, and El Cajon have all approved robust, aggressive charters.

Meanwhile, in the San Luis Obispo County coastal town of Grover Beach, construction trade unions spent a few thousand dollars to send slick, professional mailers from Sacramento to residents urging them to vote against Measure I-12, a proposed charter with similar powers to the ones proposed in Costa Mesa and Escondido. See my articles Campaign Mailer Opposing the Proposed Grover Beach Charter: Definitely NOT Photocopied at Dave’s Copies & Fax and Who Paid the Bills for the Mailers Opposing the Proposed Charter (Measure I-12) in Grover Beach? No One.

The union strategy in Grover Beach emulates successful union-funded mail campaigns to defeat proposed charters in Rancho Palos Verdes in March 2011 and Auburn in June 2012. Unions have learned they can successfully overrun local grassroots activism for charters in smaller towns by stuffing voters’ mailboxes with deceptive, paranoid propaganda. (For more information about how unions defeated the Rancho Palos Verdes and Auburn charters, see my article Who Defeated the City of Auburn’s Proposed Charter, and How Was It Done? (Answer: Three Union Entities, by Spending $56.40 Per NO Vote).

I expect more than a dozen California cities will ask voters to enact charters in the June 2014 election. Currently there are 121 California cities with charters. Many of these cities take advantage of their charters to establish their own policies concerning government-mandated construction wage rates (so-called “prevailing wages”). See Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

Unions Help K-12 School and Community College Districts to Borrow Money for Union-Only Construction by Selling Bonds

Voters throughout California are being asked to approve 106 ballot measures to authorize school districts and community college districts to borrow money for construction by selling bonds. But for the first time since California voters narrowly approved Proposition 39 in 2000 (lowering the voter approval threshold from 66.67% to 55% for educational bond measures), there is a semi-coordinated statewide effort (“Operation Close the Spigot”) to oppose some of the most egregious bond measures by moving beyond the message “it’s for the kids” and providing some real accountability for performance. There is even an aggressive, well-funded locally-based opposition campaign (led by the San Diego County Taxpayers Association) to defeat an exceptionally foolish bond measure in San Diego.

Sacramento City Unified School District wants voter approval through Measures Q and R to sell another $414 million in bonds to add to its existing $522 million bond debt. West Contra Costa Unified School District (based in Richmond) wants voter approval through Measure E to sell another $360 million in bonds to add to its existing $1.77 billion bond debt. Solano Community College District wants voter approval through Measure Q to sell another $348 million in bonds to add to its existing $180 million bond debt. And San Diego Unified School District wants voter approval through Proposition Z to sell another $2.8 billion in bonds to add to its existing $4.7 billion bond debt.

Why are construction unions and their unionized contractor allies providing significant funding to the campaigns in support of these four ballot measures? It’s not because they love the kids; it’s because the elected boards of these fiscally irresponsible, mismanaged educational districts require their construction contractors to sign Project Labor Agreements with unions as a condition of working on projects funded by bond sales previously authorized by district voters.

In July 2011, the National University System’s Institute for Policy Research in San Diego published a comprehensive study showing that California school construction projects cost 13% to 15% higher when the district requires contractors to sign a Project Labor Agreement with unions. (The study is titled Measuring the Cost of Project Labor Agreements on School Construction in California.)

I’ve written extensively about these four union-backed bond measures – here are the most recent articles about each one:

  • Who’s Paying to Convince Sacramento Voters to Take On $414 Million of Additional Debt – Plus Interest – with Measures Q and R?
  • $652,650 Contributed to Measure E Campaign: West Contra Costa Unified School District Seeks to Borrow Another $360 Million “For the Children of West County”
  • Updated Chart! Who’s Paying to Convince Solano County Voters to Take On $348 Million of Additional Debt – Plus Interest – with Measure Q?
  • ONE San Francisco Investment Banker Is Funding About 20% of the Yes on Proposition Z Campaign for San Diego Unified School District to Borrow $2.8 Billion Through Bond Sales

As I reported in my www.UnionWatch.org article Construction Unions Could Grab Billions Through Education Bonds, Oakland Unified School District and East Side Union High School District will surely require their contractors to sign Project Labor Agreements with unions for projects funded by bond measures on the November 2012 ballot. Other districts such as the Rancho Santiago Community College District may also attempt to cut bid competition and increase costs for the benefit of union special interests.

