Charter City Report Updated

In November, residents of three cities will decide whether or not to enact local charters and emancipate themselves from an often unfair and inefficient State government. Charters – as defined by Article IX – act as local government constitutions and grant “home rule” over municipal functions.

Among the opportunities presented by city charters is the ability to establish a council-manager structure for city administration, the ability to directly elect a mayor, and the ability to more fully control local government finances.

According to League of Cities documents publicly available on their website, cities do not necessarily need to explicitly enumerate each facet of their home rule authority. So long as the charter includes a provision that expresses the local will to “avail itself of the full power provided by the California Constitution,” the city will continue to have authority over purely municipal affairs.

That means any local government function which receives its funding entirely from local revenues can be freed of state-level rules and restrictions. One of the most common areas it can impact is public works.

A group representing Merit Shop contractors has released its third edition of a study of charter cities in California, focusing on charter cities and how they address costs arising from prevailing wage. Oftentimes, exemption from the state’s mandatory wage law is addressed in city charters.

PublicCEO covered the release of the original report in 2009 and the first update in 2011.

Each time, specific cases of cost savings arising directly from cities chartering and adjusting the local approach to prevailing wage were presented.

In 2009, it was Modesto Councilwoman Janice Keating who pointed at a 17 to 20 percent decrease in labor costs because the City exempted itself from prevailing age. “For public works projects alone, we’ve saved more than $1.2 million over the past five years,” she told a PublicCEO reporter.

In 2011, it was Oceanside City Councilman Jerry Kern, who helped pass the city’s charter in June of 2010. He said the city had accepted bids for three projects before the city passed its charter, and then put them back out to bid. The bids came back $970,000 cheaper.

Those kinds of savings, and many of the other freedoms afforded to cities, have three cities looking to charter in November. One of the highest profile cases comes from Costa Mesa, where the City Council has been pursuing a charter for the better part of a year.

For Costa Mesa, it’s about controlling local affairs and being able to leverage local solutions to local problems. The most obvious case, as Councilman Jim Righeimer told PublicCEO in the past, is outsourcing and contracting.

Pointing to the city’s jail services, Righeimer said that, “…savings alone on a $1.5 million cost could be $50k a month. That’s just one contract.”

But the city also included language exempting local projects from prevailing wage laws.

“Prevailing wage is clear as day,” said Righeimer. “We want to be able to negotiate with market rate wages like Newport and Huntington. We don’t want to have to have a union wage.”

Prevailing wage is a state-mandated hourly wage for construction-related industries. Essentially, since 1939, it has established a uniform rate for specific occupations, with moderate flexibility for regions and markets.

Kevin Dayton, President and CEO of Labor Issues Solutions, LLC, authored the introduction to the Charter City Report, and made the case for cost savings through charters.

“One way (to save city resources) is to enact policies that allow wage rates for city construction contracts to more accurately reflect economic conditions in the local market region.”

The report was designed to not only educate local officials about charters and cost savings, but Dayton also presents it as a tool to help establish a charter or amend one to include prevailing-wage exemptions.

“This third edition of the guide to the status of government-mandated construction wage rates in California’s charter cities provides all the information necessary for charter cities considering exercising their constitutionally-guaranteed right to determine the government-mandated wage rate policies in their own municipal construction contracts.”

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