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Mailbag: Oppose a charter with 'prevailing wage' exemption

October 22, 2013

I have read the Daily Pilot article "Charter could cost city funding" (Oct. 16), and because of my attendance at several Costa Mesa City Charter Committee meetings, I have some additional comments.

Only two committee members have consistently opposed including a provision in the charter to exempt the city from paying prevailing wages on public works projects. Among other reasons, they did not want to risk the city's state funding by exempting the prevailing wage (wage and usual benefits paid to a majority of workers of similar skill in an area).

As mentioned in the article, the risk of putting a prevailing-wage exemption in the charter comes from the bipartisan authored Senate Bill 7. This law denies state funds for projects to cities that include a provision in their charter that authorizes a contractor to not pay prevailing wages.

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The Pilot article mentioned that SB 7 could affect 51 charter cities. This implies that nearly 90% of California cities (70 charter cities and all 361 general law cities) pay prevailing wages. I suspect that prevailing-wage exemption savings are exaggerated, and that's why so many cities continue to pay prevailing wages.

Keep in mind that the exemption from paying the prevailing wage applies only to those relatively few projects that do not use state or federal funds. Also, the savings from not paying the prevailing wage applies only to the labor component of a public works project, which averages about 25% of the total project cost and often is as low as 10% on road paving projects.

As a result of attempting to get some relatively small and speculative savings from a prevailing wage exemption, the committee majority risks losing state funding for our city's projects, reducing middle class jobs for families in our community, and getting the city into another unnecessary, costly and prolonged lawsuit, this time with the state.

The committee majority's risky position is partially based on intuition, anecdotal information and some nonpublic works examples. They have emphasized the lowest bidder and placed less importance on avoiding cost overruns and poor quality construction.

Lastly, the committee ignored the comment of 30-year public works veteran Ernesto Munoz. He said he didn't know what would happen if he was limited to using only companies that didn't pay prevailing wages. In Costa Mesa he has worked only with prevailing-wage-paying companies, and I don't think any project has had a significant problem or serious cost overrun.

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