Tag Archive for Assemblywoman Shannon Grove

Contractor Has to Shell Out $8 Million After Unions Win Argument That Hilton San Diego Bayfront Hotel Was a “Public Works” Project

Are you one of the 2000+ construction trade workers who built the Hilton San Diego Bayfront Hotel? The California Division of Labor Standards Enforcement (Labor Commissioner’s office) gave me the following information about what to do:

Send your contact information to this California Division of Labor Standards Enforcement district office address (presumably via a letter or postcard) explaining that you were a trades worker on the Hilton San Diego Bayfront Hotel:

California Division of Labor Standards Enforcement
7575 Metropolitan Drive, Room 210
San Diego, CA 92108

According to a representative in the DIR Legal Division, payments to former workers (in the form of checks) are supposed to be available 60-90 days after the June 17, 2013 official announcement. A third-party administrator is handling the processing of the payments.

The phone number for this San Diego district office is (619) 220-5451.

This morning (June 17, 2013) the California Department of Industrial Relations (DIR) issued a press release declaring that the Labor Commissioner Collects Over $8 Million in Wages for Public Works Job at Hilton Hotel in San Diego. Surely unions will portray this settlement as a victory for exploited workers against greedy capitalists. Actually, it is a symptom of absurd, ambiguous, union-backed definitions of public works in state law.

Right off the bat, you notice something odd: the headline of the press release includes the clarification that the hotel was a “public works job.” How did a Hilton hotel become a public works job? You thought “public works jobs” were government projects such as schools, courthouses, libraries, and post offices.

You thought wrong. In 2001, Governor Gray Davis signed the union-backed Senate Bill 975 into law. It expanded the definition of a “public works” project to include just about any assistance of any financial value from a government:

For purposes of this section, “paid for in whole or in part out of public funds” means the payment of money or the equivalent of money by a state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer, performance of construction work by the state or political subdivision in execution of the project, transfer of an asset of value for less than fair market price; fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, which are paid, reduced, charged at less than fair market value, waived or forgiven; money to be repaid on a contingent basis; or credits applied against repayment obligations.

In 2012, the Assembly Labor and Employment Committee rejected (on a party-line vote – Democrats opposed and Republicans in support) Assembly Bill 987, sponsored by Associated Builders and Contractors of California and introduced by Assemblywoman Shannon Grove (R-Bakersfield). This bill would have simplified a section of California Labor Code 1720 defining “public works” that two court decisions have described as “As statutes go, Section 1720 is hardly a triumph of the drafter’s art.” Unions like the law as written, and their triumph described below shows why they oppose any reasonable amendments to the law.

The United Port of San Diego owns property on the San Diego waterfront next to the San Diego Convention Center. In 2002, the Port issued a Request for Proposals for an entity to lease the land and build a hotel on the site. After choosing Hilton San Diego Convention Center, LLC to lease the land and build the hotel, the Port negotiated a lease that included a rent credit equal to 60 percent of the rent due each month for 11 years, not to exceed a total of $46.5 million. Subsequently the Port provided a “rent credit acceleration” for the hotel developer.

Hilton San Diego Convention Center, LLC chose Hensel Phelps, an investor in the project, as the general contractor. In April 2004, Hensel Phelps asked the Port if the hotel project was a public works job subject to the payment of state-mandated construction wage rates (so-called “prevailing wages”) to trade workers. In a memorandum dated May 12, 2004, the Port considered the available information and concluded that “the Hilton Hotel development is not considered a public works project subject to the payment of prevailing wages.” See that memo here: May 12, 2004 – Port Says Hilton San Diego Not Public Works.

After construction began in 2006, the Carpenters Contractors Cooperation Committee (CCCC) and Southern California Labor/Management Operating Engineers Contract Compliance Committee, two union-affiliated labor-management cooperation committees, referenced the rent credit and asked the California Department of Industrial Relations (DIR) to determine whether or not the Hilton Hotel was a public works project subject to state-mandated prevailing wage laws. The DIR began its own analysis of the project. See September 14, 2006 DIR Request to Port of San Diego for Hilton San Diego Documents.

In a response to the DIR dated October 2, 2007, Port of San Diego staff stated that it “believes that given the specific conditions of the RFP; challenges caused by extensive site remediation; the extent of public improvements; location; and size of the site, the transaction that was negotiated with Hilton represents the market for this particular site,” thus denying that the rent credit exceeded fair market value. The Port also warned that if the state decided to declare the hotel a public works project, it would discourage additional development of the area:

Port staff has received inquiries from other tenants, who are in the process of developing leaseholds, regarding this matter. We are concerned that attempts to treat private leaseholds as public projects will set off a chain reaction and have a chilling effect on redevelopment and reduce rental revenue to the Port, which will in turn negatively impact the Port’s ability to further its own capital projects.

Associated Builders and Contractors (ABC) of California (my former employer) and Associated General Contractors (AGC) of California submitted letters to the DIR arguing that the Hilton hotel was not a public works project. The Southern California Labor/Management Operating Engineers Contract Compliance Committee submitted a rebuttal to the ABC and AGC arguments.

November 30, 2007 San Diego Hilton Not a Public Works – ABC of CA Comment

December 7, 2007 San Diego Hilton Not a Public Works – AGC of CA Comment

December 19, 2007 San Diego Hilton is a Public Works – Operating Engineers Union Response

On April 1, 2008, the Director of the California Department of Industrial Relations determined that “the construction of the Hilton San Diego Convention Center Hotel and related development” is “a public work subject to prevailing wage requirements.” See April 1, 2008 DIR Director’s Decision – San Diego Hilton – Public Works.

Hensel Phelps filed an administrative appeal of the decision, and the DIR sought additional comments. See April 25, 2008 DIR Notice of Appeal – San Diego Hilton. Among the commenters were Associated Builders and Contractors of California: see May 8, 2008 San Diego Hilton Not a Public Works – Comments on Appeal – ABC of California.

On June 23, 2008, the DIR Director denied the appeal and affirmed his original decision that the Hilton San Diego Convention Center Hotel was a public work subject to prevailing wage requirements. Four days later, Hensel Phelps filed a lawsuit (Hensel Phelps Construction Company vs. California Department of Industrial Relations) in San Diego County Superior Court to overturn the DIR Director’s decision.

On February 25, 2010, a San Diego County Superior Court judge ruled that the Hilton San Diego Convention Center Hotel and related construction was not a “public work” subject to prevailing wage requirements. On April 23, 2010, the Director rescinded his earlier decision and ruled that the Hilton San Diego Convention was not a public works project. See April 23, 2010 DIR Rescinds Coverage Determination for San Diego Hilton.

But the Carpenters Contractors Cooperation Committee appealed the judgment to the Court of Appeal, Fourth Appellate District. On July 26, 2011, the court reversed the Superior Court decision and ruled that the rent credit was a payment of public funds, regardless of whether or not the rent reduction had a realizable monetary worth. See July 26, 2011 Hensel Phelps v San Diego Port District Appeals Court Decision – Prevailing Wage on Hilton San Diego Bayfront Hotel.

The State Building and Construction Trades Council of California had filed an amicus brief in the case. In its July 21, 2011 bulletin Court of Appeal Rules Prevailing Wage is Required on San Diego Hilton Project, it expressed outrage that “the Schwarzenegger Administration refused to file an appeal to defend the Department of Industrial Relations’ coverage decision” and that “the Port District and the Developer should be ashamed of themselves.”

