Tag Archive for California Labor Federation

Workers’ Compensation Reform Bill Sent to Governor Jerry Brown Has One Change to Union-Exclusive Alternative Dispute Resolution Carve-Out Program

On August 31, 2012 (the last day of the 2012 California legislative session), the California State Assembly voted 72-5 and the California State Senate voted 34-4 for Senate Bill 863, a bill making various changes to California’s workers compensation system.

As is customary in the California State Legislature, the bill was created as a gut-and-amend at the last minute (amended on August 24, August 27, and August 30) and whipped through the legislative process to Governor Jerry Brown on August 31 without adequate review.

As Sacramento Bee columnist Dan Walters wrote in his September 2, 2012 column entitled The Legislative Process Does Count:

A 170-page overhaul of California’s multi-billion-dollar workers’ compensation system – hammered out during months of secret negotiations between business and labor union lobbyists – was dumped on the desks of 80 Assembly members late Friday after being whisked through two perfunctory committee hearings…

So is SB 863 good public policy or not?

One can’t really answer that question, and the same ambiguity envelops almost everything else that was done, and left undone, in the final days of the session.

SB 863 was one of countless measures that popped up during those days, entirely new bills that were hustled through the process with little or no detailed knowledge of what they really do, or whose interests they serve.

I looked at the final version of Senate Bill 863 to see if the bill changed the obscure alternative dispute resolution “carve-out” program authorized exclusively for the unionized construction industry. It does. For some reason (innocuous or sinister?), Senate Bill 863 eliminates this reporting requirement, which was part of the original 1993 authorization:

By June 30, 1996, and annually thereafter, the Administrative Director of the Division of Workers’ Compensation shall prepare and notify Members of the Legislature that a report authorized by this section is available upon request. The report based upon aggregate data shall include the following:

(1) Person hours and payroll covered by agreements filed.

(2) The number of claims filed.

(3) The average cost per claim shall be reported by cost components whenever practicable.

(4) The number of litigated claims, including the number of claims submitted to mediation, the appeals board, or the court of appeal.

(5) The number of contested claims resolved prior to arbitration.

(6) The projected incurred costs and actual costs of claims.

(7) Safety history.

(8) The number of workers participating in vocational rehabilitation.

(9) The number of workers participating in light-duty programs.

The division shall have the authority to require those employers and groups of employers listed in subdivision (c) to provide the data listed above.

Why was this language eliminated? The legislative analyses for the bill don’t say.

Background on Alternative Dispute Resolution in Carve-Outs for Unionized Companies

This program was established as California Labor Code Section 3201.5. It was part of a workers compensation reform enacted by Governor Pete Wilson in 1993. The program was expanded by reform legislation signed by Governor Arnold Schwarzenegger in 2004. (Section 3201.7 allows unionized employers in other industries to set up similar programs.)

An article in the March 10, 2006 Sacramento Business Journal (“Unionized Firms Save in Workers’ Comp Plan“) gave rare news media attention to this program, which is only available to construction companies in a collective bargaining agreement with unions or signatory to a Project Labor Agreement. I’m quoted in the article:

Too bad this kind of program is only allowed in the construction industry when companies and employees are part of a collective bargaining agreement, said Kevin Dayton, state government affairs director for Associated Builders and Contractors of California, a merit-shop group.

The California Department of Industrial Relations maintains a list of what are now 34 carve-out programs established to date. Unions have promoted this program as a benefit of unionization. For example, the California Commission on Health and Safety and Workers’ Compensation (CHSWC) – then (and now) chaired by California Labor Federation lobbyist Angie Wei – was able to commission what is now the University of California Miguel Contreras Labor Program to produce a 2006 report entitled How To Create a Workers’ Compensation Carve-Out in California: Practical Advice for Unions and Employers. The California Commission on Health and Safety and Workers’ Compensation has also hosted at least one conference on Workers’ Compensation Carve-Outs and Alternative Dispute Resolution.

Although I never hear carve-outs cited nowadays as a reason to require contractors to sign a Project Labor Agreement, unions and pro-union construction management firms such as Parsons Constructors used the existence of this alternative dispute resolution carve-out program as an argument in support of Project Labor Agreements for large infrastructure projects during the early years of government-mandated Project Labor Agreements in California (1993-2000). One example was the Project Labor Agreement for the U.S. Department of Energy’s Lawrence Livermore National Laboratory National Ignition Facility in Livermore, California. It was negotiated in 1997 between construction manager Parsons Constructors and officials of the Building and Construction Trades Department, AFL-CIO and the Building and Construction Trades Council of Alameda County.