Keep in mind that every California taxpayer pays for the union-controlled construction in these educational districts. The State Allocation Board regularly provides matching grants for construction projects with proceeds from bond sales authorized by three past statewide propositions (Kindergarten-University Public Education Facilities Bond Acts) totaling $35.8 billion. Union officials believe in “trickle-down economics” when your taxes “trickle down” to their operational and political funds.

Kevin Dayton is the President and 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.

Mysterious Union Slush Fund Spends $100,000 Against Costa Mesa Charter

As explained by the League of California Cities, the California Constitution gives cities the authority to enact “charters” and thereby manage their purely municipal affairs without interference from the state. Cities have been increasingly eager to seek charters in recent years in order to free themselves from costly state mandates. Since 2007, voters have increased the number of charter cities from 107 to 121, and voters in three more cities will have the opportunity to consider approving charters on November 6, 2012.

Here are web links to the three proposed charters and the support and opposition web sites for the three proposed charters:

1. City of Escondido (San Diego County) – population 146,032

2. City of Costa Mesa (Orange County) – population 111,600

3. City of Grover Beach (San Luis Obispo County) – population 13,275

  • Charter Proposal as Presented on City Web Site: Measure I-12
  • Yes on I-12 Web Site: Vote Yes on Measure I-12
  • No on I-12 Web Site: http://www.protectgroverbeach.com

The most aggressive opponents of proposed charters are unions, particularly construction trade unions. (See Who Defeated the City of Auburn’s Proposed Charter, and How Was It Done? Answer: Three Union Entities, by Spending $56.40 Per NO Vote.) As confirmed by a California Supreme Court decision in July 2012 (State Building and Construction Trades Council of California, AFL-CIO v. City of Vista), charter cities have the right to establish their own policies concerning government-mandated construction wage rates (so-called “prevailing wages”).

In almost all cases, the state determines the wage rate by adding up all of the employer payments (including payments that are not employee compensation) indicated within the union collective bargaining agreement that applies to a specific trade within the specific geographical region that falls within the jurisdiction of the union agreement. The state does not survey contractors or workers to determine an average or median wage, nor does it consider regional wage statistics calculated by the California Economic Development Department. As a result, state-mandated construction wage rates in California are often much higher than the actual wage rates in a locality. But with a charter, a city can set its own rates for its own projects.

For a comprehensive 92-page guide about government-mandated construction wage rates in California and the status of prevailing wage policies in California’s 121 charter cities, see the recently-published 3rd edition of Are Charter Cities Taking Advantage of State Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

As listed above, voters in the City of Costa Mesa have the opportunity on November 6, 2012 to consider Measure V, which would enact a charter. Mailboxes are stuffed daily with slick full-color productions telling the citizens of Costa Mesa how awful life will be if the city frees itself from the benevolent California State Legislature and adopts its own mini-constitution.  (See some of these mailers below.)

ONE entity has spent $100,000 against Measure V as of September 30. (At the rate those mailers are pouring in, it’s likely much more has been spent in October.)

The donor is the California Construction Industry Labor-Management Cooperative Trust. Have you ever heard of it?

The secretive California Construction Industry Labor-Management Cooperative Trust is the sole direct contributor (of at least $100,000) to the No on V campaign in Costa Mesa.

What is the California Construction Industry Labor-Management Cooperative Trust? Where does it spend its money? How does it get its money?