The DIR press release explains what happened next:

Hensel Phelps Construction Company and the Labor Commissioner then negotiated the amount of wages due to the workers. All 2,051 workers will receive the full prevailing wages they earned on this project. They performed every aspect of construction, from foundation drilling to concrete pouring to steel erection to landscaping.

Hensel Phelps Construction Company will pay a third party administrator to process payments to the workers. The prime contractor will also pay an additional $400,000.00 to the Labor Commissioner as reimbursement for investigative costs.

Now we know that state-mandated construction wage rates cost an extra $8 million for a specific $350 million hotel project built in downtown San Diego in the mid-2000s. You can imagine the cost of prevailing wage for a project in a rural area during the recent economic downturn.

Is it surprising that the developers of the proposed Turtle Bay Sheraton Hotel in Redding suspended their plans earlier this year to build the hotel when unions managed (on their second try) to get the DIR to determine that hotel would be a “public works” project? See my February 15, 2013 post Unions Rise to Defense of “Prevailing Wage” Rates Jeopardizing Hotel Project in Redding and my January 31, 2013 post Redding Needs a Charter to End Nonsense Definition of Private Hotel as a “Public Works” Project.

California Bill Would Create a New Construction Trade Classification for Final Cleanup and Janitorial Work

UPDATE: An article posted on January 11, 2013 in www.CalWatchdog.com reveals how some company officials in the California construction industry illegally handle the $45 per hour state-mandated wage rate for construction cleanup laborers. I’m quoted in the article. See Prevailing Wage Scams Steal from Taxpayers.

My article California’s “Prevailing Wage” – Floor Vacuuming at $45.93/Hour was posted on January 8, 2012 in www.UnionWatch.org.

An article in the January 2, 2013 San Bernardino Sun (Assemblyman Curt Hagman to Introduce Bill on Prevailing Wages for Final Cleanup Workers) reports that Assemblyman Curt Hagman (R-Chino Hills) will be introducing a bill to establish a new trade classification for the purposes of setting state-mandated construction wage rates (so-called “prevailing wages”) for low-skilled cleanup work on taxpayer-funded construction in Southern California.

Here is the draft summary of the bill to establish a construction cleanup prevailing wage rate in California.

Here is the draft text of the bill to establish a construction cleanup prevailing wage rate in California.

The article reports that the state requires contractors working on public works projects in Northern California to pay at least $12 per hour to laborers engaged in janitorial or final clean-up work for construction. Meanwhile, the state requires contractors working on public works projects in Southern California to pay at least $45 per hour to laborers engaged in janitorial or final clean-up work for construction, because Southern California lacks a janitorial work or final cleanup trade classification.

A decision in 2009 (Harbor Construction Co., Inc.) from John Duncan, Director of the California Department of Industrial Relations (DIR) during the Schwarzenegger Administration, stated that “final cleanup” work was subject to state-mandated construction wage rates when such work was included in a contract between a construction company and a public agency. That “final cleanup” included “vacuuming, dusting, cleaning and polishing windows, walls and floors” for a project of the Antelope Valley Union High School District in Los Angeles County. Harbor Construction hired Baron Cleaning Services for a cost of $8,721.00 to perform clean-up work, and Baron Cleaning Services paid the workers for a total of 619 hours as if they were doing private janitorial work. The labor compliance program at Antelope Valley Union High School District concluded that this was construction work to be paid at the applicable state prevailing wage rate, and the DIR agreed.

So how are contractors able to pay $12 to janitors who perform final cleanup work on public works projects in Northern California?  I’m not sure.

In California, “prevailing wages” for construction trades are almost always based on the employer payments in the applicable collective bargaining agreement for a geographical region: see Section 1773 of the California Labor Code and Title 8, Subchapter 3 of the California Code of Regulations.

In Northern California, the state-mandated wage rate for Laborers Group 4 trade classification applies to “Final cleanup on building construction projects prior to occupancy only. Cleaning and washing windows (new construction only), service landscape  laborers (such as gardener, horticulture, mowing, trimming, replanting, watering during plant establishment period) on new construction.” But the straight time hourly wage for that classification is $39.02 ($20.58 basic wage + fringe benefits and “other”) in the San Francisco Bay Area and $38.02 ($19.58 + fringe benefits and “other”) in other counties of Northern California. These wages are based on the collective bargaining agreement negotiated between the Northern California District Council of Laborers and Associated General Contractors (AGC) of California.

For Southern California, the Department of Industrial Relations sets the “prevailing wage” for the Group 1 classification of “Laborer, General Cleanup” at $45.93 ($28.09 + fringe benefits and “other”) This matches the claim made in the San Bernardino Sun article. This amount is based on the collective bargaining agreement negotiated between the Southern California District Council of Laborers and three contractor associations – Associated General Contractors (AGC) of California, Building Industry Association (BIA) of Southern California, and the Southern California Construction Association:

In San Diego County, the state-mandated total straight time hourly “prevailing wage rate for a journeyman in the Group 1 classification of “Laborer, General Cleanup” for commercial building is $43.27. This amount is based on the collective bargaining agreement negotiated between the Southern California District Council of Laborers for San Diego County and Associated General Contractors – San Diego Chapter.

I can’t imagine that the Laborers Union would permit employers to pay $12 per hour when its collective bargaining agreements includes the same work at far higher wages. I wasn’t able to find an exception to this rule in the collective bargaining agreements.

California Public Utilities Code Sections 465-467 require public utilities to pay prevailing wage rates for labor of a custodial or janitorial nature, and therefore the California Department of Industrial Relations determines state-mandated wage rates for this kind of work. These wages are about $12 per hour, but this is not construction work.

Alternative Strategies for Accurate Prevailing Wages on Construction Cleanup

Assemblyman Hagman is bringing public attention to the need for reform of California’s prevailing wage laws, as Assemblywoman Shannon Grove (R-Bakersfield) did in 2012 with her bills to reform the definition of public works (Assembly Bill 987) and the method of calculating state-mandated construction wage rates (Assembly Bill 988). Based on the comments posted under the San Bernardino Sun article, some readers were disgusted about how they pay taxes so people can vacuum floors at $45 per hour (including fringe benefits and “other”).

But there’s no way lobbyists for the Laborers Union and the State Building and Construction Trades Council of California are going to let this bill pass out of committee. (They wouldn’t even pass Assemblywoman Shannon Grove’s Assembly Bill 1958, which increased the project cost threshold from $1000 to $2000 to match the federal Davis-Bacon threshold.) It will be defeated in the Assembly Labor and Employment Committee on a party-line vote: Democrats opposed, Republicans in support.

Interested parties that want to establish a reasonable wage rate for “vacuuming, dusting, cleaning and polishing windows, walls and floors” may want to use the authority of California Labor Code Section 1773.4 (see California Code of Regulations Title 8, Section 16302) and petition the Department of Industrial Relations for a prevailing wage determination on such work. The DIR could conduct a survey and/or refer to the wage rates set for janitors working for public utilities.

Another idea is for public agencies to narrowly define construction cleanup in their contracts with construction companies, so that the absurd $45 per hour straight time hourly wage applies to legitimate construction cleanup and not to vacuuming up dirt tracked in weeks later.

