New State Budget is the Best in Many Years For Crucial Building Trades Priorities

June 17, 2014 - Meeting into the late hours Sunday night, both houses of the State Legislature on Sunday gave final approval to a 2014-15 state budget that provides funding for many programs strongly supported by the State Building Trades, that will create thousands of good new jobs for California’s Building Trades workers.

Interviewed in the Capitol moments after the final vote, SBCTC President Robbie Hunter commented: “Building Trades Council advocates worked diligently to keep our issues at the forefront during the budget debate. Governor Jerry Brown and the Legislature have negotiated a budget that will drive the state’s economy and create tens of thousands of jobs for California construction workers and improve the quality of life for all Californians. This is possible to a large extent because of the tenacious, united efforts of individual State Building Trades unions and workers to elect public officials who understand and care about what’s best for California and its working families.”

Among the items included in the budget advocated by the Building Trades is a plan for investing cap-and-trade revenues, including $250 million for the construction and operation of high-speed rail in the budget year, and 25 percent of ongoing revenues in future years. This ongoing source of permanent funding is a huge boost for this vitally important infrastructure  project. It will accelerate the construction of the rail connection between the new Burbank transportation center and Palmdale, while simultaneously moving forward with the construction in the Central Valley, and also opening the real possibility of early construction north in the major metropolitan areas. The budget dedicates other cap-and-trade revenues to local transportation projects, green construction and other state infrastructure projects.

The budget also provides a much needed $40 million investment for court construction and improvement projects. Court construction funding has been reduced for several years, delaying many projects. This funding, in conjunction with the reimbursement of other funding that we have had reinstated, will get some of those projects back on track.

The State Building Trades, working with the Administration, developed budget language that also guarantees an ongoing permanent source of funding for the Department of Industrial Relations to enforce the payment of prevailing wage and apprenticeship laws on all public works projects, by establishing a $300 annual contractor registration fee for contractors who bid or perform work on public works projects. Contractors will be required to meet certain qualifications to qualify to register, and will not be able to bid on these projects without registration. This permanent compliance funding will address the issue of underground economy contractors cheating workers on wages, the nonpayment of workers’ compensation, Social Security, Medicare, and state and federal taxes. This fraud hurts the state economy and creates a disadvantage for law-abiding contractors that base their bids on utilizing a streamlined and skilled workforce completing the job in the least amount of time, doing it once, and doing it right.

Budget legislation will also encourage more solar power plant construction in California by extending for 10 more years the property tax exemption for new solar construction, including utility-scale solar projects which are covered by project labor agreements.  Again driving the creation of new construction jobs.

The budget provides $250 million for the important Career Pathways Trust program, to offer work-skills training to high school and community college students, and provide them the tools they will need to enter union apprenticeship programs upon finishing school and entering the work force.

A fact sheet for the Compliance Monitoring Unit Registration Program is attached as well as our communication to the Legislature on Cap and Trade.




This legislation will restructure funding for the administration and enforcement of prevailing wage requirements by the Department of Industrial Relations and make related changes to project monitoring requirements.

Under existing law – DIR administers and enforces the prevailing wage and related requirements found in Division 2, Part 7, Chapter 1 (commencing with section 1720) of the Labor Code.  This includes:

·         Director’s determination of prevailing wage rates for all parts of state

·         Public Works coverage determinations by the Director

·         Traditional enforcement through investigation of complaints by the Labor Commissioner (including prevailing wage and apprenticeship violations)

·         Proactive monitoring by the Compliance Monitoring Unit (CMU), including review of all certified payroll records (CPRs), on state bond-funded projects and other specified projects

·         Issuance and enforcement of civil wage and penalty assessments by the Labor Commissioner

·         Administrative appeal hearings conducted by DIR hearing officers

·         Director’s approval and oversight of labor compliance programs (LCPs) that are required for Proposition 84 projects and authorized in some other circumstances

These activities have been funded through (1) billing in arrears to awarding bodies for services provided on CMU projects; (2) portion of LECF assessment charged to all California employers; (3) General Fund; and (4) other minor sources.

This legislation will replace these funding sources with a public works contractor registration fee that pays for all DIR administration and enforcement of prevailing wage requirements (activities listed above with revisions in how projects are monitored).

Essentials of contractor registration program:

·         Contractors will be subject to a registration and annual renewal fee that has been set initially at $300.  The fee is non-refundable and applies to all contractors and subcontractors who intend to bid or perform work on public works projects (as defined under the Labor Code).  Unregistered contractors will not be able to work on public works projects as specified. 

·         Contractors will apply and pay the fee online and must meet minimum qualifications to be registered as eligible to work on public works:

o   Must have workers’ compensation coverage for any employees and only use subcontractors who are registered public works contractors.

o   Must have CSLB contractor license if applicable to trade.

o   Must have no delinquent unpaid wage or penalty assessments due to any employee or agency.

o   Not under debarment.

o   Not in prior violation of this registration requirement once it becomes effective.  However, first time violators will be able to avoid 12 month disqualification by paying an additional penalty. 