If you want a more detailed but still shadowy idea of how this group spends its ill-gotten money, you can read my May 31, 2012 article Where the California Construction Industry Labor-Management Cooperative Trust Spends Its Money: Now We See How Unions Spread It. But here is a list of the top recipients:

  1. $1,095,000 – Taxpayers to Preserve Community Jobs, No on Measure A, sponsored by labor and management organizations (June 5, 2012 election in City of San Diego)
  2. $770,000 – UCLA Labor Center (aka UCLA Center for Labor Research and Education), part of the University of California Miguel Contreras Labor Program
  3. $250,000 – No 98/Yes 99 – A Committee of City and County Associations, Taxpayers and Environmental Groups, League of California Cities, Californians for Neighborhood Protection, Coalition of Conservationists
  4. $164,550 – “Other” (?)
  5. $100,000 – Apollo Alliance
  6. $100,000 – Paxton-Patterson Construction Lab/Shop in San Joaquin County
  7. $50,000 – Taxpayers to Preserve Community Jobs, No On Measure G, sponsored by labor and management organizations (June 8, 2010 election in City of Chula Vista)

But what’s more interesting is the source of at least some of this money, if not all of it.

A Mysterious Union Slush Fund, Authorized by an Obscure 1978 Federal Law to Encourage Better Relationships Between Unions and Manufacturers, Gave $100,000 to No on Measure V

The California Construction Industry Labor-Management Cooperative Trust contributed a total of $100,000 to the No on Measure V campaign. This is an extraordinarily high amount for a political contribution from one entity, especially concerning a local ballot measure! The head of the California Construction Industry Labor-Management Cooperative Trust is Bob Balgenorth, who is also head of the State Building and Construction Trades Council of California, based in Sacramento.

This is NOT a traditional Political Action Committee. It is an arcane type of union trust authorized by the obscure Labor-Management Cooperation Act of 1978, a law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service. Inspired by the decline of unionized manufacturing in the Northeast, this federal law was meant to help industrial management and union officials build better personal relationships and cooperate against the threat of outside competition. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards. This is an ambiguous and forgotten law that’s ripe for abuse.

It’s Not Union Members that Give the Money to the California Construction Industry Labor-Management Cooperative Trust: It’s Utility Ratepayers and Contractors Working for Extorted Power Plant Owners

Since the 1990s, whenever an energy company or public utility submits an application to the California Energy Commission seeking approval of a new power plant, an organization called California Unions for Reliable Energy (CURE) often “intervenes” in the licensing process. Represented by the South San Francisco law firm Adams Broadwell Joseph & Cardozo, CURE submits massive data requests and environmental objections to the California Energy Commission. The applicant by law is required to answer CURE’s submissions, at significant cost and delay. The chairman of California Unions for Reliable Energy (CURE) is Bob Balgenorth (see above).

If the power plant owner agrees to require its construction contractors to sign a Project Labor Agreement with the State Building and Construction Trades Council of California or its regional affiliates, CURE’s objections fade away and the power plant proceeds unhindered through the licensing process. If the company or utility does not surrender to CURE’s demand, then CURE’s interference and lawsuits continue.

This racket – sometimes called “greenmail” because it’s the use of the California Environmental Quality Act (CEQA) and federal environmental laws to pressure developers to sign Project Labor Agreements – is well-known to the energy industry in California and has been extensively reported in the news media over the past dozen years. (For example, see Labor Coalition’s Tactics on Renewable Energy Projects Are Criticized – Los Angeles Times – February 5, 2011.)

For cases in which the power plant applicant succumbs to CURE’s harassment, the Project Labor Agreement that the power plant owner signs usually contains a provision requiring the owner or its contractors to make a lump-sum payment or series of payments to the California Construction Industry Labor-Management Cooperative Trust.

For example, the Project Labor Agreement signed by the Northern California Power Agency (a conglomerate of publicly-owned utilities) for the construction of the Lodi Energy Center required the agency to shell out $90,000 to the California Construction Industry Labor-Management Cooperative Trust. That amount was dutifully mailed to Bob Balgenorth on August 17, 2010. (For more on this payment, see High Energy: Lodi Center Designed to be a Powerhouse for Chunk of State – Stockton Record – October 4, 2011; also, the union rebuttal on the California Building Trades Council web site – ABC Falsehoods Refuted in Letter to Stockton Record – a denial that the California Construction Industry Labor-Management Cooperative Trust is used for political contributions.)