For more information on California’s state-mandated construction wage rate (“prevailing wage”) law, see Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? Also, see Assembly Bill 987 and Assembly Bill 988 – two comprehensive prevailing wage reform bills for California from 2012.

Is REAL Reform of the California Environmental Quality Act (CEQA) in the Works? Here’s the Test: Does the Reform Measure Discourage Union GREENMAIL?

There is a sudden burst of talk out of California’s state capitol regarding the possibility of some sort of amendment to the California Environmental Quality Act, or CEQA (California Public Resources Code Section 21000 et seq.). Consider the news reports today.

Environmentalists, unions fear last-minute CEQA changes” according to the Los Angeles Times. Sacramento Bee columnist Dan Morain reports that Using CEQA as bait, [Assembly Speaker John] Pérez muscles tax bill. The San Diego Union-Tribune has just published an editorial on its web site for August 16, 2012 (“Finally, Momentum to Reform Regulations, Help Economy“) that expresses astonishment about the serious possibility of significant changes to CEQA:

Now there are reports that Assembly Speaker John Pérez is considering backing a reform that is beyond anything business groups ever thought could emerge out of Sacramento: exempting projects that adhere to local planning and zoning codes from CEQA review entirely. If this somehow made it into law – and if the three ex-governors were heeded and CEQA stopped being a tool for obstruction and legal extortion – this would be remarkable indeed.

All of these developments have triggered sharp expressions of concern from the Sierra Club, the Planning and Conservation League and other environmental groups. But they would have far more credibility if they’d spoken out against how CEQA has been used for “greenmail”: to extract money from developers.

It’s about as unsubtle as it gets: Warning of environmental disaster if a project proceeds, labor groups file a vast list of CEQA objections that would take many years to resolve. When they get the pay and benefits concessions they want, suddenly their environmental concerns vanish.

This editorial hits the same concerns about union “greenmail” using CEQA that the Fresno Bee addressed in its August 6 editorial “Governor Again Moves Toward Needed CEQA Reform Steps: Changes to the state law should be vetted and discussed by all parties and the Modesto Bee addressed in its August 11 editorial “Study CEQA in the Open.”

In my opinion, Californians will be able to test the seriousness of CEQA reform if the proposed changes hinder the ability of construction trade unions to exploit the law as a weapon to force private developers to sign Project Labor Agreements and make other economic concessions.

In January 2012, the Assembly Natural Resources Committee considered and rejected a dramatic proposed CEQA reform bill (Assembly Bill 598) introduced by Assemblywoman Shannon Grove (R-Bakersfield) that would have given the California Attorney General the sole and exclusive right to file lawsuits against governments for inadequate environmental review under CEQA. I believe this is the ultimate fate of CEQA if meaningful reforms do not occur soon.

Here are the opening and closing statements of Assemblywoman Grove when her Assembly Bill 598 was considered in committee on January 9, 2012.

Opening Statement

Thank you Mr. Chair and fellow Members.

Any private developer or public agency in California that considers building anything of significance knows that one of the chief obstacles is the California Environmental Quality Act, better known as CEQA. The problem is not so much complying with the requirements of CEQA, however. The problem is dealing with the many parties that exploit CEQA for ends unrelated to environmental protection.

CEQA was signed into law in 1970 by then-Gov. Ronald Reagan with the intent to “develop and maintain a high-quality environment now and in the future, and take all action necessary to protect, rehabilitate and enhance the environmental quality of the state.” Yet, like many noble efforts, CEQA has been repeatedly abused and is now hindering economic growth throughout California.

In an all-too-common scenario, labor union interests are often behind CEQA lawsuits filed against a construction project on the claim that they are merely looking out for the environment, only to drop the suit once the business owner agrees to employ unionized labor. This practice, properly known as “greenmail,” is rampant up and down the state. Allow me share some examples.

+ Last year, the Teamsters union filed a CEQA lawsuit against VWR International, a distributor of laboratory supplies. The union, in an attempt to intimidate VWR International into signing a union labor agreement at a proposed new facility in Visalia, is using CEQA to allege that trucks entering and exiting the facility will harm the environment. This large facility is likely to employ more than 100 people in a county that has an unemployment rate over 15% and desperately needs jobs, yet there are truckers trying to stop the use of trucks! And this is after an EIR has already been approved for the process.

+ In 2009, the California Nurses Association sued Alameda County under the pretense that the county did not comply with CEQA in approving a project to demolish the deficient Eden Medical Center Hospital and other buildings and replace them with a new state of the art hospital and medical office complex. The nurses’ union did not want Sutter Health to close the San Leandro Hospital and reduce the number of beds at the Eden Medical Center. Here we see nurses protesting against a state-of-the-art new hospital.

+ The Service Employees International Union filed a CEQA lawsuit in 2007 to stop construction of Providence Holy Cross Medical Center in Mission Hills and a CEQA lawsuit in 2006 to stop construction of Sutter Medical Center in Sacramento. Both of these lawsuits occurred in the context of SEIU organizing campaigns.

+ The United Food and Commercial Workers Union has been behind numerous CEQA lawsuits filed by a Davis lawyer against proposed Wal-Mart projects in Northern California. These lawsuits are related to unions concerns over non-signatory competition for grocery sales.

As you can see, unions are abusing our environmental laws in order to extract the project labor agreements that they seek. However, it is not only unions abusing CEQA. Businesses have been known to sue on the grounds of environmental protection simply as a way to fight off competition. All the more reason that Californians should be appalled at how the legitimacy of the state’s environmental protection laws is undermined and trivialized by special interest groups with ulterior motives.

This is a slap in the face to any Californian who is truly looking out for the environment, and it is crushing business development and job creation. Something drastic needs to be done. AB 598 would establish a policy that a lead agency’s decision to approve a project, certify an environmental impact report or adopt a mitigated negative declaration based on an initial study for a project is not subject to review by a court, except for reviews initiated by the Attorney General.

It is the constitutional duty of the California Attorney General to see that the laws of the State are uniformly and adequately enforced. The repeated abuse of CEQA to hold up projects while labor unions and others pursue non-environmental goals has proven to be bad public policy. This bill will provide businesses protection from frivolous attacks by organizations alleging environmental concerns, yet still ensures citizens, through the Attorney General, the people’s attorney, the recourse against legitimate environmental concerns.

Thank you very much.

Closing Statement

Colleagues, I am not asking for CEQA to be eliminated.  We do need to protect the environment.

I am asking that after a lead agency makes a judgment on its environmental impact, that the proposed project not be subject to a frivolous lawsuit.

I am asking to eliminate the abuse and allow the people’s attorney of the state of California to be the one to uniformly enforce our environmental laws. The Attorney General’s office may not believe they have enough time or resources for this, but that is simply not a valid excuse to just sit by and watch this abuse occur.

This abuse of CEQA is mocking the legitimate attempts at using CEQA to protect our environment, and is CRUSHING job creation and the entrepreneurial spirit that has built California. California consistently ranks as one of the least business-friendly states in America. Instead of promoting job creation by encouraging businesses to build and expand, we discourage them with costly regulations and lawsuits. California needs jobs. We cannot afford to continue treating businesses like adversaries. Eliminating the misuse of our environmental law will send at least one clear signal that the Legislature is serious about addressing the structural changes necessary to improve California’s economy.

