State Water Agency Is First to Implement State Punishment for California Local Governments Banning Project Labor Agreements

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In 2011, California Governor Jerry Brown signed into law Senate Bill 922, which nullified current and future “fair and open competition” ordinances that prohibit California counties and (general law) cities from entering into contracts that require construction companies to sign Project Labor Agreements with unions as a condition of work.

Along with the subsequent Senate Bill 829 enacted in 2012, Senate Bill 922 also prohibited the state from providing funding for construction projects to any charter city with a “fair and open competition” charter provision or ordinance. Because the 121 California cities with a charter have a degree of authority over their municipal affairs, the state legislature cannot directly nullify local contracting policies: it can only withhold funding to such cities as a financial disincentive. (To send an extra belligerent message to uppity cities seeking to evade the costly union political agenda, the State Building and Construction Trades Council of California and its member unions and allied organizations helped convince voters in Costa Mesa, Escondido, and Grover Beach to reject proposed charters on the November 2012 ballot.)

Now the the State Water Resources Control Board (State Water Board) appears to be the first state agency to implement SB 922 and SB 829. At its July 23, 2013 meeting, the State Water Board will consider a resolution to adopt a Clean Water State Revolving Fund (CWSRF) Program Preliminary Funding Commitment (PFC) for the bankrupt City of Stockton to proceed with the $3.25 million Tuxedo Avenue Sewer Rehabilitation Project, by funding half of the project by forgiving principal on existing debts to the Clean Water State Revolving Fund loan program.

The proposed resolution includes a list of conditions, which includes a statement that “the City shall provide an opinion from the City’s counsel, documenting that counsel has reviewed the financing agreement, and confirming the following…

iv. There is no provision or other legal impediment to the City’s authority or discretion to adopt, require, or utilize a project labor agreement that includes the tax payer protection provisions of section 2500 of the California Public Contract Code;

Of course, the condition includes the false and extraneous reference to “taxpayer protection” meant to portray Project Labor Agreements as something fiscally responsible rather than something that cuts bid competition for the benefit of construction trade unions.

Note that the Clean Water State Revolving Fund (CWSRF) loan program is federally-funded, meaning that the SB 922 and SB 829 restrictions are actually applying to federal funds distributed by the state. California received about $147 million of the $2.1 billion appropriated for the program in fiscal year 2010.

Incidentally, no one on the State Water Resources Control Board has any obvious connections to trade unions.

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