Seeking Access to Alternative Dispute Resolution for Non-Union Contractors

In 1998, then-Senator Dick Mountjoy introduced Senate Bill 2019, sponsored by the California Business Properties Association (the contract lobbying firm at the time for three California chapters of Associated Builders and Contractors), which would have eliminated the requirement that alternative dispute resolution programs for workers compensation in the construction industry be part of a collective bargaining agreement. Opposed by unions and trial lawyers, the bill did not get out of committee, and since then there have been no attempts to expand alternative dispute resolution in the construction industry outside of the unionized arena.

Before the 2011 legislative session, I attempted on behalf of my former employer (Associated Builders and Contractors (ABC) of California) to develop language that would allow non-union contractors to reduce workers compensation costs through participation in an alternative dispute resolution program. I was unable to figure out a way to graft such a program onto the existing law, which is dependent on the models of union collective bargaining agreements and labor-management cooperation committees.

Trying to Eliminate Favoritism in California State Law for Bidders in the Union-Exclusive Alternative Dispute Resolution System

Various laws authorize state agencies and local governments in California to award contracts for construction projects with subjective “best value criteria” under the “design-build” alternative bidding procedure. Unionized contractors that are part of alternative dispute resolution carve-out programs get a special exemption from safety requirements.

Design-build authorization language throughout California law includes the following:

A bidder’s safety record shall be deemed acceptable if their experience modification rate for the most recent three-year period is an average of 1.00 or less, and their average Total Recordable Injury/Illness rate and average lost work rate for the most recent three-year period does not exceed the applicable statistical standards for its business category, or if the bidder is a party to an alternative dispute resolution system, as provided for in Section 3201.5 of the Labor Code.

So a bidder in an alternative dispute resolution system (under California Labor Code Section 3201.5) does not have to worry about the experience modification rate or injury/illness/loss rate. As noted above, Section 3201.5 only applies to contractors in either a collective bargaining agreement or a Project Labor Agreement. Non-union contractors cannot use this method of alternative dispute resolution.

On January 11, 2010, the Assembly Business and Professions Committee considered Assembly Bill 1063, introduced by Assemblyman Martin Garrick and sponsored by my former employer, Associated Builders and Contractors (ABC) of California. It would have removed language that allows a contractor with a poor safety record to be “acceptable” if it is part of an alternative dispute resolution program that by law is restricted to contractors in a collective bargaining agreement or project labor agreement.

ABC of California argued that all design-build entities should have a decent safety record, without exceptions. The Western Electrical Contractors Association stated that “A safety record should be based on safety – not the existence of a side-agreement over dispute resolution – the two have nothing to do with each other! There is simply no valid public policy served by this requirement.” But the California Labor Federation, AFL-CIO opposed AB 1063 by praising unions and their activities, which was sufficient for the bill to fail on a party-line vote (Democrats opposed, Republicans in support.)


Update, October 31, 2013: The California Department of Industrial Relations (DIR) issued a bulletin on October 28, 2013 announcing The Division of Workers’ Compensation (DWC) Approves Carve-Out Agreement Covering 22,000 Workers in Southern California between seven Southern California United Food and Commercial Workers (UFCW) local unions, Vons and Super A Foods. I sent this tweet in response:

A labor attorney representing management emailed me a response:

But Kevin this can only work under a union contract because the health plan workers comp plan and grievance process are combined. A good idea. Still, few unions have implemented as it is a lot of work to make it work…Impossible to do in a non-union setting as the grievance process side of things would be cost prohibitive and disruptive – only works in union setting as the grievance process is already in place, as is the trust health plan administration system which does double duty – that is reason for efficiencies. Maybe some giant corporation might try it non-union but doubt it – frankly most unions see the benefits but it is so much work and can cause employee dissatisfaction if a comp case goes wrong that not worth it. And then what do you do with claimants’s lawyers? – nice idea, but generally a no-go.

What Happened to the Pacific Research Institute? California Needs a Policy Institute That Inspires and Dominates Intellectual Discussion about an Alternative Way to Govern the State

The leftist magazine Mother Jones published an article today (July 19, 2012) critical of the President and CEO and the operations of the Pacific Research Institute, a free market think tank based in San Francisco. I am an Adjunct Fellow in Labor Studies at the Pacific Research Institute, although I probably won’t be after I post this commentary on my Dayton Public Policy Institute blog.

