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By banning project labor agreements for city projects with 2012’s Prop. A , we set the stage to lose out on hundreds of millions in state funding. Now what?
Did you know that in a little less than four months, San Diego could lose out on hundreds of millions of dollars in state funding for construction projects? Or that our city might no longer be eligible to receive low-interest loans for sewer and water projects?
This probably comes as a shock, since no one seems very interested in talking about it. But the future of our cityscape is at stake. These factors could make it much more expensive to build in San Diego.
To understand how we got here, we need to go back a few years.
On Oct. 2, 2011, Gov. Jerry Brown signed SB 922, which prohibits using state funds for local construction projects where local agencies no longer allow the use of project labor agreements. These are pre-hire collective bargaining agreements with labor organizations that set the terms of employment for specific construction projects.
The legislation takes effect in January.
The day after Brown signed that bill, supporters of banning labor agreements for city projects appeared at the San Diego City Council meeting. They had gathered enough signatures to place the labor agreement ban on the ballot, so the Council had two choices: Adopt the measure outright, or place it on the ballot. Council members voted to place it on the June 2012 ballot, designated as Prop A.
On April 26, 2012, Brown signed SB 829, which prohibits state funding or financial assistance to support any construction projects awarded by a city “if a charter provision, initiative or ordinance of a charter city prohibits, limits or constrains in any way the governing board’s authority or discretion to adopt, require, or utilize a project labor agreement.” That legislation also takes effect in January.
By potentially banning project labor agreements, we were setting ourselves up to lose out on tons of state funding. Leading up to the June 2012 election, Prop. A opponents warned of the significant financial risks to the public if the measure passed.
“If Prop. A passes, San Diego would no longer be eligible to receive state grants for local construction projects,” State Controller John Chiang warned in May of that year.
The city also sounded an alarm of sorts in its 2012 bond offering documents: “If approved, Proposition A could cause the city to lose state funding for city construction projects.”
Even global ratings agency Fitch Ratings weighed in, calling Prop. A a “potential area of general fund exposure” and noted that its passage “could place downward pressure on the city’s bond ratings.”
Prop. A supporters argued that there was nothing to worry about and dismissed the discussion of financial risks as a “scare tactic.” They said Senate bills 922 and 829 were “legally suspect” and that “Proposition A was written to protect the city’s access to state construction funds.”
In June 2012, voters approved Prop. A and it became law. There hasn’t been much talk about what that means for the city since then. But a court ruling this past August might change that — it seems to confirm that SB 922 and SB 829 are “constitutionally permissible,” and that the state can place conditions on the receipt of state discretionary funds, meaning it can withhold funding to cities and counties that ban project labor agreements.
We have a few options, such as holding a special election to undo Prop. A, pushing for state legislation, initiating litigation or trying to somehow convince the state or the courts that San Diego’s Prop. A didn’t really ban project labor agreements.
The first option — putting the matter back on the ballot – may be the simplest solution. A special election would cost money, but nowhere near as much as the city could lose in state funding and loans for construction projects.
The second option — seeking state legislation — is possible, but it seems unlikely that state legislators would overturn their own laws given the court’s ruling that upheld the constitutionality of the legislation. Initiating litigation is also on the table, but that would take time and the outcome likely would be the same.
The last option of trying to convince the state or the courts that San Diego’s Prop. A actually allows project labor agreements might be worth a shot, however long.
Whatever we do, it needs to happen soon and in full view of the public.
Donna Frye is a former San Diego city councilwoman. Frye’s commentary has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.