In This Edition:
· Sacramento Transportation Tax Proposed
· PAGA Reform
· San Diego Hotel Tax Sham
· Classifications for Public Works Projects
· California Worker Walkaround Rule
· Proposition Numbers Assigned to California November Ballot Measures
· 21st Century ROAD to Housing Act
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Transportation Tax Today — PLA Tomorrow?
Sacramento voters are likely to decide this November whether to approve the Sacramento Safe Streets and Affordable Transit Measure of 2026, a citizen-sponsored initiative that would impose a permanent one-half-cent local sales tax dedicated to transportation improvements. Because it is a citizen initiative, the measure requires only a simple majority to pass. Supporters estimate it would generate approximately $75 million annually for street maintenance, transit operations, and related infrastructure.
The coalition behind the measure is notable. It includes city leaders, transportation advocates, neighborhood organizations, and construction interests such as the Sacramento-Sierra Building & Construction Trades Council, Teichert Construction, and Siemens Mobility. Campaign finance disclosures also identify Sacramento Area Electrical Workers Labor Management and Siemens Industry Inc. as the campaign's two largest financial supporters.
While the measure itself does not mandate project labor agreements (PLAs), WECA members should recognize the political reality that the city’s broad PLA mandate will apply. The organizations investing the most in the campaign are also the most likely to advocate that the resulting transportation projects be carried out under union-only PLAs. California has repeatedly seen major public funding measures followed by efforts to channel the resulting construction work through PLA requirements.
For merit shop contractors, the concern extends beyond the tax itself. A permanent revenue stream creates a permanent pipeline of public works projects—and organized labor will undoubtedly seek to ensure those projects are built under agreements that limit open competition. Sacramento voters should understand that approving a permanent tax increase may also fuel continuing battles over who is allowed to compete for the work.
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PAGA Reform? The Lawyers Didn't Notice.
When Governor Newsom and legislative leaders announced the 2024 "PAGA reform" package, Californians were promised fewer abusive lawsuits, more opportunities for employers to correct mistakes, and a better balance between protecting workers and discouraging litigation.
A recent $2.25 million settlement involving Sacramento's Mikuni restaurant chain suggests those promises have yet to become reality.
According to published reports, approximately 3,000 employees will share about $1.1 million in payments—an average of roughly $394 per employee. The named plaintiff will receive a $10,000 enhancement payment. The plaintiffs' law firm, Blackstone Law, meanwhile, will receive more than $742,000 in attorney fees, with additional settlement funds allocated to penalties, administration costs, and payments to the state. The largest check does not go to the average worker—it goes to the litigation process itself. (The case was initially filed in 2023, before the 2024 "reforms”)
To be clear, employers should comply with California's labor laws, and employees deserve to be paid every dollar they earn. But the continuing question is whether PAGA has become a system designed primarily to compensate workers—or to generate lawsuits.
The 2024 reforms were supposed to encourage employers to correct violations early, reduce penalties for good-faith compliance, expand opportunities to cure alleged violations, and discourage meritless claims. Yet PAGA filings and settlement dollars have continued to climb, prompting the Labor & Workforce Development Agency to propose yet another round of regulations in 2026 aimed at high-volume and vexatious filers.
If "comprehensive reform" is followed almost immediately by proposals for additional reforms, perhaps the Legislature didn't solve the real problem.
For California's contractors and other employers, the lesson is obvious. PAGA remains a litigation industry measured in billions of dollars annually. Until the financial incentives favor quickly correcting workplace mistakes rather than pursuing lengthy lawsuits, employers will continue to spend enormous sums enriching the legal process, while the average "aggrieved employee" receives only a modest recovery.
That isn't meaningful reform. It's the same business model with a fresh coat of paint.
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Just In: Politicians Lie
Stop the presses.
In 2020, San Diego voters approved Measure C (a permanent hotel tax increase) after being promised it would generate new funding for homelessness services, road repairs, and a convention center expansion. The sales pitch was straightforward: this wasn't about replacing existing spending—it was about doing more.
Six years later, reality has arrived.