Here’s my perspective on this matter.

Once innovative, creative, and on the cutting edge of policy initiatives, many American free market think tanks in 2012 appear to be developing into a stagnant, protective, incestuous club of interlocking directorates and eccentrics who enjoy socializing in urban intellectual salons. This culture will react strongly against any outside pleas to reform the remnants of their comfortable “movement.” No version of the Tea Party has yet emerged among free market-oriented intellectuals to topple the decaying edifice and energetically rebuild it with fresh thinking and ambitious strategic planning.

The Pacific Research Institute perhaps excels among the thousands of people and organizations in this country who are trying to make a living pontificating about Obamacare. But is there any unique angle or aspect about Obamacare that still remains to be chewed on? While bashing Obamacare attracts attention and excitement, even I’m tired of it – I change the radio station whenever a talk show host begins rehashing it. (I recommend reading the June 28, 2012 U.S. Supreme Court decision and dissent in National Federation of Independent Business v. Sebelius for fresh, thoughtful perspectives on Obamacare.)

Meanwhile, the State of California and many of its local governments are careening toward bankruptcy while most citizens of the state are wringing their hands in helplessness. Almost everyone in this state knows something is terribly wrong (even the union officials and the union-backed politicians know it), but the state utterly lacks a recognized free market organization with a message that can effectively subvert the entrenched, self-preserving syndicate of politicians, big corporations, unions, and media. Some sort of intellectual force needs to develop and advance a thoughtful, principled alternative to the current way in which the state is governed.

The people of California desperately need a strong, vocal, prominent free market policy institute that not only identifies the numerous economic and governance problems in the State of California, but also proposes audacious, concrete long-term solutions that ordinary citizens can understand and support. The Pacific Research Institute in San Francisco should have that role. It has not held it for many years.

My Early Background with the Pacific Research Institute

I first met a Pacific Research Institute policy analyst – former Director of the Center for Enterprise and Opportunity Katherine Post – in Washington, D.C. in the mid-1990s. I was surprised and impressed to learn that a free market think tank was based in San Francisco.

When I began government affairs work for Associated Builders and Contractors in California in 1997, the Pacific Research Institute’s Senior Fellow in Education Studies Lance Izumi was one of the first people I met in the public policy arena. In the early 2000s, the Pacific Research Institute recognized my professional expertise on complex and costly construction labor issues and designated me as their one and only fellow in Labor Issues. I saw Milton Friedman at the institute’s 25th anniversary gala in San Francisco in September 2004.

The Pacific Research Institute especially took an interest in my lonely work researching and exposing a taxpayer-funded union propaganda program at the University of California, established in 2000 with $6 million in direct funding in the California state budget signed by Governor Gray Davis. I worked extensively on this and other labor issues with the Pacific Research Institute’s former Business and Economic Studies Director Lawrence McQuillan (now chief economist at the Illinois Policy Institute) and also with its former Editorial Director Lloyd Billingsley (author of Hollywood Party: How Communism Seduced the American Film Industry in the 1930s and 1940s).

Selected twice by the Pacific Research Institute for its Golden Fleece Award, the University of California Labor Program was an especially appropriate state issue for the Pacific Research Institute to examine and expose. Other than my employer (Associated Builders and Contractors), no other prominent organization in California was taking a leadership role in publicly criticizing the University of California Labor Program, even as the Labor Program grew to serve as the intellectual foundation of the California Labor Federation‘s political agenda at the California State Legislature and at California local governments. (The Howard Jarvis Taxpayers Association did include the program in its lists of unnecessary, wasteful, inappropriate government programs, but it necessarily had to focus on a thousand other examples of California fiscal foolishness.)

While independent free market-oriented think tanks such as the Pacific Research Institute rely on corporations, foundations, and individuals to fund their policy research, the California Labor Federation and the State Building and Construction Trades Council of California simply obtained taxpayer funding to start and maintain what should have been their own self-funded research and marketing program. To add insult to injury to California taxpayers, the Labor Program was hosted at the University of California, so union officials and their academic sycophants could add a degree of credibility to their phony and biased reports, web sites, and news releases by stamping the respected UC logo and name on them.

