Friday, September 20, 2019

Richard Markuson

The Legislative session ended with delay, protests and last-minute deal-making and deal-breaking. This week we will run through some significant measures and evaluate where they stand. As a civics reminder, Governor Gavin Newsom has until the morning of October 14 to sign or veto legislation - and there is no "pocket-veto" in California like there is at the Federal level. Newsom must veto a bill - or it is enacted without his signature - something that hasn't occurred accidentally since the tenure of Governor Pete Wilson!
 
Most of you will have read or heard about the anti-vaxxer protests that took place in the Capitol during the last weeks of session. It culminated with one protester throwing what was claimed to be blood onto the floor of the Senate (and a few Senators). After the 5:14 pm assault, some said Newsom should be partially responsible for not tempering the protests after he signed legislation to change the law on medical exemptions. Some even suggested he directed the CHP to be unusually lenient to protestors, who became increasingly aggressive before shutting down the Senate for hours on the last night of the session.
 
But with the Senate floor contaminated - and a crime scene - the Senate reconvened in a committee room and proceeded on the file.
 
And surprising no one, the Legislature passed Assembly Bill 5 (Gonzalez, D-San Diego) which is an attempt to make independent contractors in the gig economy regular employees of the employing business. Democrat Adam Gray was the only member of the Assembly to break ranks, while two Republicans - Jordan Cunningham and Chad Mayes - abstained. In the Senate, it was straight party-line: 29-11.
 
Unlike hundreds of bills passed by the Legislature but still in the administrative enrollment headed to the Governor's desk, AB 5 was fast-tracked. Rather than a large public rally-style bill signing with hundreds of labor supporters, he held a quiet signing ceremony with author Lorena Gonzalez and supporters in his office.
 
You can get a sense of Newsom's agenda in his signing statement. (Signing statements are a relative rarity and are used sometimes to provide clarification, or in this case, articulate the Governor's inner feelings).
 
"A next step is creating pathways for more workers to form a union, collectively bargain to earn more, and have a stronger voice at work -- all while preserving flexibility and innovation."
 
Readers - particularly those who have been signatory - will know how much union membership contributes to "flexibility and innovation."
 
He continued, stating, "In this spirit, I will convene leaders from the Legislature, the labor movement and the business community to support innovation and a more inclusive economy by stepping in where the federal government has fallen short and granting workers excluded from the National Labor Relations Act the right to organize and collectively bargain." I guess he could have done that this year. You can read the Governor's statement here.
 
As Cook Brown Partner Barbara Cotter put it, "Most importantly, it [AB 5] will require a comprehensive review of such relationships. For those businesses that utilize independent contractors on any regular basis to perform tasks which are an integral part of their operations, the law may compel them to transition the workers to employees. For those businesses that only occasionally use independent contractors, they will be required to assess whether the risk of civil and/or criminal penalties warrants such hiring or whether it would be less risky to assign the work at issue to the regular workforce." You can read her full analysis  here.
 
Another VERY high-profile bill was Senate Bill 1 by Senate President Pro-Tempore Toni Atkins (D-San Diego) (gotta love those San Diego legislators). SB 1 was on CalChambers' Job Killer list.
 
SB 1 was drafted to enshrine Obama-era environmental rules - aimed partly at countering an upcoming federal rewrite of California's water-pumping rules - which environmentalists expect to send more water to farms at the expense of endangered fish. But unlike AB 5, Newsom announced early Saturday that he planned to veto the bill.
 
Newsom defended his opposition to the bill by calling it "a solution in search of a problem. No. 1, it's unnecessary, No. 2, it would've set back our ability to advance an effort to get out of this litigious mindset where nobody's getting anything except more and more frustrated."
 
Newsom said Monday that he had made lawmakers "very clear on [his] concerns" about the bill ahead of the vote and that he didn't read anything into their decision to send him the bill anyway.
 
The LA Times' George Skelton said, "In defying Newsom, [Atkins] tried to protect California from Trump - and showed how legislating should work. On Friday, [she] showed us how a healthy, productive legislature works - one that independently pushes its own ideas about public policy and leaves it to the governor to decide whether to sign or veto a bill. Atkins rejected Newsom's request to shelve her landmark anti-Trump environmental protection measure, SB 1. Then she rammed it through both legislative houses within hours."
 
But there is an interesting sidebar to the SB 1 story - one including the State Building and Construction Trades Council. As Debra Kahn from Politico reported, "A wide coalition of labor unions, including the International Brotherhood of Electrical Workers, California Labor Federation and State Building and Construction Trades Council, is circulating an Assembly floor alert flier that urges "strong support" for the bill. It cites the Trump administration's rollback of limits on workplace exposure to beryllium and the requirement for industry to submit detailed workplace injury reports." 'We have been talking with the environmental organizations about who to visit so they can hear from us,' said Cesar Diaz, legislative and political director for the State Building and Construction Trades Council. 'I'm very hopeful.' He said the unions had supported the bill since it was first proposed by former Senate President Pro Tem Kevin de León, but had been waiting this session to see how the environmental provisions would evolve. 'Now we're able to see clearly what we need to do in terms of working the bill,' he said."
 
So, did the trades take until the last days of session to figure out how to lobby, or were they responding to a call for help from Atkins?
 
I think the trades saw an opportunity to support environmental groups so that the next time a local building trades council wanted to have environmental group support on a greenmail, it would be payback time.
 