·         The registration fee is not related to any project.  It is more like a driver’s license in that it entitles the registrant to bid on and perform public works.

·         DIR will post a list of registered contractors and subcontractors on its website so that awarding bodies and contractors will be able to comply with requirement to only use registered contractors and subcontractors.

·         Various protections are built in so that

o   Contractor won’t be in violation for working on a private job that is later determined to be public work;

o   Inadvertent listing of unregistered subcontractor on a bid will not necessarily invalidate that bid;

o   Contract with unregistered contractor or subcontractor is subject to cancellation but is not void as to past work;

o   Unregistered contractor or subcontractor can be replaced with one who is registered;

o   Contractor whose registration has lapsed given grace period within which to pay a late fee and renew.

·         Other miscellaneous information:

o   Registrations will begin after July 1, 2014.  The requirement to list only registered contractors and subcontractors on bids becomes effective on March 1, 2015.  Requirement to only use registered contractors and subcontractors on public works projects applies to all projects awarded on or after April 1, 2015.

o   Payment will be by credit card.

o   The initial fee has been set at $300 in anticipation that it will generate sufficient revenue to support the $11.4 million cost of DIR’s current public works program.  The fee may be adjusted later (no more than annually) so that it continues to meet program costs.

o   Registration program is based on model that has been in use for several years in states of New Mexico and New Jersey.


Essentials of Public Works Enforcement Fund

All fees will go into Public Works Enforcement Fund and be used to fund the following items and for no other purposes --

·         administration of contractor registration requirement

·         all DIR costs for administering and enforcing public works laws

·         Labor Commissioner’s enforcement of other Labor Code violations on monitored public works projects.

LECF assessment paid by all California employers, including vast majority not engaged in public works, will no longer be relied upon to fund public works enforcement.

DIR will no longer charge awarding bodies for prevailing wage compliance monitoring (as is done currently for CMU projects).  Note: DIR will continue to bill awarding agencies for CMU services provided through June 30, 2014. 


Related changes in DIR’s administration and enforcement of public works requirements

Current requirements to use CMU for state bond-funded and other specified projects will be eliminated and replaced by requirements that apply to all public works projects (as defined under the Labor Code).

·         Awarding bodies will be required to submit PWC-100 (contract award notice) for all public works projects [requirement has applied to about 90% of all projects]

·         Contractors and subcontractors on all public works projects will be required to submit CPRs to the Labor Commissioner unless excused from this requirement.

o   Requirement will be phased in as follows:

§  Will apply immediately to projects that have already been under CMU monitoring

§  Will apply to new projects awarded on or after April 1, 2015

§  May apply to other projects as determined by Labor Commissioner

§  Will apply to all projects, new or ongoing, on and after January 1, 2016

o   Labor Commissioner may make exception to this requirement for

§  Projects covered by qualifying project labor agreement

§  Projects undertaken by one of four remaining awarding bodies with legacy LCPs (Caltrans, City of Los Angeles, County of Sacramento, and Los Angeles Unified School District), so long as those LCPs remain approved by DIR

o   CPRs will be furnished online (as is done currently for CMU).  DIR intends to continue making improvements to the process, including creating a means for general contractors to have online access to the CPRs submitted by their subcontractors.

·         Although all CPRs will be furnished to the Labor Commissioner, the Labor Commissioner will have discretion to determine which records to review and what kind of additional monitoring to conduct based on enforcement priorities.

·         Labor Commissioner’s monitoring and enforcement staff will increase slightly but remain well below the numbers originally projected for the CMU. 






Cap & Trade Package for Jobs, Environmental and Economic Benefits Statewide

The Cap & Trade investments will create tens of thousands of quality jobs by providing critical funding throughout California for transportation (intercity rail capital programs and high speed rail), affordable housing, low carbon transportation, clean energy, natural resources and sustainable communities programs.

Tens of thousands of union construction and transportation operation jobs for California workers and thousands of new apprentices (veterans, young men and women of the Central Valley and urban regions) will be given the opportunity to work and receive training for a well-paying career because of the Cap & Trade package.

The package will not only provide funding for our nation's first high speed rail (HSR) system, it also continuously appropriates new funding for intercity rail capital projects that will improve mobility in urban centers and connect the intercity rail systems with HSR-accelerating the greenhouse gas (GHG) reduction and economic benefits.  Specifically, the funds will: (1) help realize more immediate enhanced transportation options, (2) realize quicker reductions of GHG emissions, and (3) create stability that can lead to enhanced delivery of the program.

The dedicated funding stream will allow the High Speed Rail Authority (HSRA) to leverage a number of financing options to construct additional usable project sections concurrently with the initial construction segment.  Private sector financing currently under consideration by the HSRA includes bank loans, taxable bonds, and equity investments.  Constructing and delivering the HSR system earlier also saves money by reducing the impact of inflation.

It is critically important to remember that Cap & Trade investments are not only about jobs and transportation, but also about having the long-term vision to invest in infrastructure that will improve our economic future, environment and quality of life for the state's growing population.


Vote "AYE" ON SB 862/AB 1467

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