I ask for your ‘Aye’ vote.  Thank you.


Fresno Bee Calls for CEQA (California Environmental Quality Act) Reform That Includes Stopping Union “Greenmail” for the Purpose of Coercing Developers to Sign Project Labor Agreements

The Fresno Bee published an editorial on Sunday, August 5, 2012 calling for Governor Jerry Brown to take a leadership role in reforming the California Environmental Quality Act, or CEQA (California Public Resources Code Section 21000 et seq.) so that unions can’t exploit it to block proposed projects until the owner signs a Project Labor Agreement giving unions monopoly control of the construction work.

See “EDITORIAL: Governor Again Moves Toward Needed CEQA Reform Steps – Changes to the State Law Should Be Vetted and Discussed by All Parties” – Fresno Bee – August 5, 2012.

Like other counties in the San Joaquin Valley (such as Kings, Tulare, and Kern counties), Fresno County has received numerous environmental comments on behalf of construction trade unions from the law firm of Adams, Broadwell, Joseph & Cardozo concerning proposed solar energy power plants. The ultimate objective is not saving the planet, but coercing the developer to sign a Project Labor Agreement.

The editorial states the following:

Brown recently has been dropping hints he is open to a significant reform of the law. It’s clearly needed, and we hope this isn’t another instance of him shooting off his mouth. California needs significant CEQA reform.

CEQA is being abused, and defenders of the law get defensive whenever anyone suggests it. The most pernicious abuse is known as “greenmail,” with groups threatening CEQA lawsuits to get labor concessions or other side deals.

See a Sacramento Bee article about Governor Brown’s comments: “California Gov. Jerry Brown Upsets Environmentalist Friends with His CEQA Critique” – Sacramento Bee – July 31, 2012.

Also, read the opinion piece from former California governors George Deukmejian, Pete Wilson, and Gray Davis calling for “modernization” of CEQA: “Keep California Green and Golden with CEQA Reforms” – San Diego Union-Tribune – July 12, 2012.

Real Reform of CEQA Will Be an Uphill Battle

The California State Legislature has considered one bill this year to significantly reform CEQA. On January 9, 2012, the Assembly Natural Resources Committee considered Assemblywoman Shannon Grove’s Assembly Bill 598, which would have given the California Attorney General the exclusive authority to file or maintain a lawsuit alleging that an Environmental Impact Report (EIR), negative declaration, or mitigated negative declaration does not comply with CEQA.

The committee rejected the bill on a 6-3 party-line vote, with Republicans in support and Democrats opposed. The hearing was an opportunity for the committee to discuss how certain parties, particularly labor unions, exploit public participation in the CEQA process to achieve objectives unrelated to environmental protection.

Assemblywoman Grove cited four specific examples of different unions (the Teamsters, the California Nurses Association, the United Food and Commercial Workers, and the Service Employees International Union) filing CEQA lawsuits to delay projects as leverage to extract labor concessions from businesses. She also noted that some businesses use CEQA to try to block potential competition.

Testifying on behalf of my former employer (Associated Builders and Contractors of California), I discussed how certain construction trade unions abuse CEQA as a weapon to delay projects until the owner agrees to require contractors to sign a Project Labor Agreement with unions. The Western Electrical Contractors Association (WECA) and the Chambers of Commerce Alliance of Ventura & Santa Barbara were the other public supporters of the bill.

Assemblywoman Linda Halderman (R-Fresno) cited a specific example of a union using CEQA to try to force a contractor to sign a Project Labor Agreement to install solar panels at Fresno-Yosemite International Airport. Assemblyman Steve Knight (R-Palmdale) adeptly exposed the Attorney General’s double standard of opposing the additional responsibilities assigned in AB 598 while remaining silent about adopting additional responsibilities through other legislation.

Legitimate environmental organizations such as the Sierra Club and the Planning and Conservation League opposed the bill. The Teamsters and United Food and Commercial Workers (UFCW) union opposed the bill in writing but did not speak at the hearing. Democrats on the committee opposed the bill, but some of them (along with the Attorney General’s office) acknowledged that some parties abuse CEQA. Assemblyman Bill Monning (D-Santa Cruz) said nothing about how the Carpenters union used CEQA in a recent high-profile campaign to delay and ultimately derail the proposed La Bahia Hotel in Santa Cruz.

The Local Charter City Rebellion Against the Destructive California State Legislature Is Underway!

The Sacramento Bee published an editorial today (July 11, 2012) entitled “Will Cities Seize the Opportunity of Wage Ruling?” that urges charter cities to “seize the opportunity” and free themselves from costly state-mandated construction wage rates (also known as “prevailing wages”). It is the latest of numerous articles, editorials, blogs, and opinion pieces describing this court decision as a turning point for local governments seeking to provide adequate public services at a competitive and reasonable price. See my compilation of these articles here.

Regarding the July 2 California Supreme Court decision in State Building and Construction Trades Council v. City of Vista confirming the right of charter cities to establish their own policies concerning government-mandated construction wage rates, the Bee says the following:

…charter cities in California that use their own money to build new fire stations, libraries, sewer systems or other municipal facilities can ignore the state’s prevailing wage law.
The ruling is a blow to organized labor but a boon to taxpayers. If they have the political will to take advantage of it, struggling municipal governments can save a lot of money.

Do elected officials in charter cities have the political will to develop their own city prevailing wage policies, or even simply to exempt their purely municipal construction projects from state-mandated construction wage rates? They should proceed to do so, at least until the California State Legislature approves more reasonable definitions of public works through Assembly Bill 987 and approves more accurate methods of calculating prevailing wage through Assembly Bill 988? These two comprehensive, detailed, well-informed bills were introduced by Assemblywoman Shannon Grove (R-Bakersfield) but rejected in the Assembly Labor and Employment Committee on party-line votes (Democrats opposed, Republicans in support) on January 4, 2012. These bills need to be reconsidered!

Cities such as Costa Mesa and Escondido and Grover Beach [added August 19, 2012 – ed.] are definitely asking their citizens to approve robust, assertive charters. The cities of Temecula, Murrieta, Arroyo Grande, and Grover Beach are seriously considering asking their citizens to do the same. Several cities that already have charters are preparing to establish their own government-mandated construction wage policies.

Yes, unions will aggressively and viciously oppose any effort by the citizens of local governments to escape the oppressive mandates of the California State Legislature, long dominated by foolish union puppets from Los Angeles and San Francisco. Their opposition only confirms that city charters are a very powerful and meaningful way to assert local authority over local matters and provide public services at a better price for ordinary taxpayers.

Memo to All Fiscally Responsible City Council Members in California: Background on Charter Cities Establishing Their Own Policies for Government-Mandated Wage Rates for Municipal Construction Contractors

Memorandum to All California City Councilmembers Who Believe in Local Control, Fiscal Responsibility, and Providing Local Services in an Efficient, Cost-Effective Way:

As you can see from my blog posts (at Dayton Public Policy Institute, a project of Labor Issues Solutions, LLC), I am an informed and genuine believer in fiscal responsibility, limited government, and economic and personal freedom. While local government organizations and construction trade associations need to be cautious about offending politically powerful unions, I can tell the unvarnished truth about state mandates on local governments like yours.

Your citizens now have a RARE opportunity to meaningfully free their cities from some of the costly, excessive, and unnecessary mandates endlessly coming from the majority in the foolish California State Legislature.