And Section 13.1 of the Project Labor Agreement signed by the Southern California Public Power Authority (another conglomerate of publicly-owned utilities) for the construction of the City of Anaheim’s Canyon Power Plant required the agency to shell out $65,000 to the California Construction Industry Labor-Management Cooperative Trust.

The California Construction Industry Labor-Management Cooperative Trust reports these payments as “membership dues” to the Internal Revenue Service. Which brings up a question: are the local elected officials who serve as commissioners for the Northern California Power Agency and the Southern California Public Power Authority exercising their responsibilities as “members” to approve $100,000 in political contributions to the No on Measure V campaign in Costa Mesa?

But Wait a Minute…Is It Legal to Have Utility Ratepayers Fund a Mysterious Union Trust Fund that Contributes to Political Campaigns, Such as No on Measure V in Costa Mesa?

In 2009, an internal committee of the Northern California Power Agency discussed whether or not a payment to the California Construction Industry Labor-Management Cooperative Trust was an illegal gift of public funds. (Note the original amount to the California Construction Industry Labor-Management Cooperative Trust was supposed to be $150,000, but aggressive opposition to the Project Labor Agreement forced the unions to cut it down to $90,000 in order to win approval from the board of commissioners.)

To solve this uncertainty, in May 2011 State Senator Mark Leno (D-San Francisco) added a cryptic amendment at the request of union lobbyists and lawyers to the end of a large unrelated public utilities bill (Senate Bill 790) regarding “community choice aggregation.” It added Section 3260 to the Public Utilities Code: “Nothing in this division prohibits payments pursuant to an agreement authorized by the National Labor Relations Act (29 U.S.C. Sec. 151 et seq.), or payments permitted by the federal Labor Management Cooperation Act of 1978 (29 U.S.C. Secs. 173, 175a, and 186). Nothing in this division restricts any use permitted by federal law of money paid pursuant to these acts.”

No one in the California State Legislature – apparently not even Senator Leno – initially knew what this strange new provision meant. In the end, a few legislators such as Assemblywoman Shannon Grove (R-Bakersfield) came to understand and reveal in floor debate that it authorized public utilities to pass on the costs of payments to labor-management cooperation committees to ratepayers. Governor Brown signed the bill into law with the language tacked on the end.

It’s a tangled conspiracy. Especially intriguing is that one union official is the head of the State Building and Construction Trades Council of California, the California Construction Industry Labor-Management Cooperative Trust, and California Unions for Reliable Energy. For more information, see the investigative report of the Coalition for Fair Employment in Construction at this September 23, 2011 post at www.TheTruthaboutPLAs.comA Genuine California Union Conspiracy: Senate Bill 790 and the California Building Trades Council’s Ratepayer Funded Political Slush Fund

Confused about the Conspiracy? Here’s a Chart.

A public utility or private energy company applies to the California Energy Commission for approval to build a power plant.

California Unions for Reliable Energy (CURE) uses its “intervenor” status at the California Energy Commission to submit massive data requests and environmental complaints about the proposed power plant, as a result gumming up the licensing process and causing costly and lengthy delays for the applicant.

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Applicant for prospective power plant surrenders and agrees to sign a Project Labor Agreement with the State Building and Construction Trades Council of California or its regional affiliates. California Unions for Reliable Energy releases its grip of legal paperwork and the project moves forward unimpeded and acclaimed as environmentally sound.

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The Project Labor Agreement contains a required payment or payments to the California Construction Industry Labor-Management Cooperative TrustCalifornia Public Utilities Code Section 3260 – enacted by Senate Bill 790 in 2011 – allows public utilities to pass costs through to ratepayers.

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The California Construction Industry Labor-Management Cooperative Trust reports those payments to the IRS as “Membership Dues,” creating questions about the rights inherent for dues-paying members.