Neither Associated Builders and Contractors nor I had any sort of written or unwritten financial agreement with the Pacific Research Institute for any of its research and exposure concerning the UC Labor Program. The Pacific Research Institute staff was outraged about the taxpayer funding for the program and filled a policy vacuum by investigating it and reporting on it for several years, thus providing a valuable service to California taxpayers and businesses.

In 2002, I Propose to the Pacific Research Institute That It Establish the Nation’s First Free Market-Oriented Labor Studies Center

Here are a few excerpts of my October 10, 2002 memorandum to Pacific Research Institute officials, entitled “Proposal for Labor Studies Center at the Pacific Research Institute.”

New Union Think Tank Challenges Free Market Economics in California

At the request of the California Labor Federation, the California state legislature has provided a total of $17 million in the past three state budgets to establish and operate a “Multi-Campus Research Unit for Labor Studies” at U.C. Berkeley and UCLA. With taxpayer funding and the academic credibility of the University of California behind it, this “union think tank” has quickly become a powerful political tool for organized labor.

An Orange County Register editorial describes this union think tank as “a thinly veiled payoff to organized labor activists.” As cited in the same editorial, Associated Builders and Contractors contends that “studies and papers produced by this union think tank lack academic merit but make useful propaganda for the unions to advance their political agenda at the state and local levels.”

Legislators and news media now regularly cite the dozens of studies already produced by the union think tank, including studies on living wage and the supposed negative impact on the poor that would result from the breakup of Los Angeles. Directors for the union think tank have essentially become the media spokespeople for the union political agenda, displacing the angry rhetoric of union lobbyists with the calm impartiality of supposedly thoughtful university intellectuals. As one union leader said when presenting a union think tank study during a recent Antioch City Council meeting, “It’s from a college. Written by a doctor.”

There’s a Vacuum Where Opposing Views Should Be Heard

California lacks a clear voice from the free market perspective on the immediate labor issues before state and local governments. Responses from industry representatives and elected officials to union initiatives have often been lackluster or even apologetic. Unions and their Democrat supporters portray industry positions on proposed legislation as self-interested and motivated by corporate greed, and there lacks an alternative source of information to back industry positions.

On the national level, many of the intellectual champions of free market economics against the unions during the union heyday of the 1950s and 1960s have retired or died … compared to the prolific union think tank, output is minimal.

Pacific Research Institute Can Fill the Vacuum and Provide Balance

For a few years now, I’ve seen the need for an intellectual operation in California to challenge some of the unions’ academic production that is blindsiding business associations and interest groups. For example, when the UCLA union think tank and the California Research Bureau simultaneously issued studies in the fall of 2001 to support a Project Labor Agreement (PLA) for construction of U.C. Merced, opponents of PLAs lacked opposition studies. Studies and comments against the union political agenda from outside the political world could provide some balance on labor issues in the media and in Sacramento.

I believe that creating a Labor Studies Center at the already established Pacific Research Institute could be a solution. I have not been able to identify a purely research-oriented free market institute for Labor Studies anywhere in the country.

Although my proposal sparked some interest at the Pacific Research Institute, especially after the October 2003 recall of Governor Gray Davis and replacement with Arnold Schwarzenegger, the Labor Studies Center was never established, and the country still lacks anything like it.

My Relationship Fades with the Pacific Research Institute

On August 30, 2009, the San Jose Mercury-News published an opinion piece written by me under my title of Adjunct Fellow in Labor Studies at the Pacific Research Institute. It exposed the documented behind-the-scenes politics leading to a decision at the highest levels of the University of California administration to divert $4 million from other purposes to the University of California Labor Program, which had its annual budget appropriation vetoed by Governor Schwarzenegger in 2008. This op-ed stirred up a lot of controversy.

But the Pacific Research Institute seemed to be retreating from important issues at the state level. I was quoted and cited as a source in a comprehensive report released by the Pacific Research Institute in March 2011 outlining weaknesses and proposing solutions concerning California’s public records access laws (Bringing More Sunshine to California: How to Expand Open Government in the Golden State). I was disappointed at how little attention the Pacific Research Institute received for this well-documented, thoughtful report about another policy arena in which California governance is failing.

Then the Pacific Research Institute laid off some people I knew, and subsequently a few others I knew left for other employment – some to other states. The Pacific Research Institute was ditching California policy issues, while its staff – highly informed Californian policy experts – was simply moving out of the state for better opportunities. (Good riddance, I’m sure many leaders in this state are saying about those departures as they eagerly anticipate the bounty from higher tax rates on the people who are left.)

