Charter Cities to Lose Authority Over Public Works Projects

Last night Governor Jerry Brown signed SB 7 into law, effectively stripping charter cities of local control.

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

The bill was authored by Senate President Pro Tem Darrell Steinberg and sponsored by the State Building and Construction Trades Council, AFL-CIO. It stems from AFL-CIO’s three year legal fight with the City of Vista, in which the California Supreme Court ruled in favor of Vista’s right to exercise control over its municipal affairs.

In light of this ruling, the union-sponsored bill will mandate compliance with prevailing wage laws indirectly: by blocking state funding to cities that do not require civic project laborers to be paid at prevailing wage rates.

Charter cities that do not mandate prevailing wage will lose their autonomy over public works projects. SB 7 will even apply cities where public works projects are entirely funded by municipal tax dollars.

Prevailing wage is determined by an intricate formula set by the California Department of Industrial Relations. It essentially amounts to union-level pay.

Supporters believe the bill will protect middle-class jobs and ensure that public works projects are completed by the highest-quality of laborers.

“Prevailing wage attracts the most efficient, highly-skilled, best-trained streamlined workforce that provides the best value on construction projects,” Senate Anthony Cannella (R-Ceres) stated in an interview with the San Diego Union-Tribune.

Meanwhile critics, including the League of California Cities, are concerned about both the loss of home rule and the bill’s impact on civic projects. Prevailing wage will, in many of the cases, substantially raise labor costs and many believe the increase in costs will have a chilling effect on construction of new public works projects. Mandatory compliance has also been criticized for its one-size-fits-all approach that fails to address regional economic differences.

Critics have been vocal in their opposition. City officials from the Central Valley held a joint press conference in August to express their disapproval to the bill and over a hundred of the state’s 121 charter cities have stood with the League in opposition.

California’s Constitution specifically affirms the rights of charter cities to maintain authority over their municipal affairs, including the ability to set labor costs. In fact, a number of charter cities already require compliance with prevailing wage standards. This list is comprised of many of the state’s largest municipalities, including Sacramento, Los Angeles, San Francisco and San Jose.

SB 7 removes the freedom of cities to make that choice of their own accord.

General Law cities are not affected by SB 7 as they are required to adhere to state standards on prevailing wage.

For more information on the history of the law, check out this article published last month in PublicCEO.

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