I encourage you to draft and propose a robust, assertive charter to your voters that allows your city to establish its own policies concerning government-mandated construction wage rates (so-called “prevailing” wages) for purely municipal construction. Until the legislature approves reasonable prevailing wage reform bills – for example, Assembly Bill 987 and Assembly Bill 988, introduced by Assemblywoman Shannon Grove and rejected on January 4, 2012 – your city will be victimized by bizarre methods of calculating prevailing wage and absurd definitions of public works.

I also urge you to include a provision in your charter guaranteeing fair and open competition in construction contracts, to ensure the best quality work at the best price for taxpayers.

Also, I urge you to include a provision in your charter to provide “paycheck protection” for your city employees, so they are fully informed and in control of their choice about whether or not their union should withdraw dues money from their paychecks to use for politics. Was it necessary for thousands of public employees of all political affiliations to endure a seven-year court case to win their right not to involuntarily give their dues money to union political campaigns against ballot propositions? (See My Outline of the June 21, 2012 U.S. Supreme Court Decision on a California Union’s Mandatory Fee Assessment on Non-Members to Fight Governor Schwarzenegger’s 2005 Ballot Measures.) Your city’s voters can stop this racket.

Here is a link to a guidebook on the prevailing wage policies of California’s charter cities. (Note two revisions that need to be made: the Irvine City Council bound itself under state prevailing wage laws on a 3-2 vote in April 2011, and voters in the City of El Cajon enacted a charter on June 5, 2012 that includes power for the city to set its own government-mandated construction wage rate policies for contractors.) As reported by the League of California Cities, there are now 121 charter cities, with a big explosion of new ones about to occur.

The guide is here: http://abc-ccc.org/documents/CharterCityReportFINAL.pdf

Also, here is detailed information on the movement to give California charter cities the ability to assert local control and free themselves from the fiscal irresponsibility of the state legislature:


You’ll be hearing from union officials soon. Be strong and keep your thoughts on the taxpayer citizens you represent when charter opponents pack your council chamber and threaten to end your political careers. Obviously a charter is highly meaningful! Don’t worry about the unions; they have a good deal with their union monopolies through Project Labor Agreements (PLAs) at dozens of local governments – you know, all the fiscally responsible and efficiently-managed ones such as the Los Angeles Community College District and the City of Vallejo…

Below are arguments for these charter provisions that will make sense to 90% of the citizens and taxpayers in your city.

Feel free to contact me with any questions.

Kevin Dayton
President and CEO
Labor Issues Solutions, LLC
(916) 439-2159

Talking Points on California’s Government-Mandated Construction Wage Rates (“Prevailing Wage” is a Misnomer)

1. First, the accurate terminology is “government-mandated construction wage rates” (not the Orwellian “prevailing wage” used by people who also describe taxes as “revenues” and government spending as “investment”). State-mandated construction wage rates are not “prevailing” under any reasonable definition.

2. The state does not survey contractors or workers to determine the rates. It does not consult with the California Economic Development Department’s Quarterly Census of Employment and Wages or Labor Market Information to obtain statistical data.

3. Here’s how state-mandated construction wage rates are determined: construction trade unions submit their collective bargaining agreements to the California Division of Labor Statistics and Research. There, state bureaucrats go through these massive documents and identify every payment. They total up the payments and voilà: the “prevailing wage.” Find all wage rates for all trades for all geographical regions (union jurisdictions) here.

4. State-mandated construction wage rates are not “local.” The rates apply to the geographical jurisdiction of the applicable collective bargaining agreement. For example, the Iron Worker collective bargaining agreement covers the entire State of California, so the prevailing wage for an Iron Worker is the same for the ENTIRE state. Alturas = San Francisco = Beverly Hills = El Centro. All bound as one by the laws of the California State Legislature.

5. State-mandated construction wage rates apply to any projects over $1000. Absurd!

6. State-mandated construction wage rates have nothing to do with minimum wage. California’s minimum wage is $8.00 per hour. (I know from my service on the California Wage Board.) In Southern California, the “prevailing wage” for someone holding a stop/slow sign at a road job site in Barstow is a straight-time total hourly wage of $44.68 per hour: $27.29 + $17.00 fringe benefits + 0.39 for “Other.”  In Northern California, someone holding a stop/slow sign at a road job site in Sonora makes a straight time total rate of $42.93 per hour$25.89 + $16.91 fringe benefits + $0.13 for “Other.”

Maybe those wage rates are fair and reasonable, but shouldn’t the cities of Barstow and Sonora be deciding that, instead of state legislators from Los Angeles and San Francisco?

7. Volunteers have a limited temporary exemption in the state-mandated construction wage rate that expires on January 1, 2017. See California Labor Code Section 1720.4 for the extensive union-backed state law meant to discourage volunteerism. In 2004, some unions tried to use the state government to stop volunteer work on construction within their trade jurisdictions.

8. Some of the payments included in the state’s prevailing wage determinations have nothing to do with employee compensation. As a result of Senate Bill 868, signed by Governor Davis just before he was recalled, payments to union slush funds (with no regulatory or reporting requirements) are defined under California Labor Code Section 1773.1(a)(7-9) and have nothing to do with direct employee compensation or benefits. They are indicated in the state’s prevailing wage determinations as “Other.” Why do taxpayers have to pay for this?

9. There are numerous ongoing court cases regarding disputes among construction trade unions over who controls the work. Electricians versus Laborers. Sheet Metal Workers versus Roofers. Cement Masons versus Laborers. Almost a dozen unions are fighting over who gets to control photovoltaic (solar) installation. The State of California routinely gets tied up in controversies over which state-mandated construction wage rate applies to a specific type of work.

How Does the State of California Determine Prevailing Wage Rates?

The term “prevailing wage” is a misnomer.  Section 1773.9 of the California Labor Code requires the California Department of Industrial Relations to calculate prevailing wages using the “modal” rate—the most commonly paid rate—rather than an average or median rate.  (Minnesota is the only other state in the country to use the modal rate to determine prevailing wages.) While non-union workers receive a variety of wages based on experience, location, market conditions, and difficulty of work, unions always pay their journeymen workers the same wage. Thus, the modal rate is always the union rate.

Prevailing Wages Include More Than Wages and Benefits

Former Governor Gray Davis signed Senate Bill 868 in 2003 that expanded the definition of prevailing wages beyond wages and employee fringe benefits. Under California Labor Code Section 1773.1(a)(7-9), prevailing wages now include payments in collective bargaining agreements that funds such programs as “worker protection and assistance programs or committees established under the federal Labor Management Cooperation Act of 1978,” “industry advancement” programs, and “collective bargaining agreements administrative fees.” In response to a petition filed in 2005 by Associated Builders and Contractors of California, the Department of Industrial Relations confirmed that funding for at least one union political program was included in the prevailing wage determination for Laborers in Northern California.

Private Enforcement of Prevailing Wage Laws Used as Union Organizing Tool

The California Division of Labor Standards and Enforcement is responsible for enforcement of prevailing wage laws. However, Section 1771.2 of the California Labor Code permits private investigative organizations run by unions to request payroll records of contractors on public works projects. These union operations can bring court action against contractors who are supposedly violating prevailing wage laws, and this tactic is often part of the economic pressure against individual contractors during union organizing campaigns.