I’m guessing the unflattering profile in Mother Jones magazine will not alter the priorities of the Pacific Research Institute. I’m now waiting for the emergence of a new free market think tank, based near the state capitol in Sacramento and influential in changing the hopes and plans of the people of California. It would be ideal to see the Pacific Research Institute revitalized to tackle this ambitious project, but I expect someone outside of the traditional culture of free market think tanks will need to start it from scratch.

Don’t Be Fooled! Meet Some Sneaky Fake Taxpayer Groups In California

In November 2000, California voters approved Proposition 39, which allows school districts to seek voter approval for school construction bonds at a 55% threshold instead of a two-thirds threshold. One of the conditions in Proposition 39 required of school districts seeking the 55% threshold for passage is to establish a Citizens Bond Oversight Committee, with the requirement that “One member shall be active in a bona fide taxpayers’ organization.” (See California Education Code Section 15282.)

I scoffed at that provision and figured it wouldn’t be long before the California Labor Federation, AFL-CIO and its regional affiliates created their own “bona fide taxpayers’ organizations” to undermine bond oversight committees and make sure taxpayers remain a generous source of revenue for the government and the people who live off of it.

That has surely happened with the case of the Middle Class Taxpayers Association in San Diego, one of two obviously phony taxpayer organizations that float about nowadays to provide cover for the union tax-and-spend agenda.

The Middle Class Taxpayers Association in San Diego – FAKE!

The Middle Class Taxpayers Association, formed in 2011 in San Diego, betrays its true agenda with the code words in its mission, as reported in the leftist Ocean Beach Rag: “MCTA will focus on pocket-books issues such as healthcare coverage, housing affordability, quality of life, small business development, asset building, moral public budgeting, employment self-sufficiency, lifetime education, retirement security, and consumer safety.” (They forgot to include “investment” in this list.) In other words, more taxes, more programs, more spending.

A post on the web site of the San Diego County Republican Party claims that “the ‘Middle Class Taxpayers Association’ isn’t a new voice for responsible stewardship of our tax dollars. It’s a front group shilling for the San Diego (Central) Labor Council. The Labor Council doesn’t even try to hide its involvement.” No surprise, the Middle Class Taxpayers Association opposes Proposition A (Fair and Open Competition) and Proposition B (City Employee Pension Reform) on the June 5 ballot in the City of San Diego.

In the summer of 2011, the Governing Board of the Southwestern Community College District in Chula Vista declined to reappoint Rebecca Kelley, the representative of the San Diego County Taxpayers Association, to its Citizens’ Bond Oversight Committee for the $389 million Proposition R bond measure, instead placing a representative of the Middle Class Taxpayers Association on the oversight committee.

That so-called taxpayers’ representative is Matt Kriz, political director of International Union of Painters and Allied Trades, District Council 36 and Local 831. As reported earlier by the Dayton Public Policy Institute, the board of directors of the Southwestern Community College District is about to vote on a policy to require contractors to sign a Project Labor Agreement with construction unions to work on projects funded by Proposition R. Even the college newspaper was able to make the connection:

Builder Decries Loss of Oversight Members: SWC Board Replaced Two on Prop. R Committee over the Summer – Southwestern College Sun newspaper – October 7, 2011

Also, see Breaking: Labor Corruption…SD Labor Council Seeks to Oust Taxpayer Advocate from Oversight Committee – posted on San Diego Rostra by Ryan Purdy – July 12, 2011

The real taxpayers’ organization in San Diego County is the San Diego County Taxpayers Association. In addition, Richard Rider’s San Diego Tax Fighters is a reliable source of information on local fiscal responsibility.

The Contra Costa County Senior Taxpayers Group – FAKE!

I only checked the existence of this phony organization when construction union officials handed me a letter from the Richmond-based “Contra Costa County Senior Taxpayers Group” on May 18 outside an event hosted by the Contra Costa Taxpayers Association. The letter reiterated union-backed attacks on a study showing that school construction in California is 13%-15% more expensive when a school district requires contractors to sign a Project Labor Agreement with unions.