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The California Construction Industry Labor-Management Cooperative Trust makes contributions to political campaigns, such as $100,000 to fund 100% of the No on Measure V anti-charter campaign (Committee for Costa Mesa’s Future, No on V, sponsored by labor and management organizations) in the City of Costa Mesa in 2012.

Solutions

Is there any way this racket can be stopped? Yes. The U.S. Department of Labor’s Office of Labor Management Standards could promulgate regulations that establish restrictions and reporting guidelines for committees authorized by the Labor-Management Cooperation Act of 1978. Even better, Congress could pass legislation amending or repealing the law, and the President could sign it.

In the meantime, enjoy some of the No on V mailers below, brought to you by the California Construction Industry Labor-Management Cooperative Trust!

Is this a photo of a typical meeting of the board of directors of the California Construction Industry Labor Management Cooperative Trust?

If the union officials running the California Construction Industry Labor-Management Cooperative Trust had read Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?, they would have known that Mammoth Lakes is NOT a charter city.

They should have used a photo of Los Angeles and a photo of the state capitol to show who calls the shots when a California city doesn’t operate under a charter.

Is this the joint in Sacramento where the board of directors of the California Construction Industry Labor Management Cooperative Trust goes for drinks after deciding to spend more money against the proposed Costa Mesa charter?

OK, I get it. If you’re concerned about crushing debt, government mismanagement, and lack of public accountability, vote against the charter and leave your municipal affairs to the prudent and responsible leaders of the California State Legislature.

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.

California Supreme Court Supports Rights of Charter Cities Over State Legislature

California Supreme Court Declares that the State’s 121 Charter Cities Have a Constitutional Right to Circumvent the Union-Controlled State Legislature and Establish Their Own Policies Concerning Government-Mandated Construction Wage Rates for Taxpayer-Funded Construction

Yesterday morning (July 2, 2012), the California Supreme Court ruled 5-2 in State Building and Construction Trades Council v. City of Vista that the state’s charter cities have the constitutional right to establish their own policies concerning what their contractors are required to pay their trade employees working on construction projects paid for in whole or in part by the charter city. See the decision here.

There has been a recent flurry of cities trying to enact charters to gain some freedom from costly state mandates, especially freedom from the state’s inaccurate and inflated prevailing wage rates that apply to construction contracts of $1000 or more. In the City of El Cajon (in San Diego County), 58% of voters approved that city’s proposed charter on June 5, 2012. That charter includes an exemption from state prevailing wage.

Meanwhile, voters in the City of Auburn defeated a proposed charter with a similar prevailing wage exemption on June 5, 2012 after three union entities spent almost $80,000 to defeat a small local grassroots movement for a charter. Unions spent $56.40 per vote against the proposed charter to keep state control over the city’s contracting rules.

Article XI, Section 3 of the California Constitution describes how a general law city can organize under a charter. The California Supreme Court ruled on July 2, 2012 that the constitutional rights for a charter city extend to governing authority over contracting rules for purely municipal construction projects. In the case of the City of Vista, it established its own policy on prevailing wage in 2007 with the intention of saving millions of dollars on the seismic retrofit of an existing fire station and the construction of two new fire stations, a new civic center, a new sports park, and a new stagehouse for the city’s Moonlight Amphitheatre.

Charter cities are trying to circumvent the state’s prevailing wage laws because pay rates determined under these laws are often obviously much higher than actual regional market rates. In addition, the definitions of public works under these laws apply to projects that no reasonable Californian would consider to be government work.

Instead of surveying contractors or workers or looking at statistics from the California Economic Development Department, the California Department of Industrial Relations uses a system of calculating rates in which all of the employer payments indicated in the applicable union collective bargaining agreement for a construction trade in the union’s geographic region are added up to produce the wage rate for that region.

The state rates even incorporate employer payments to union-affiliated trusts that are not related to employee compensation; in fact, these trusts are sometimes used for union political purposes. Classified by the California Department of Industrial Relations in the mysterious “Other” column of prevailing wage determinations, this component was added to law through a bill signed by Governor Gray Davis just before he was recalled in 2003.