A recent Voice of San Diego investigation found that Measure C revenue is largely being used to plug holes in the city's existing budget. Instead of funding new homelessness programs, the tax is helping pay for services the city was already providing. The money didn't supplement the budget. It supplanted it.
City officials insist they had little choice. Budgets tightened. Deficits emerged. Priorities changed.
Exactly.
That's why taxpayers should be skeptical whenever politicians promise that a tax increase is "just for" one worthy purpose. Money is fungible. Once government collects another dollar, yesterday's promises become today's budget strategy.
The same script plays out in Sacramento every year. Bills are sold as narrowly targeted. Tax increases are advertised as temporary. Labor mandates are described as having little or no cost. Opponents are dismissed as alarmists.
Then the ink dries.
The tax becomes permanent. The mandate expands. The costs grow. And the original promise quietly disappears into the next budget cycle.
WECA members know that the real question isn't what politicians promise before Election Day. It's what the law actually allows them to do after Election Day.
History suggests those are often two very different things.
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Law Requires Awarding Agencies to Follow CSLB Regulations When Determining Classifications for Public Works Projects
The Contractors State License Board (CSLB) is providing additional guidance on following licensing regulations for public works projects because of Senate Bill 1455 (2024).
SB 1455 amended California Business and Professions Code (BPC) §7059 to clarify that awarding authorities must ensure that contractors bidding on public works projects hold the license classification appropriate for the work being performed, in accordance with CSLB regulations. The italicized information below in BPC 7059 (b)(1) shows what was changed in the law.
- In public works contracts, as defined in Section 1101 of the Public Contract Code, the awarding authority shall determine the license classification necessary to bid and perform the project, in accordance with the classifications prescribed by this article and as set forth in Division 8 of Title 16 of the California Code of Regulations.
SB 1455 clarifies that awarding authorities must determine the required license classification using CSLB’s classification descriptions in Division 8 of Title 16 of the California Code of Regulations. Previously, the law required proper licensure but did not expressly connect to CSLB’s classification descriptions.
The classification descriptions noted in Division 8 of Title 16 of the California Code of Regulations are included in CSLB’s Description of Classifications publication, which awarding agencies should review in determining the most appropriate classification or classifications.
In addition, CSLB’s Fast Facts: What Jobs "B" General Building Can/Cannot Perform provides further clarification to help awarding authorities determine whether a “B” is appropriate for a project. While it is CSLB’s largest classification, the “B” is not always suitable depending on the project. “B” General Building may not be appropriate if the work does not involve the construction of a structure involving framing or carpentry, does not require multiple building trades, and is not incidental to a project.
Awarding authorities must review the project scope and select the appropriate classification that best aligns with the work described using CSLB’s Description of Classifications.
Contractors are responsible for ensuring they hold the appropriate license classification at the time of bid and use properly licensed subcontractors for work outside their classification. Failure to do so may affect bid eligibility and could result in enforcement action under existing contractor license laws.
For more information or questions regarding classification determinations, contact CSLB’s Classification Deputy at Classifications@cslb.ca.gov.
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Cal/OSHA Takes Next Step Toward Worker Walkaround Rule
On July 1, 2026, Cal/OSHA took another step toward implementing a California variation of federal OSHA’s “worker walkaround rule” by posting proposed modifications to the proposed text and providing a narrow 15-day period for public comment, through July 16, 2026. This action follows a previous comment period on the initial proposal, and a public hearing conducted on April 1, 2026.
The new regulation, Director’s Regulations §331.8, would implement a federal regulation expanding who can be considered a representative for purposes of accompanying Cal/OSHA inspectors on site visits. It would allow employees in nonunion workplaces to designate a representative to “assist” in inspections.
Critics say the change could allow third parties, such as plaintiff attorneys or a union representative in a nonunion shop, if chosen by the employee, to insert themselves into the inspection process. The federal regulation on which the California version is based is under challenge in federal court.
The proposed Cal/OSHA modifications are in sections (a) and (b):
(a): “A representative of the employer and a representative authorized by employees shall be given an opportunity to accompany the Chief or their representative during the inspection of any workplace for the purpose of aiding such inspection.”