Using web searches, I only find one example of the Contra Costa County Senior Taxpayers Group involved in policy issues: on June 18, 2009, Susan Swift – the executive director of the Contra Costa County Senior Taxpayers Group – spoke to the Brentwood City Council in support of a requirement for contractors to sign a Project Labor Agreement to work on the Brentwood Civic Center. (The union requirement was approved on a 3-2 vote.) Swift is a former staffer to two San Francisco Bay Area Democrat state legislators and received the endorsements of numerous Democrat politicians and unions when she ran unsuccessfully for Director of the West Contra Costa Healthcare District in 2004.

The real taxpayers’ organization in Contra Costa County is the Contra Costa Taxpayers Association. There is also a small group called the Alliance of Contra Costa Taxpayers, which still seems to pop up occasionally to oppose new taxes but whose web site has been neglected for several years.

The Mother Lode Taxpayers Association – BONA FIDE or a POLITICAL FRONT?

I was reminded last week of my old 2000 prediction about fake taxpayer groups when I read about the controversy concerning the legitimacy of the Mother Lode Taxpayers Association, a group founded in 2010 that established a Political Action Committee on April 12, 2012 for independent campaign expenditures in support of Frank Bigelow, a Republican candidate for the 5th Assembly District facing off in the June 5 primary against former Assemblyman Rico Oller.

Now, I’m guessing that Frank Bigelow (just like Rico Oller) would be a solid vote for fiscal responsibility in the California State Assembly. But I wouldn’t regard the three donors to the Mother Lode Taxpayers Association’s Political Action Committee to be special interest groups known for their philosophical resistance to relentless tax increases and government expansion. It received $150,000 from the California Real Estate Independent Expenditure Committee, $75,000 from the California Dental Association Independent Expenditure PAC, and $10,000 from the California Cattlemen’s Association PAC (CATTLE PAC).

The Howard Jarvis Taxpayers Association (which endorsed Rico Oller) issued a press release noting “fake taxpayer groups like this undermine legitimate taxpayer organizations…” Yet, I notice that the web site for the Mother Lode Taxpayers Association has been active in other local campaigns in the past three years: see here. The executive director, Heidi Morton, is active in Republican and conservative causes in Tuolumne County.

So is the Mother Lode Taxpayers Association bona fide or not? I hope so, and I hope it will join the other legitimate taxpayer associations in California in the lonely fight for fiscal responsibility.

A Fairly Trustworthy List of Taxpayer Organizations in California

I don’t know every listed group, but I believe the National Taxpayers Union (based in Washington, D.C.) has posted a fairly accurate list of bona fide taxpayer groups in California: California is the Best Example of How to Run a State’s Economy into the Ground.

California Labor Federation and California Building Trades Council Oppose All Proposed Bills for Regulatory Reform

At the National Federation of Independent Business (NFIB) in California’s “Day at the Capitol” program on April 18, 2012, executive director John Kabateck told the attendees that two union groups had submitted a written statement to the California State Legislature in opposition to all regulatory reform.

When I heard this, I figured Kabateck’s claim included a bit of hyperbole. I guess I wasn’t cynical enough, because it is true. The March 23, 2012 letter was sent from the California Labor Federation and the State Building and Construction Trades Council of California to the Speaker of the Assembly and the Senate Pro Tem. It bluntly states the groups’ “opposition to all legislation to amend the regulatory process in the name of regulatory reform.”

(Note: the unions apparently don’t want to recognize that legislation to amend the regulatory process is usually proposed “in the name of” encouraging economic growth and job creation in a state that is struggling economically and is consistently ranked as the worst state in the country for running a business.)

The jaw-dropping letter seems to be reported and posted on the web in only one place: a blog called Small Business Revolution, which has as a slogan “Ready to revolutionize the political landscape in California?” The CEO of Small Business Revolution is Marty Keller, who was Director of the Office of Small Business Advocate for the State of California during the Schwarzenegger Administration. He also has a political blog called The Recovering Bureaucrat (“Dragging Government Kicking and Screaming into the 21st Century.”) He writes, “After serving as Small Business Advocate for four years, I got tired of business owners being told they are ‘the backbone of the economy’ and then burdened with more fees, regulations, taxes, and incessant nannying.” No kidding. I don’t know him personally, but his political views seem to agree with the Dayton Public Policy Institute.

Get a copy of the letter at this Small Business Revolution blog posting: “California Labor to Small Business: Drop Dead!”

