It is no secret that California is in the midst of closing a massive budget shortfall. In fact, California is in such bad shape that it took eight of the twenty spots in Forbes‘ 2011 version of “America’s 20 Most Miserable Cities,” thanks to its high unemployment rates, declining housing market, high taxes, cuts to public services and unfriendly business climate.

For most Californians, being in a financial crisis means it’s time to increase frugality – coupons, sales, bagging groceries at the local discount grocery store, etc. It’s only fair that California’s struggling citizens should be able to count on their government to do the same with their hard earned tax dollars.

On Tuesday, March 1, Los Angeles County Supervisors will decide whether or not to add a union-only Project Labor Agreement (PLA) to a major infrastructure project. It would be the first-ever agreement adopted by the County. Project Labor Agreements are union-backed agreements that require that any employee working on the project must either be a union member or pay into the union pension and healthcare fund, even if they will never receive the benefit. Simply negotiating the PLA will cost taxpayers $800,000 while regional contractors have alleged that the agreement itself will eliminate competitive bidding, and increase costs by as much as 20 percent. Union leaders counter that the agreements are beneficial, protect local jobs and have no negative effect on competition.

Here’s the story. You decide.

The project in question is the reconstruction and reopening of the Martin Luther King Jr. Hospital in South Los Angeles. As originally intended, there were to be two projects started simultaneously; a $350 million renovation of the hospital and a $121 million renovation for the Ambulatory Center. The plan called for two separate contracts, due to the specific trades and skills required for each unique project. If all had gone as planned, both the Ambulatory Center and the 120-bed hospital would have opened in rapid succession, providing South Los Angeles residents access to local quality health services in a timely fashion.

However, the original plan was abandoned before the work on the Ambulatory Center even began when the bidding process was halted by Supervisor Mark Ridley-Thomas.

The Supervisor and his office declined to comment as to why, but it appears the action was taken for the purpose of adding a PLA. Before the vote, nearly $800,000 has been set aside for the projected cost associated with the development of the PLA. This unplanned negotiation has placed the project nearly four months behind schedule and increased the cost.

Residents are unhappy with the delay and local contractors oppose the use of a PLA, noting that it does not benefit the County, taxpayers or improve the quality of construction. Instead, they assert that the PLA is nothing more than a tool to exclude non-union contractors and force payments to fund union benefits without benefitting actual workers.

At a heated Board of Supervisors meeting in December 2010, residents of Supervisor Thomas’ district stood before the Board to express their frustrations and demanded they move the project forward in anticipation that it would bring jobs to the community. Supporters of the proposed PLA say that implementing this agreement will guarantee that local workers will account for a certain percentage of the project’s workforce.

“PLAs don’t ensure that local people stay competitive in the market,” said Richard Slawson, Executive Secretary of Building Trades of Los Angeles and Orange County. “It makes sure that local people are included in a project that’s paid for with local funds and administered by a local agency.”

Citing previous experiences his contractors have had on projects in Los Angeles, Mr. Slawson says that PLAs have helped his union contractors maintain between a 35 and 37 percent local hire rate.

But Art Geller, the Human Resources Manager at Helix Electric, disagrees. As a non-union company, they still meet the requirements for local hiring that are set forth in any standard contract. As a large company, Helix has offices in various states across the country, but their Los Angeles office would manage the hiring.

“We may not be corporately based in Los Angeles, but with our Los Angeles division, we’d still hire locally,” said Mr. Geller.

But, should a PLA be put in place, Helix wouldn’t bid for the work.

“We have a company policy that keeps us from touching any project with a mandatory PLA,” said Mr. Geller. “We have our own health and welfare program, but we’d still have to pay into the union sponsored health and welfare program. And we don’t want to pay twice.”

Helix isn’t the only contractor who says they would be prevented from working on this project. Another non-union contractor, who asked to remain anonymous, considered the passage of a PLA a “shakedown.”

“I would not bid on this contract under [the PLA] restrictions,” the contractor said. “I’ve worked under two PLAs and I will never do that again… It’s basically a union shakedown.”

Because the project was designed to last less than two years, employees would not be eligible to receive any of the union benefits, even though they would be forced to pay into the program.

Sentiments such as that are what lead some people to say that PLAs limit competition by providing disincentives to non-union companies from bidding.

“PLAs are exclusionary,” said Mr. Geller. “They eliminate competitive bidding on public works projects. On a non-PLA project, more companies can bid, and that drives down price.”

But Mr. Slawson doesn’t agree. “Even without [PLAs], our contractors win out every day, on private works, on public works… They really do nothing to injure competition.”

As the debate rages on, the vote on the proposed Project Labor Agreement has been delayed several times.

Supervisor Gloria Molina was unsure how she would vote on the PLA, but her office has declined to comment further on the issue.

This delay is only the most recent setback in the history of the Martin Luther King Jr. Hospital. In 2007, it shut down its emergency room and in-patient services after repeatedly failing standard-of-care inspections.

Since 2007, the hospital operated as a series of walk-in clinics, without a trauma center, emergency room, or in-patient care. Shortly after the shutdown, Supervisor Ridley-Thomas began working to re-open the facility. By October of 2009, an agreement was reached between the UC System and the Los Angeles Board of Supervisors. That agreement was pivotal in helping the project get off the ground.

Until consensus is reached by the Board of Supervisors and the PLA issue is resolved, low income families will be forced to continue waiting for a new quality healthcare facility.