Bakersfield Becomes Latest of California’s 121 Charter Cities to Free Itself from Government-Mandated Construction Wage Rates (So-Called “Prevailing Wage”)

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As I anticipated in my July 2, 2012 article Prediction: An Explosion of California Cities Freeing Themselves from Costly State-Mandated Construction Wage Rate Laws, the past three months have seen a flood of California cities seeking voter approval for charters, as well as existing charter cities establishing their own policies concerning government-mandated construction wage rates (so-called “prevailing wages”) for purely municipal construction (or private projects that receive government assistance only from the city).

These recent www.CalWatchdogs.com articles summarize what’s happening in California: Push for Charter Cities Enrages Unions and Cities Vying for Local Control on November Ballot.

Through its July 2012 decision in State Building and Construction Trades Council of California, ALF-CIO v. City of Vista, the California Supreme Court affirmed the right of California’s 121 charter cities to set their own prevailing wage policies for municipal construction and thereby free themselves from the costly, complicated, and nonsensical way that the State of California calculates state-mandated construction wage rates and defines public works.

For comprehensive information, see the 92-page guidebook Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions?

Bakersfield is the latest charter city to establish its own policy concerning government-mandated construction wage rates. Hoping to sustain its economic boom and resist union-backed public policies dragging down economic growth and job creation in the state and other cities, the Bakersfield City Council voted 4-2 (with one city council member recusing himself) on October 17, 2012 to set its own policy. Here is the city’s agenda item description: Resolution exempting the City from prevailing wage requirements for locally funded public works contracts except where required by law.

Here’s a July 17, 2009 video report on KBAK Channel 29 (CBS) news featuring a comment from me about the need for the City of Bakersfield to free itself from state-mandated construction wage rates set based on collective bargaining agreements for urban areas: Prevailing Wage Wastes Tax Dollars in Bakersfield.

It was reported to me that unions brought busloads of people from Los Angeles to pack the council chamber, but the city council majority was not fooled and not intimidated. Here’s news coverage, with excerpts (bold highlights are mine):

Council Shakes Off Prevailing Wage Requirement – Bakersfield Californian – October 17, 2012

City staff also informally surveyed local contractors and were told that without the prevailing wage requirement, project costs could be cut by 3.5 percent to 30 percent

But just as many people spoke in favor of the resolution as against it, saying it would result in more efficient use of taxpayer money and wouldn’t lead to unfair construction wages or lower quality in projects.

“As a city council member, I have a fiduciary responsibility to taxpayers and the community to utilize funds with care and strive to provide the best value possible,” Weir said in an email earlier Wednesday. “With the approval of tonight’s resolution, we will be able to build better parks with more amenities, increase the amount of street repaving, and provide other benefits without additional cost to the taxpayers. To not pursue this opportunity would be a breach of my responsibility.”

Councilmembers added a late amendment to the resolution as a step to better protect against unqualified contractors bidding for city work. Before the resolution passed, projects valued at $1 million or more required that contractors be “pre-qualified” for their suitability to do the type of project at hand before being allowed to submit a bid. With the resolution, that threshold was lowered to $250,000.

Contractors, Unions Object to City Prevailing Wage Proposal – Bakersfield Californian –  October 16, 2012

City Manager Alan Tandy said savings for the city means more work can be done. Taking an example of 20 percent savings, he said, “If we save 20 percent on resurfacing a street, we can resurface 20 percent more streets. We have more that need resurfacing than we have money to resurface.”

Council Members Tackle High Speed Rail, Prevailing Wages in Heated Debate – KGET Channel 17 (NBC) news – October 18, 2012

Congratulations to the Bakersfield City Council. Under pressure and threats, they refused to payoff the unionsCalifornia Political News and Views – October 19, 2012

Will This Charter City Movement Lead to Genuine (or Any?) Prevailing Wage Reform?

Perhaps union officials in Bakersfield are realizing that “prevailing wage” as calculated under state law and “public works” as defined under state law are so outrageous that cities are intent on escaping them. Bakersfield’s own Assemblywoman Shannon Grove introduced two thoughtful and reasonable prevailing wage reform bills (Assembly Bill 987 and Assembly Bill 988) to make state-mandated government wage rates only apply to legitimate government projects and be more reflective of actual local market rates, but union lobbyists opposed these bills and Democrats defeated them in committee in January 2012.

In fact, as I reported in my April 20, 2012 article State-Mandated Construction Wage Rate Requirements Remain on California Projects Worth $1001 to $2000, union lobbyists and Legislative Democrats wouldn’t even support Assemblywoman Grove’s Assembly Bill 1958, which made two very modest changes to the state’s prevailing wage laws. That bill increased the project cost threshold for coverage from $1000 to $2000 to match the $2000 threshold set by the federal prevailing wage law called the Davis-Bacon Act. It also indexed the threshold to the same measure of inflation that the Democrats want to use for indexing the state minimum wage.

There WILL be a day when unions no longer control the California State Legislature and the Governor’s office. In the meantime, charter cities are exercising their own right to determine their economic destiny, and many of them don’t want to follow the direction of the State of California to inevitable bankruptcy.

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