Prevailing Wage Laws Create a Local Government Mandate

Under Section 1771.5 of the California Labor Code, government entities are required to review, and, if appropriate, audit the payroll records of their contractors to verify compliance with the state’s convoluted prevailing wage law. The awarding body shall withhold contract payments when payroll records are delinquent or inadequate and withhold contract payments equal to the amount of underpayment and applicable penalties when, after investigation, it is established that underpayment has occurred.

Recent Non-Partisan California Studies on Prevailing Wage Costs  

Link: California Study Reveals Wide Disparities Between Market Wages and Prevailing Wage Rates (also, see the Updated 2004 version of the above study)

An August 2003 study from the California Institute for County Government at California State University, Sacramento shows that federal commercial prevailing wage rates and state prevailing wage rates in California are on average 36 percent to 55 percent higher than market wages.

The study, An Analysis of Market and Prevailing Wage Rates for the Construction Trades in California, compares market wages to commercial and residential Davis-Bacon federal prevailing wage rates and state prevailing wage rates on a county-by-county basis for five trades: electricians, carpenters, drywall installers, HVAC/sheet metal workers, and plumbers. Maps included with the study show that as a general rule the disparity between government-imposed rates and market wages increases as the distance increases between a county and the California Department of Industrial Relations headquarters in San Francisco. The California Institute for County Government is a nonpartisan public policy institute that is a joint program of the California State Association of Counties, the California State University system, and California State University at Sacramento.

Link: The Effects of Prevailing Wage Requirements on the Cost of Low-Income Housing (2003)

A working paper released in September 2003 by the Program on Housing and Urban Policy at the University of California, Berkeley presents new evidence on the increased costs of prevailing wage laws on construction. The Effects of Prevailing Wage Requirements on the Cost of Low-Income Housing estimates that new prevailing wage requirements signed into law by now-recalled Governor Gray Davis in 2001 increased costs on state-subsidized low-income housing in California between 9 and 32 percent under the most credible statistical models. According to the paper, under reasonable conditions, the authors’ mid-range estimate of the prospective decrease in dwellings in California subsidized by tax credits alone exceeds $2,600 per year.

The U.C. Berkeley study conclusions are consistent with the June 2004 study from the California Institute for County Government at California State University, Sacramento showing that the expansion of prevailing wage coverage in California to affordable housing increased the cost of that housing by an average of 11 percent. See Impact of Prevailing Wage Rate Requirements on The Costs of Affordable Housing In California.

A list of studies from across the country on the costs of state prevailing wage laws and the federal Davis-Bacon Act is available at the Associated Builders and Contractors web site:

Studies on the Costs of Laws Imposing Government-Mandated Construction Wage Rates

Prediction: An Explosion of California Cities Freeing Themselves from Costly State-Mandated Construction Wage Rate Laws

California Supreme Court Issues Decision Upholding Local Control, Fiscal Responsibility, and Taxpayer Savings against Union Political Power

This morning, the California Supreme Court issued a decision in State Building and Construction Trades Council of California, AFL-CIO v. City of Vista that allows California’s charter cities to establish their own policies concerning government-mandated construction wage rates on taxpayer-funded public and private construction projects.

I predict that numerous charter cities in California will establish their own policies concerning government-mandated construction wage rates, and numerous cities that do not have charters will now seek voter approval for charters.

This is a badly-needed victory for supporters of local control, fiscal responsibility, and saving money for taxpayers. The timing could not be better. Finally, after five years with this case winding through the courts, fiscally responsible local governments have a clear and easy option to free themselves from a few of the intrusive union-backed laws of the California State Legislature.

How Does the State Determine Construction Wage Rates?

State-mandated construction wage rates often do not reflect the actual prevailing wage rates for a construction trade in a market region. This is one reason why many of California’s 121 charter cities (including the latest, El Cajon) establish their own policies concerning government-mandated wage rates for purely municipal construction projects.

Under the laws and regulations of the State of California, the state does NOT determine wage rates by surveying contractors or workers or by looking at statistics from the California Economic Development Department. Instead, state bureaucrats collect union collective bargaining agreements, parse through them to identify every required employer payment (even payments that are NOT employee compensation – called “Other”), and add up all the payments and declare the total as the “prevailing wage.” Some of these collective bargaining agreements cover half of California or all of California!

Sample Construction Wage Rates

The state sets the wage package for a bulldozer driver in Sacramento (Group 4, Area 1) at a straight time total rate of $62.00 per hour$37.15 + $24.12 in fringe benefits + $0.73 for “Other.”

The state sets the wage package for a basic carpenter in Sacramento (Area 3) at a straight time total rate of $56.60 per hour$31.62 + $22.69 in fringe benefits + $2.29 for “Other.”

The state sets the wage package for someone holding a stop/slow sign at a road site in Sacramento (Group 3, Area 2) at a straight time total rate of $42.93 per hour$25.89 + $16.91 in fringe benefits + $0.13 for “Other.”

Unions and Democrats in Legislature Have Blocked Attempts to Reform Prevailing Wage

Democrats and union lobbyists have blocked reasonable legislative efforts to reform how the State of California defines a “public works” project and how the State of California calculates its construction wage rates. In January, the Assembly Labor and Employment Committee voted down two comprehensive bills introduced by Assemblywoman Shannon Grove (Assembly Bill 987 and Assembly Bill 988) that would have made government-mandated wage rates more accurate and limited the definition of “public works” to actual government projects (ending prevailing wage mandates on private construction projects that get any sort of government assistance). The legislature even rejected a tiny bill (Assembly Bill 1958) to raise the project cost threshold for state-mandated government wage rates from $1000 to $2000 (to match the federal level) and index it to inflation!

I intend to aggressively encourage cities to take advantage of their local charter authority and free themselves from the costly burdens of the state legislature. I am also developing an aggressive model charter that gives cities authority to exempt themselves from numerous oppressive state laws.

California’s Top Construction Union Boss Opens the Slush Fund Hydrant: $1.14 Million Full-Blast Against San Diego’s Proposition A Voter Initiative

Here’s yet another scoop from the Dayton Public Policy Institute about how unions are influencing the June 2012 elections in California: one supreme union official based in Sacramento has pumped $1.14 million into San Diego to defeat a city voter initiative called Proposition A. And some of the cash originally comes from utility ratepayers.

For readers unfamiliar with Proposition A, read immediately below. Those who know about Proposition A can proceed down to read about the union sources of $1.14 million for the No on A campaign.

Who Supports Proposition A in San Diego, and Why?

In 2011, San Diego voters signed petitions to qualify a Fair and Open Competition ordinance for consideration in the June 5, 2012 election. It was the first measure placed by voters on the city ballot since 1998. Now designated on the ballot as Proposition A, the Fair and Open Competition ordinance would prohibit the City of San Diego from requiring construction companies to sign a Project Labor Agreement (PLA) with unions as a condition of working on a taxpayer-funded project. It also contains language requiring the city to post certain contract information on-line.

The campaign to enact Proposition A is strongly supported by construction companies and construction trade associations. This is no surprise, since most construction companies work directly with their employees (either individually or collectively through a union) to determine the terms and conditions of work. They don’t want two-bit local politicians to negotiate separate 30-page to 60-page labor agreements with union officials (i.e. the politicians’ campaign contributors) and then impose those agreements on their businesses.

