Cities brace for possible loss of state funds

Cities brace for possible loss of state funds
Oceanside is paying closer attention to bids for public works projects following the passage SB-7. The bill penalizes cities that accept bids from contractors that pay below prevailing wage. Photo by Promise Yee

OCEANSIDE — City Council took measures to carefully word its approval of a landscaping bid on May 28, to specify that the contractor hired agrees to pay workers prevailing wage.

The city is using extra caution on its semantics after SB-7 was passed, which will penalize cities for hiring a contractor who pays below prevailing wage beginning in January 2015. Penalties will include loss of state funding, even if funding is requested for a different project.

Oceanside passed a city charter in 2010, which allows the city to accept bids in which contractors pay below prevailing wage. The city approved this ordinance as a cost-saving measure when state funds are not involved in a project.

Oceanside City Attorney John Mullen said Oceanside is protesting the recently passed bill’s stipulation that state funds can be withheld from all public works projects if a city accepts one bid that pays workers below prevailing wage.

The city is filing a lawsuit, and joining the League of California Cities in its lawsuit against the state. Other North County cities that have a charter or ordinance that allows them to accept bids from contractors that pay below prevailing wage have also joined in the lawsuit.

Litigation is still pending.

In the meantime, caution in contract wording is being used.

“We switched to a charter city basically over prevailing wage,” Mayor Jim Wood said. Wood voted with Councilwoman Esther Sanchez against becoming a charter city in 2010.

“Now we’re facing paying prevailing wage, or a chance of losing any and all state funding.”

Oceanside has previously approved a handful of bids in which contractors pay below prevailing wage. The decisions were made on a case-by-case basis.

“The passage of the bill brings some uncertainty,” City Manager Steve Jepsen said. “The intent of the bill is that cities (public works projects) are required to pay prevailing wage.

“Very few cities are impacted by SB-7, us being one.”

The landscaping contract will be completed in 2014, and has a one-year option for 2015. It also happens that all bidders for the project pay prevailing wage or higher. In this case prevailing wage was not a consideration in choosing the contractor.

Nonetheless, City Council wanted to ensure approval is worded carefully and does not jeopardize state funding.

 

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