Mr. Keller analyzes the letter quite well, but I’ll add another comment: unions oppose regulatory reform because they use the state’s complex system of regulations as leverage in organizing campaigns. One California law firm that represents unions even produces a guidebook called Using the California Labor Laws Offensively: Organizing Through Enforcement of State Employment Laws.

Unions Use Power Over California Legislature to Suppress Local Government Contracting Authority and Push for Project Labor Agreements

On April 12, the California State Assembly approved Senate Bill 829, a union-backed proposal to exert additional pressure on voters and local elected officials to abandon any policies or policy aspirations to prohibit their local governments from entering into contracts that require construction companies to sign Project Labor Agreements (PLAs) with construction trade unions.

Political party affiliation determined the 50-23 vote (with seven legislators not voting): Democrats supported it; Republicans opposed it.

Senate Bill 829 is the latest move of California unions in their quest to stop ambitious local grassroots movements to protect fair and open bidding competition on taxpayer-funded construction. Union leaders recognize there are still a few political officials and business leaders in California who haven’t surrendered or acquiesced to the political power of the California Labor Federation and the State Building and Construction Trades Council of California. Unions are using their firm grip on the California State Legislature to derail this movement before it spreads out of their control throughout the state.

Round One: The First State Government Attack on Behalf of Unions to Stifle Local Control

In the chaotic and emotional waning days of the 2011 legislative session, the California State Assembly Speaker – John Pérez (D-Los Angeles) – and the leader of the California State Senate – Darrell Steinberg (D-Sacramento) – gutted and amended Senate Bill 922, a bill originally introduced by another legislator about tuberculosis screening. As the new authors of the hijacked bill, these legislative leaders turned it into a high-priority union-backed bill meant to stop the proactive efforts of voters and local elected officials to blunt union interference in the competitive bidding process.

Despite aggressive opposition from construction associations, taxpayer groups, local elected officials, and local government organizations such as the California State Association of Counties (see opposition statement here) and the League of California Cities (see opposition statement here), Senate Bill 922 whipped through the Assembly and Senate on strict party-line votes – Democrats in support; Republicans in opposition. Claiming the bill “seems fair to me – even democratic,” Governor Jerry Brown signed it into law.

Senate Bill 922 (now Public Contract Code Section 2500) prohibits California’s 58 counties from enacting charter provisions or ordinances that forbid counties from entering into contracts that require construction companies to sign Project Labor Agreements (PLAs) with unions. The bill also prohibited California’s 362 “general law” cities from enacting such ordinances, because general law cities must submit to the authority of the state government for their municipal contracting policies.

But the legislature could not use Senate Bill 922 to directly undermine the local contracting authority of California’s 120 charter cities that exercise “home rule” with their own local charters. Charters are essentially mini-constitutions that allow city governments to supersede state authority over purely municipal affairs.

Instead of using a stick, the legislature had to withhold a tasty carrot from these charter cities. To discourage them from using their constitutionally-granted local authority over municipal contracting as a basis for prohibiting Project Labor Agreements, Senate Bill 922 creates a financial disincentive by cutting off state funding for construction projects in charter cities that enact charter amendments or ordinances prohibiting contracts that mandate contractors to sign Project Labor Agreements.

And charter cities that already have these policies will NOT be exempted with a “grandfather” clause. In the three charter cities (Fresno, Chula Vista, and Oceanside) where voters or city councils had already enacted policies prohibiting city contracts that mandate Project Labor Agreements, the city councils or voters would need to repeal the policies by January 1, 2015 or lose state funding for future construction projects.

See “Brown Tries to Stop Ban on PLAs: Signs Law Supporting Union Contracts” – FOX News Channel – October 7, 2011

Senate Bill 922 Was Somewhat Effective in Stopping Policies to Guarantee Fair and Open Competition

When it become law, Senate Bill 922 had an immediate impact on local policy initiatives to ensure fair and open bid competition for government construction contracts.

The new law nullified a Fair and Open Competition charter provision approved in November 2010 by 76% of San Diego County voters – a provision that was previously established as an ordinance through a 5-0 vote of the San Diego County Board of Supervisors in March 2010. It also nullified a Fair and Open Competition ordinance approved on a 5-0 vote of the Orange County Board of Supervisors in November 2009 and a Fair and Open Competition ordinance approved on a 5-0 vote of the Stanislaus County Board of Supervisors in July 2011.