Many companies refuse to bid on work that includes a government-mandated Project Labor Agreement in the bid specifications. The resulting reduction in the number of bidders competing for contracts results in higher costs for taxpayers (as academic studies, basic economic theory, and common sense would predict).

See the YES on A campaign web site here and contributors to the YES on A campaign here.

Who Opposes Proposition A in San Diego, and Why?

The main opponents of Fair and Open Competition policies are obviously construction trade unions, which regard government-mandated Project Labor Agreements as an effective political tactic to cut bid competition and raise costs for their own benefit. With Project Labor Agreements, union organizers can completely avoid the unpleasant and time-consuming task of selling the benefits of unionization to skeptical workers. Instead, they simply ask their political allies in government to give them a union monopoly on construction!

Most construction unions in California belong under the umbrella of the State Building and Construction Trades Council of California, a union conglomerate based in Sacramento under the leadership of president Bob Balgenorth. If you look at the list of contributors to the No on A campaign (Taxpayers to Preserve Community Jobs, No on Measure A, sponsored by labor and management organizations), you’ll see the top two donors are Sacramento-based union-affiliated organizations under the direction of Bob Balgenorth. These two entities contributed $1.14 million to the No on A campaign, comprising 96% of all campaign receipts.

Let’s take a closer look at these two massive organizations funding the No on A campaign. One of them is a routine political action committee, but the other is a conspiracy theorist’s dream come true.

A Union Political Action Committee Gave One $45,000 Late Contribution, Comprising 3.8 Percent of the Contributions to the No on A Campaign

The Sacramento-based committee known as “Members’ Voice of the State Building Trades Council of California” made a late expenditure contribution of $45,000 to the No on A campaign on May 24. As you can see on the California Secretary of State’s web site, this committee collects money from various local construction unions and disburses the money to various campaigns for candidates and ballot measures. The Assistant Treasurer of the Members’ Voice of the State Building Trades Council of California is Bob Balgenorth.

A Mysterious Union Slush Fund, Authorized by an Obscure 1978 Federal Law to Encourage Better Relationships Between Unions and Manufacturers, Gave $1,095,000 to No on A – a Whopping 92% of All Receipts!

Something called the California Construction Industry Labor-Management Cooperative Trust contributed a total of $1,095,000 to the No on A campaign. This is an extraordinarily high amount for a political contribution from one entity, especially concerning a local ballot measure! The head of the California Construction Industry Labor-Management Cooperative Trust is Bob Balgenorth.

This is NOT a traditional Political Action Committee. It is an arcane type of union trust authorized by the obscure Labor-Management Cooperation Act of 1978, a law signed by President Jimmy Carter and implemented by the Federal Mediation and Conciliation Service. Inspired by the decline of unionized manufacturing in the Northeast, this federal law was meant to help industrial management and union officials build better personal relationships and cooperate against the threat of outside competition. There are no federal or state regulations specifically addressed toward these trusts, and these trusts do not have any reporting requirements to the U.S. Department of Labor’s Office of Labor-Management Standards. This is an ambiguous and forgotten law that’s ripe for abuse.

It’s Not Union Members that Give the Money to the California Construction Industry Labor-Management Cooperative Trust: It’s Utility Ratepayers and Contractors Working for Extorted Power Plant Owners

Since the 1990s, whenever an energy company or public utility submits an application to the California Energy Commission seeking approval of a new power plant, an organization called California Unions for Reliable Energy (CURE) often “intervenes” in the licensing process. Represented by a South San Francisco law firm called Adams Broadwell Joseph & Cardozo, CURE submits massive data requests and environmental objections to the California Energy Commission. The applicant by law is required to answer CURE’s submissions, at significant cost and delay. The chairman of California Unions for Reliable Energy (CURE) is Bob Balgenorth.

If the power plant owner agrees to sign a Project Labor Agreement and require its construction contractors to sign a Project Labor Agreement with the State Building and Construction Trades Council of California or its regional affiliates, CURE’s objections go away and the power plant can proceed unhindered through the licensing process. If the company or utility does not surrender to CURE’s demand, then CURE’s interference and lawsuits continue.

This racket – sometimes called “greenmail” because it’s the use of environmental laws to pressure developers to sign Project Labor Agreements – is well-known to the energy industry in California and has been extensively reported in the news media over the past dozen years. (For example, see Labor Coalition’s Tactics on Renewable Energy Projects Are Criticized – Los Angeles Times – February 5, 2011.)

For cases in which the power plant applicant succumbs to CURE’s harassment, the Project Labor Agreement that the power plant owner signs usually contains a provision requiring the owner or its contractors to make a lump-sum payment or series of payments to the California Construction Industry Labor-Management Cooperative Trust.

For example, the Project Labor Agreement signed by the Northern California Power Agency (a conglomerate of publicly-owned utilities) for the construction of the Lodi Energy Center required the agency to shell out $90,000 to the California Construction Industry Labor-Management Cooperative Trust. That amount was dutifully mailed to Bob Balgenorth on August 17, 2010. (For more on this payment, see High Energy: Lodi Center Designed to be a Powerhouse for Chunk of State – Stockton Record – October 4, 2011; also, the union rebuttal on the California Building Trades Council web site – ABC Falsehoods Refuted in Letter to Stockton Record – a denial that the California Construction Industry Labor-Management Cooperative Trust is used for political contributions.)

And the Project Labor Agreement signed by the Southern California Public Power Authority (another conglomerate of publicly-owned utilities) for the construction of the City of Anaheim’s Canyon Power Plant required the agency to shell out $65,000 to the California Construction Industry Labor-Management Cooperative Trust. See Section 13.1 of the Project Labor Agreement here.

The California Construction Industry Labor-Management Cooperative Trust reports these payments as “membership dues” to the Internal Revenue Service. Which brings up a question: are the local elected officials who serve as commissioners for the Northern California Power Agency and the Southern California Public Power Authority exercising their responsibilities as “members” to approve $1,095,000 in political contributions to the No on A campaign?

But Wait a Minute…Is It Legal to Have Utility Ratepayers Fund a Mysterious Union Trust Fund that Contributes to Political Campaigns, Such as No on A?

Well, in 2009 an internal committee of the Northern California Power Agency discussed whether or not a payment to the California Construction Industry Labor-Management Cooperative Trust was an illegal gift of public funds. (See here. Note the original amount to the California Construction Industry Labor-Management Cooperative Trust was supposed to be $150,000, but aggressive opposition to the Project Labor Agreement forced the unions to cut it down to $90,000 in order to win approval from the board of commissioners.)

To solve this uncertainty, in May 2011 State Senator Mark Leno (D-San Francisco) added a cryptic amendment at the request of union lobbyists and lawyers to the end of a large unrelated public utilities bill (Senate Bill 790) regarding “community choice aggregation.” It added Section 3260 to the Public Utilities Code: “Nothing in this division prohibits payments pursuant to an agreement authorized by the National Labor Relations Act (29 U.S.C. Sec. 151 et seq.), or payments permitted by the federal Labor Management Cooperation Act of 1978 (29 U.S.C. Secs. 173, 175a, and 186). Nothing in this division restricts any use permitted by federal law of money paid pursuant to these acts.”