(b): “When the representative(s) authorized by employees is not an employee of the employer nor the collective bargaining representative, they may accompany the Chief or their representative during the inspection if, in the judgment of the Chief or their representative, good cause has been shown why their participation accompaniment is reasonably necessary to the conduct of an effective and thorough physical inspection of the workplace….”
DOSH says the changes are based on stakeholder comments.
Read More
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Proposition Numbers Assigned to November Ballot Measures
The ballot designations have been set for the 14 statewide measures that will appear on the November 3 ballot, setting the stage for an election that could result in the most sweeping changes in tax policy in many years.
Voters will face a staggering $44 billion in bonds, an $11.25 billion affordable housing measure championed by Assemblymember Buffy Wicks, a $25 billion bond organized by former legislative leader Bob Hertzberg to fund home loans for the middle-class, and an $8.4 billion bond to finance immunology research.
For decades, it was rare to see even one bond on the ballot that reached into the double digits, and since voters shot down a $15 billion school bond in 2020, campaigns have viewed higher numbers as a potential liability.
Yet this year, voters will not only see big numbers but will find them attached to a common issue. Two of the bonds, the affordable housing measure, Prop. 1, and middle-class loans, Prop. 37, as well as a CEQA reform measure, all target California’s housing shortage.
“It was the first thing that caught my attention when I looked at the ballot,” said Mark Baldassare, the survey director of the Public Policy Institute of California. “I struggle to think of another example in which there are two double-digit billion bonds on the same topic.”
It will, in fact, be a first. But in the early stages of the campaign, proponents of housing bonds argue the measures will not cannibalize each other but rather draft off one another.
During a news conference at an affordable housing project in downtown Oakland this morning, Gov. Gavin Newsom told reporters that voters "absolutely should support” Wicks' bond, but he declined to comment on the competing housing measures.
Evan Westrup, a spokesperson for the Yes on 37 campaign, said Hertzberg and company view the measures as "complementary" and expect voters to appreciate the need for supporting both. Hertzberg did not pull together his initiative out of the blue and was in “close contact throughout” with Wicks and her team, Westrup said. Wicks told ABC10 that she viewed the measures as parallel, noting that Hertzberg’s targets middle-class housing, whereas her bond targets lower-income Californians.
Supporters of CEQA reform also expressed little concern that so many housing initiatives would affect their campaign.
“On the list of things I’m preparing for, in terms of potential pitfalls, the other measures aren’t really on there,” said Amelia Matier, a spokesperson for the campaign.
But according to Baldassare, the realities of ballot-measure politics could pose challenges for all related measures. Ballot measures never exist in isolation, and voters are very used to dueling propositions, in which one cancels out or targets another. Even on the 2026 ballot, there will be a measure proposing to tax billionaires and two measures that would preempt such an effort.
Although Hertzberg’s bond is a revenue bond, meaning it would be paid for by homebuyers' mortgage payments, and Wicks’ bond is a general obligation bond backed by taxpayers, it’s unclear if voters will make that distinction.
As the campaigns behind both measures get into gear, they will need to account for a housing-heavy ballot and a potentially stingy electorate. Recent polling showed support for the middle-class housing bond at 53 percent, while a February PPIC poll placed support for an affordable housing bond at 49 percent.
The Measures
Proposition 1: Housing Bond. SB 417, the Veterans and Affordable Housing Bond Act of 2026, placed on the ballot by the Legislature.
Proposition 2: Changes to Spending Limit. ACA 20, placed on the ballot by the Legislature, would change the state appropriations limit (the Gann Limit) by, among other things, doubling the amount that can be held in the state’s “rainy day fund” – which has the effect of reducing the likelihood of triggering the provision that requires excess revenue to be returned to taxpayers.
Proposition 3: Income Tax on High Earners. A permanent extension of the “temporary” personal income tax surcharges on high earners (Initiative 25-0016, filed by the California Teachers Association). CalTax opposes the measure and launched a “No on Prop. 3” campaign last week. Although Proposition 3 was qualified via an initiative and normally would have been placed farther down on the ballot, the Legislature and governor approved a last-minute bill to give it special treatment and place it higher on the ballot, in hopes that doing so would increase its odds of passage.