Another last minute gut-and-amend (where the contents of a bill change markedly) was AB 48 by Assembly Member O'Donnell and Senator Glazer (and a whole bunch of co-authors who want to take credit). It authorizes $15 billion for the construction and modernization of public preschool, K-12, California Community Colleges (CCC), University of California (UC), and California State University (CSU) facilities to be placed on the March 3, 2020 primary ballot. It includes a variety of concessions to developers. It waives developer fees until January, 1, 2026, for multifamily housing within a ½ mile of a major transit stop to increase access to housing; it provides a 20 percent reduction to multifamily housing project fees in other areas until January 1, 2026; and it suspends Level 3 fees, which doubles the fees paid by developers when state bond funds are exhausted, from January 1, 2021, or whenever existing bond funds are expended, to January 1, 2028. Possibly as a concession to State Building and Construction Trades Council for giving something to developers (or just because), it includes PLA language (I know - you were surprised at that). It gives priority to projects that include a PLA. I can hear the local trades preparing their marketing speech already ... "And if you adopt a PLA, not only will you get local hires, campaign contributions and no strikes, but you also get higher priority over other equally qualified projects!!!"
 
This PLA language (which only WECA opposed) didn't keep Republicans from voting in favor of the bill (which incidentally will cost the state $1 billion a year in principal and interest). The language also allows local school districts to borrow more - further indebting local property owners.
 
Only five Legislators stood with WECA and voted no - Assembly member Jay Obernolte, and State Senators Brian Jones, John Moorlach, Mike Morrell, and Jeff Stone. Senator Moorlach (the former Treasurer of Orange County) spoke eloquently about AB 48 - you can see him here (at hour 4:15). Obernolte, by the way, is giving up his seat in the Assembly to run for Congress. Read more here.
 
There was scant mention of the PLA language in the media - and it wasn't even mentioned in the bill analyses. But Construction Dive did pick up on it (although their depiction of our opposition was a little off), noting that "If voters approve the legislation next year, that's good news for the California contractors that specialize in school construction, but it has also raised questions from some about the role that project labor agreements (PLAs) play in the measure." We have been in touch with the author who does understand our concerns and is trying to get authorization for a follow-up article. But the real question is why did the trades settle for only a preference? It is completely plausible that they could have obtained the Democratic votes necessary with a flat PLA mandate to secure State funds.
 
A bill waiting for Governor Newsom's scrutiny is AB 520 (Kalra, D-San Jose). This is a three-peat of sorts. The State Building and Construction Trades Council have tried for years to set in statute a definition of "de minimis" for the purpose of paying the prevailing wage in public works projects. The trades tried several times during the Brown administration to define de minimis without success. Brown, while a supporter of prevailing wages, thought the current administrative practice worked fine. AB 520 defines a public subsidy as de minimis for the purpose of paying the prevailing wage in private projects if it is both less than $500,000 and less than 2 percent of the total project cost for bids advertised or contracts awarded after July 1, 2020. If the subsidy is for a residential project consisting entirely of single-family dwellings, the subsidy is de minimis so long as it is less than 2 percent of the total project cost. CBIA argued that "California's homebuilders have consistently endeavored to proactively work with the state and its local governments to collectively achieve California's green building and housing goals. Unfortunately, AB 520 will jeopardize those ongoing partnerships in an attempt to solve a purported problem that has not been demonstrated to exist." A few moderate Dems in the Assembly abstained - but it was straight party-line in the Senate. Now, it is up to Newsom.
 
One of IBEW's bills - AB 1028 (Gonzalez) stalled out for some reason. It would have required the California Energy Commission (CEC), to allocate grants to local educational agencies (LEAs) as part of the Proposition 39 (Clean Energy Job Creation Program) to give priority based on the LEA's utilization of apprentices from state-approved apprenticeship and pre-apprenticeship programs. At this point, funds have been largely been exhausted and additional funding allocations to schools is halted until additional funding is appropriated for these purposes - which may have caused its demise.
 
Another IBEW bill that stalled was SB 524 (Stern) that would have required that a skilled and trained workforce must perform the work for energy efficiency projects of $50,000 or more in ratepayer-funded incentives within the same building, facility, or complex. The CA Large Energy Consumers Association, CA Food Producers, Agricultural Energy Consumers Association and the Efficiency + Demand Management Council opposed SB 524 and collectively said, "The bill ... requires a skilled and trained workforce for large projects with ratepayer incentives, but it does not allow the PUC program to cover the incremental cost of employing a skilled and trained workforce for energy efficiency projects, making skilled and trained projects less feasible. Fewer projects using a skilled and trained workforce will be funded."
 
Another stalled bill is AB 1066 (Gonzalez). Current law makes an employee ineligible for UI benefits if the employee left work because of a trade dispute and specifies that the employee remains ineligible for the duration of the trade dispute. AB 1066 would have restored eligibility after the first two weeks for an employee who left work because of a trade dispute. The bill failed twice on the floor of the Senate - due in large part to a growing exhaustion with Lorena. Democrats Bob Archuleta, Bill Dodd, and Jerry Hill joined Republicans in voting NO and an additional seven Democrats who couldn't reach the NO button on their desk abstained - causing the bill's demise. (Actually - there is no "No" button in the Senate, which has refused to join the Assembly in electronic voting. Rather, the Senate still calls the roll for every measure.)
 
We'll cover some more bills next time!