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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.

 ↓

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.