SB 7: Cities Stand to Lose Home Rule over Municipal Affairs

Up to 51 charter cities are at risk of losing their authority over public works projects, should Governor Brown sign SB 7 this week.

SB 7 explicitly targets cities that have voter-approved provisions in their charters that authorize the optional use of prevailing wage.

Since the state cannot enforce its will on cities with independent charters, SB 7 seeks to accomplish that aim by imposing a financial penalty. Specifically, this bill will strip non-compliant charter cities of all state funding for construction projects, including public works initiatives funded by local revenue.

Currently, all general law cities are required to adhere to state standards on prevailing wage.

SB 7 was introduced in the Senate last spring and passed with a 28-10 vote in late May. Assembly amendments were taken in early August and the bill has returned to the Senate for concurrence. The bill is coauthored by Senate President Pro Tem Darrell Steinberg (D-Sacramento) and Senator Anthony Cannella (R-Ceres).

In his official comment on the matter, Steinberg remarked, “Continuing California’s economic growth depends on creating more middle class jobs, especially in the construction industry that was hit so hard during the Great Recession. Low wage contractors cut costs by cutting corners, but the data shows that they’re not saving public money. We can’t afford to shortchange workers and taxpayers by ignoring the economic net benefit of California’s prevailing wage law.”

City leaders across the state have been ardent and vocal in their opposition. Officials from the Central Valley held a joint press conference last month to collectively speak out against the bill. The cities of Modesto, Merced, and Waterford were represented as well as the Stanislaus County Board of Supervisors.

When SB 7 was first heard in the Assembly Local Government Committee back in June, city leaders from over 100 cities throughout California signed a petition urging members of the ALGC to vote no on the bill.

Since then, it has amassed an even greater opposition from political observers, including the Sacramento Bee Editorial Board. In an editorial published this morning, the SacBee alleges prevailing wage rates are often set by unions and because of this, rates in areas like the Central Valley are disproportionate to the median rates of the region. Due to the inflated cost, such rates prevent cash-strapped cities from undergoing routine maintenance such as fixing roads.

Dan Carrigg, Legislative Director for the League of California Cities, is highly troubled by the potential ramifications of this bill. “Consistent with his often expressed respect for the views of voters and his philosophy of ‘subsidiarity,’ we hope the Governor will step back from the emotional debate over this bill and help avoid what is a transparent and ill-advised effort to circumvent a recent ruling of the state supreme court and usurp authority the people have reserved to themselves in our constitution,” stated Carrigg. “As we all know, once we start down that road, we have little left to protect our most fundamental rights.”

The League points out that contract cities can still choose to require contractors to comply with prevailing wage. Several big players in California already do, including Los Angeles. SB 7 would just take away that option.

Court rulings have supported the autonomy of charter cities and their right to comply with or reject prevailing wage laws.

Last year, the State Building & Construction Trades Council sued the City of Vista, after three years of litigation over the city’s optional compliance of state prevailing wage. The litigation stems from a citywide vote in June of 2007 to become a charter city, in which 67% of voters were in favor.

The California Supreme Court ruled in favor of Vista’s right to excise control over their municipal affairs, including the decision whether or not to pay prevailing wages on projects funded with local revenues.

Cities like Vista often seek charter status in order to maintain local control. Union-sponsored mandates—like prevailing wage—have resulted in uncertain futures for recent public works projects up and down the state. In Redding, a prevailing wage fight has been brewing over the construction of a hotel and citizens of Redding have suggested seeking charter status as a way to avoid general law city restrictions.

Read more about SB 7 here.

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