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Controversial SB 7 Remains Alive in Senate Appropriations Committee

April 8, 2013
Today the Senate Appropriations Committee voted to send SB 7 (Steinberg) to the committee’s “Suspense File” due to identified state costs.
The bill must be moved off suspense by May 24, which is the last day for fiscal committees to hear and report bills to the floor introduced in the house of origin.

The Senate Appropriations Committee analysis identified that implementation of SB 7 would have unknown costs above $150,000 to the Department of Industrial Relations (DIR) and other agencies involved in compliance. The Department of Finance representative testified that the most conservative analysis shows that DIR would need to hire at least five new staff to implement this legislation. If it’s the intent of the Legislature that SB 7 be more broadly enforced, the costs would be even more extensive. The committee analysis noted that DIR would require staff to monitor the implementation and compliance of SB 7, track projects in each charter city, and distribute information to other state departments seeking guidance on what is covered by the legislation.
The League is strongly opposed to SB 7, which would prohibit a charter city from receiving or using state funding or financial assistance for a construction project if the city has a voter-approved charter provision or ordinance that authorizes a contractor to not comply with state prevailing wage requirements on local construction projects funded by (non-state) city funds. In essence, the bill seeks to compel charter cities to require prevailing wages on projects they construct with local funds on local projects by withholding all state contracting funds from non-compliant cities.

While prevailing wages can be controversial, the issues at stake are far broader. The League’s opposition is based on protecting the flexibility of local agencies to govern their community’s municipal affairs. SB 7 violates the principle of local control and the charter cities doctrine of municipal affairs.
Only eight months ago, the California Supreme Court held that the construction of a city-operated facility for the benefit of the city’s inhabitants with city funds is subject to a charter city’s ability to manage its “municipal affairs” and not subject to state intrusion. State Building and Construction Trades Council of California, AFL-CIO v. City of Vista (2012) 54 Cal. 4th 547. SB 7 is an effort by the Legislature to use political leverage to micromanage city affairs, essentially attempting to achieve indirectly what the Court said it could not do directly. 
All cities should be alarmed by the potential consequences of SB 7. It is bad public policy for the state to withhold funds in an effort to compel cities to alter local charters and policies and comply with state demands by threatening to withhold funds. If enacted, SB 7 would establish a new and disturbing tactic for state micromanagement. 

Joining the League in opposition to SB 7 are the following organizations:
  • Howard Jarvis Taxpayers Association
  • Associated Builders and Contractors of California
  • Air Conditioning Trade Association
  • Plumbing-Heating-Cooling Contractors Association of California;
  • Western Electrical Contractors Association; and
  • The cities of: Arcadia, Cerritos, Folsom, Glendora, Grass Valley, Indian Wells, Norco, Petaluma, Pico Rivera, Roseville, Selma, Shafter, Solvang, Torrance, and Wasco.         
SB 7 should be opposed by all cities that value local control. The League’s opposition letter and a sample opposition letter can be found on the League’s website by typing “SB 7” into the search box.

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