See the state-mandated construction wage rates for taxpayer-funded projects here.

In addition, the state defines a public works project to mean a construction project that gets any sort of public financial benefit. That means the state identifies many privately-owned and privately-built projects as public works projects. Hotels and retail developments become public works projects equivalent to courthouses and city halls.

Few Californians understand the complicated, convoluted, and often ambiguous structure of the state’s laws and regulations concerning government-mandated construction wage rates. For a simple explanation of the state’s prevailing wage laws and the prevailing wage laws of the state’s charter cities, see this guidebook: Are Charter Cities Taking Advantage of Prevailing Wage Exemptions?

To see how state prevailing wage laws could be reformed to produce more accurate rates and more reasonable definitions of public works, see these two comprehensive reform bills introduced by Assemblywoman Shannon Grove (R-Bakersfield) but defeated in January 2012 on party-line votes in the Assembly Labor and Employment Committee: Assembly Bill 987 (reform definition of public works) and Assembly Bill 988 (reform calculation of prevailing wages).

OUTLOOK: In the November 2012 election, voters in the cities of Costa Mesa, Escondido, and Grover Beach will consider enacting charters that allow these cities to establish their own policies concerning government-mandated construction wage rates for purely municipal construction. I predict that dozens of cities will seek this authority from their citizens in 2014.

Here is a compilation of the substantial press coverage about this important court decision:

News Coverage So Far: City of Vista Wins California Supreme Court Ruling – Charter Cities Can Set Their Own Policies Concerning Prevailing Wage


APPENDIX: Union Perspectives on Charter Cities Establishing Their Own Policies Concerning Government-Mandated Construction Wage Rates

1.      Official Statement After Unions Lose in California Supreme Court

“The fight against prevailing wage is part of a larger effort by the super-rich ruling class to fatten their own wallets by forcing everyone else to sacrifice…We will continue to fight at every turn.” – July 2, 2012 statement of the State Building and Construction Trades Council of California in response to the California Supreme Court decision

Source: an article in the Newport Beach /Costa Mesa Daily Pilot, an article in the North County Times, and in an article in the San Francisco Chronicle.

2.      Dialogue at the California Appeals Court oral arguments on November 14, 2008 (one year after devastating fires in San Diego County):

Judge (to the Union Lawyer): “How do you balance (your) argument against a municipality that might say ‘prevailing wages, that concept is going to, in effect, prevent us from building the fire station that we need?’”

Union Lawyer: “The same argument could be made about a lot of laws that cost money.  The way I balance it is to say that when the people as a whole deal through the legislature with a problem that does have real extra-municipal dimension, the interests of an individual locality have to yield.”

Another Judge (to the Union Lawyer): “The response that troubles me a little bit: ‘Well, if they can’t afford to build the fire station, and they have fire problems, that’s their tough luck,’ even though they’re using municipal funds. They’re not using state funds; the state isn’t granting its largess to solve the problem. So the charter makes no difference; the city simply is stuck.”

Union Lawyer: “When you say stuck, they have to follow the exact same rules that every other government entity follows in California to construct things…It’s true the city could say ‘we might be able to get lower bids on our project if we don’t include prevailing wage specifications, and we’d like to do that,’ but where the legislature has dealt with an issue that has extra-municipal concerns, the judgment of the entire legislature has to trump, because there are substantial externalities involved.”

Source: Wildfires: Construction Unions Put Self-Interest above Public Interest in Court Case Against City of Vista’s Right as a Charter City to Set Its Own Prevailing Wage Policies

3.      From a Commentary by Bob Balgenorth (President of the State Building and Construction Trades Council of California) published on July 26, 2007:

The State Building Trades intends to establish with its lawsuit that ignoring the State’s prevailing wage law is not just bad policy – it is also illegal.

Source: “Charter Cities Must Comply with Prevailing-Wage Law,” Capitol Weekly, July 26, 2007. (It took five years for this lawsuit to reach the final and decisive outcome of failure.)

Kevin Dayton is the President and 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.