Plans under the “20 in 2010” and “21 in 2011” strategies of Associated Builders and Contractors (ABC) of California for more county Fair and Open Competition ordinances were abandoned. Under my direction as project manager, the executive committee for the “Fair and Open Competition – Sacramento” campaign abandoned its signature collection from Sacramento County voters on petitions to place a charter amendment on the ballot in 2012 so voters could prohibit their county government from entering into Project Labor Agreements. Senate Bill 922 had made the effort moot.

With its allies in the Coalition for Fair Employment in Construction and the Western Electrical Contractors Association (WECA), ABC of California and its affiliated chapters had also been lobbying for Fair and Open Competition ordinances at a dozen additional counties with significant populations and at several other local governments. We had also been developing strategies for voters to approve Fair and Open Competition ballot measures for three specific Northern California local governments where unions controlled a majority of the elected officials.

The State Building and Construction Trades Council of California had reason to gloat about undermining these efforts. But soon it was obvious that the unions had not hurt the charter cities hard enough.

Round Two: Unions Need the California Legislature and Governor Brown to Enact Yet Another Law

In December 2011, the “Fair and Open Competition – Sacramento” campaign, under my direction as project manager, submitted nine boxes of petitions signed by voters to place a charter amendment on the ballot in 2012 so voters in the City of Sacramento could prohibit their city government from entering into contracts that mandated Project Labor Agreements. Unions and their political allies got a break when the Sacramento County Registrar of Voters subsequently determined that our signature validity rate was too poor to qualify the Fair and Open Competition charter amendment for the ballot. An ambitious plan to protect the Merit Shop philosophy went awry, and the California State Building and Construction Trades Council had reason to gloat again, this time claiming it was “nothing short of a complete disaster for the ABC” and “a completely disastrous outcome for their enemies at ABC.”

Not all was lost for the beleaguered advocates of economic freedom, even as my seven-year tenure as ABC of California’s State Government Affairs Director came to an end. Voters qualified a ballot measure (Proposition A) for the June 2012 ballot that would prohibit the City of San Diego from entering into contracts that required construction companies to sign Project Labor Agreements. It was the first initiative qualified by City of San Diego voters to appear on the city ballot since 1998.

The city councils of Escondido, El Cajon, and Costa Mesa proceeded with proposed charters that would allow voters to ensure fair and open competition for city construction contracts. Californians obviously still seek the best quality construction at the best price: an unacceptable option for union leaders, whose mission is always to obtain a union monopoly on construction.

The Democrat majority in the legislature needed to do something for the unions, and fast!

On February 23, State Senator Michael Rubio (D-Bakersfield) amended Senate Bill 829 in a new attempt to eliminate any possible ambiguity concerning the financial punishment of charter cities where voters or elected officials dare to prohibit city contracts from including mandates for construction companies to sign a Project Labor Agreement with unions. Perhaps not since consideration of Assembly Bill 60 (placing the eight-hour day in statute) in 1999 has the stated motivation for a bill been so brazen in its attack on specific business groups. Here’s an excerpt from the March 12, 2012 bill analysis for the Assembly Business, Professions, and Consumer Protection Committee:

Purpose of this bill. According to the author, “This bill is necessary because anti-union groups/associations continue their campaign to eliminate the option for local governments to utilize PLAs…These are mainly political attacks because PLAs are negotiated on a project-by-project or funding source (i.e., bond) basis and PLAs are not mandated under any state laws. Anti-PLA/union lobbyists, mainly the Associated Builders and Contractors, pushed bans in a few counties (Stanislaus, Orange, San Diego) and Charter Cities (Chula Vista and Oceanside) based on intense lobbying and campaigns waged by non-union contractor organizations that voluntarily choose not to bid on projects governed by a PLA.

The State Building and Construction Trades Council of California is thrilled to see this bill sailing through the legislature despite resistance again from a coalition of construction associations, taxpayer groups, local elected officials, and local government organizations similar to the one that opposed Senate Bill 922 in 2011. Nevertheless, opposition to the bill continues. Here is the written statement of Assemblywoman Shannon Grove (R-Bakersfield) on the Assembly floor in opposition to Senate Bill 829:

Assemblywoman Shannon Grove Blasts Unconstitutional Attempt to Limit Local Control – April 12, 2012

Here is the video of her floor statement:

Shannon Grove Blasts SB 829 as Unconstitutional Attempt to Limit Local Control – April 12, 2012