No one in the California State Legislature – apparently not even Senator Leno – initially knew what this strange new provision meant. In the end, a few legislators such as Assemblywoman Shannon Grove (R-Bakersfield) came to understand and reveal in floor debate that it authorized public utilities to pass on the costs of payments to labor-management cooperation committees to ratepayers. Governor Brown signed the bill into law with the language tacked on the end.

For more information, see the investigative report of the Coalition for Fair Employment in Construction at this September 23, 2011 post at www.TheTruthaboutPLAs.com: A Genuine California Union Conspiracy: Senate Bill 790 and the California Building Trades Council’s Ratepayer Funded Political Slush Fund

Confused about the Conspiracy? Here’s a Chart.

A public utility or private energy company applies to the California Energy Commission for approval to build a power plant.


California Unions for Reliable Energy (CURE) uses its “intervenor” status at the California Energy Commission to submit massive data requests and environmental complaints about the proposed power plant, as a result gumming up the licensing process and causing costly and lengthy delays for the applicant.


Applicant for prospective power plant surrenders and agrees to sign Project Labor Agreement with State Building and Construction Trades Council of California or its regional affiliates. CURE releases its grip of legal paperwork and the project moves forward unimpeded and acclaimed as environmentally sound.


The Project Labor Agreement contains a required payment or payments to the California Construction Industry Labor-Management Cooperative Trust. California Public Utilities Code Section 3260 – enacted by Senate Bill 790 in 2011 – allows public utilities to pass costs through to ratepayers.


California Construction Industry Labor-Management Cooperative Trust reports those payments to the IRS as “Membership Dues,” creating questions about the rights inherent for dues-paying members.


California Construction Industry Labor-Management Cooperative Trust makes contributions to political campaigns, such as $1,095,000 to fund 92% of the No on A campaign (Taxpayers to Preserve Community Jobs, No on Measure A, sponsored by labor and management organizations) in the City of San Diego in 2012.



“The vast majority of Californians have an unfavorable view of their state legislature – and for good reason.”

In today’s FlashReport on California’s Most Significant Political News, Assemblywoman Shannon Grove (R-Bakersfield) gives her concise perspective on the quick defeat of her three “good government” bills to address what she called “malpractice” in the California State Legislature. The bills were Assembly Bill 1946, Assembly Bill 1947, and Assembly Bill 1948. As reported on this web site, I submitted letters to legislative committees in support of these three bills and testified in committee hearings for two of them. All three bills were defeated on party-line votes: Republicans in support, Democrats opposed.

See the opinion piece here: California Democrats Oppose Open and Transparent Government.

Read my letter in support of Assembly Bill 1946, my letter in support of Assembly Bill 1947, and my letter in support of Assembly Bill 1948.

I would like to believe that Republicans would run the state legislature differently if they were in control. And maybe it would be run differently if someone with solid principles was selected to be Assembly Speaker. But the experience of Republicans winning control of the U.S. House of Representatives in 1994 after 40 years out of power does not build a lot of confidence. (I was a legislative assistant working in the House at the time of the 1994 election.)

Upon taking control, Republicans proposed getting rid of the 10 elevator operators in the House office buildings (out of 22 total in the U.S. Capitol complex) who pushed the buttons for members of Congress and sometimes for the staff and the public. This would have saved taxpayers $263,000 annually and eliminated an obvious symbol of elitist pomp.

On June 22, 1995, Congressman Jon Christensen (R-Nebraska) irked many of his peers by offering an amendment to eliminate the House elevator operators, saying the following: “The time has come for Members of Congress to start pushing their own buttons. Yes, that grievous, arduous task of pushing your own elevator button. No, my amendment does not propose to eliminate elevators, nor does my amendment require the Members to take the steps from here out. All my amendment requires is that we begin pushing our own elevator button.”

The subsequent debate on the House floor appears to take place in an alternative universe. See page H6222 of the June 22, 1995 Congressional Record, here.

As you might guess, many Republicans joined Democrats to defeat the amendment solidly, on a 177-246 vote. Business as usual was already taking effect, almost eight months after the elections. The button pushing (in the elevators) continues today at the U.S. Capitol complex.

Shameful! Democrats Reject Assemblywoman Shannon Grove’s Bill to Codify Court Decision Allowing Public Access to Certain Legislative Records

I’m 3 for 3 on guessing the outcome of the triad of bills introduced by Assemblywoman Shannon Grove (R-Bakersfield) to reform the operations of the California State Legislature. On April 26, the Assembly Rules Committee rejected Assembly Bill 1946 on a 5-4 vote, with five Democrats opposed, four Republicans in support, and two Democrats not voting.

The bill was supported by the Howard Jarvis Taxpayers Association and the Dayton Public Policy Institute, a project of Labor Issues Solutions, LLC. (See my support letter here.) I was not able to attend the committee hearing to speak as a witness for AB 1946 because I was in Orange County on other business at that time.

This bill would have codified the December 2, 2011 Sacramento County Superior Court decision in Los Angeles Times Communications LLC v California Legislature (Case Number: 34-2011-80000929). It would have added to state law a statement of the court that “The language of the Open Records Act at issue here reflects a strong presumption in favor of public access to legislative records.” AB 1946 also would have added to state law the court’s statement that records that “reflect how Assembly money is budgeted and spent” are public records. According to the court, these records “indisputably contain information relating to the conduct of the public’s business” which is “critical to an understanding of the Legislature’s operations.”

The committee’s bill analysis for AB 1946 was essentially useless, although it suggested a clarification to the bill language that alluded to the practice of moving staff around from committees to personal offices to avoid budget restrictions.

News Media Coverage:

Assembly Kills Bill to Require Disclosure of Member Budgets – Sacramento Bee – April 26, 2012

Assembly Scuttles Bill to Make Budget Disclosure Permanent – Sacramento Bee – April 27, 2012

Assembly Errs in Keeping Its Process Closed – Bakersfield Californian (editorial) – April 30, 2012

Sacramento, A Place of No Surprises – Santa Maria Times (editorial) – May 1, 2012

Here’s a powerful excerpt from the Bakersfield Californian editorial:

One of the bills that died was an attempt by Bakersfield Assemblywoman Shannon Grove to stipulate in the Legislative Open Records Act that member-by-member budgets for individual lawmakers and their offices are public record. Grove’s bill came in response to a court decision in which a judge ruled legislative budgets are public records despite the Legislature’s long insistence otherwise. The Democratic-led committee said the judge’s decision was enough; the bill wasn’t necessary.

But why not codify the judge’s decision into law? The Legislative Open Records Act has long been regarded as a joke among open government experts and Grove’s bill could have helped bolster its legitimacy. It’s hard to see any political motivation on Grove’s part here, other than her well-documented disdain for big government and willingness to shine the light on those who take their duties as stewards of the public trust lightly. Her bill deserved more consideration and it’s a shame it was given short-shrift.

And an excerpt from the Santa Maria Times editorial:

The author of the disclosure bill, Assemblywoman Shannon Grove, a Bakersfield Republican, admitted she filed the legislation knowing it had little chance of survival — which tells you a lot about how little confidence she had in her colleagues’ ability or willingness to be honest about how they spend your tax dollars.

It’s interesting to note that Assemblywoman Grove, who tried to launch the legislation mentioned above to require full financial disclosure, is also helping the group trying to promote the part-time Legislature notion. Well, at least we know one person in Sacramento is focused on making a better government.