Proposition 4: Public Financing of Campaigns. SB 42, placed on the ballot by the Legislature to authorize local governments to distribute tax dollars for use in political campaigns. CalTax opposes Proposition 4.
Proposition 5: Recall Process. SCA 1, placed on the ballot by the Legislature to change the recall process (among other things, it provides that the lieutenant governor becomes governor if the sitting governor is recalled by voters).
Proposition 37: Loan Program for Middle-Income Buyers of New Homes. Initiative 25-0013A1, a $25 billion bond to fund a down-payment program for homebuyers, to be repaid via mortgage payments from those homebuyers, filed by former state lawmaker Robert Hertzberg.
Proposition 38: Bond for Immunology Research. Initiative 25-0026A1, authorizing an $8.4 billion bond to fund technologies that use the body’s immune system to treat disease.
Proposition 39: Voter Identification. Initiative 25-0007A1, by Assembly Member Carl DeMaio and others, establishes a process requiring voters to present government-issued identification at the polls.
Proposition 40: Wealth Tax. Initiative 25-0024A1, filed by the Service Employees International Union – United Healthcare Workers West, to impose a 5 percent tax on net worth above $1 billion, retroactive to January 1. CalTax opposes Proposition 40.
Proposition 41: Audit Requirements. Initiative 25-0040A1, requiring audits of programs funded by new state special taxes and prohibiting new state taxes that are excluded from the state’s spending limit, including the wealth tax that will appear on the same ballot. CalTax supports Proposition 41.
Proposition 42: Ban on Retroactive Taxes and Wealth Taxes. Initiative 25-0041A1, prohibiting any new state tax that either taxes the ownership or control of personal property (including retirement accounts, financial assets, investment accounts, business interests, and intellectual property), or applies retroactively based on the taxpayer’s conduct, activities, or status that occurred before the new tax’s effective date, with limited exceptions. CalTax supports Proposition 42.
Proposition 43: Local Taxpayer Protection Act. Closes the Upland loophole by approving the Local Taxpayer Protection Act that was placed on the ballot by the Legislature (ACA 22) as part of an agreement with Howard Jarvis Taxpayers Association (HJTA) President Jon Coupal. The measure amends the California Constitution to modify California's local tax approval processes, requiring two-thirds voter approval for all local special taxes – closing the loophole created by the California Supreme Court’s 2017 ruling in California Cannabis Coalition v. City of Upland, which opened the door for local governments to claim that constitutional vote requirements don’t apply to measures placed on the ballot via the initiative process, even when elected officials are heavily involved. CalTax supports Proposition 43.
Proposition 44: Health Clinic Spending. Initiative 25-0008A1, requiring community health clinics to spend at least 90 percent of their revenue on program services.
Proposition 45: Environmental Review Reform. Initiative 25-0023A1, the California Chamber of Commerce’s Building an Affordable California Act, which would expedite the environmental review process of housing, transportation, water, health, and clean-energy projects. CalTax supports Proposition 45.
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Federal Housing Bill Shows a Different Path
Congress recently approved the bipartisan 21st Century ROAD to Housing Act, one of the most significant federal housing packages in years. The legislation aims to increase housing production by streamlining regulations, modernizing federal housing programs, expanding financing options, and reducing barriers that make building new homes harder and more expensive.
Notably, Congress resisted the temptation to load the bill with the growing list of labor mandates that have become commonplace in California housing legislation. While federally funded construction under the Act is subject to prevailing wage protections, the bill does not require Project Labor Agreements, mandate union labor, or impose California's "skilled and trained workforce" requirements as conditions for housing development.
Whether one supports every provision of the legislation or not, the contrast with California is striking. Rather than using housing policy as a vehicle for expanding labor mandates, Congress largely focused on a single objective: building more housing. California policymakers should take note. If the goal is to increase housing production and improve affordability, reducing unnecessary barriers may prove more effective than continually adding new conditions on who is allowed to build.
Read more here.