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San Diego’s Attempt to Ban PLAs Could Lead to “Financial Disaster,” State Controller Says

A proposed ban on Project Labor Agreements (PLAs) by the city of San Diego, California, on the June ballot is taking an interesting turn with the city sounding the alarm to Wall Street about the financial risks of such a ban. The city is at risk of losing hundreds of millions of dollars for critical infrastructure projects due to state laws that preclude charter cities with PLA bans from receiving any state construction funding.

Donna Frye, a leading fiscal watchdog in the city, has posted excerpts of bond offering documents that mention an unquantifiable risk on the city’s ability to service debt. In her Voice Of San Diego post, she lists funding for water and wastewater projects that will be jeopardized:

“So the city is taking this seriously and think it is a material fact that must be disclosed, otherwise they wouldn’t disclose it. But it’s not just SRF loan money at risk; it’s all state grants and loans, which last year totaled $158 million according to the mayor’s office and city’s Independent Budget Analyst.”

As a result, the ballot measure would be a “financial disaster” according to the California State Controller. Perhaps most unsettling is the fact that this ballot measure is being proposed despite San Diego having never once required a PLA. In disputing the wisdom of such bans, the Stop Prop A campaign is fending off against ballot-box “bullies” at leading local newspapers:

In endorsing Proposition A, the paper proceeds from two false assumptions: that Prop. A will shield San Diego from undesirable contracts, and that the measure will be an effective rebuttal to the “power of unions in California.” The measure does neither, and had the U-T San Diego spoken to both sides before taking a position on the issue, it could have brought a balanced and informed recommendation to its readers. As it stands, it too has done neither, and San Diegans should watch out for their lunch money before relying on the U-T’s editorial endorsement of Proposition A.

The fact is that Proposition A is opposed not just by labor but also by leading business advocates who raise concerns about its questionable benefits and the threats it poses to city funding. We welcome a debate on the value of project labor agreements (PLAs). Unfortunately, by the time we sat down with U-T San Diego Editorial Board, it had already developed a position based on dogma and misdirection.

They now have a strong taxpayer argument, pointing out the fiscal recklessness of PLA bans. Donna Frye described a PLA ban as “essentially, it’s like a taxpayer-funded trip to the craps table”.

For background, California passed a set of laws that ensure taxpayer protections in a PLA — a construction agreement for large-scale public works projects that outlines wage, safety, and diversity standards as well as local and veteran hiring goals — and prohibit cities from adopting blanket PLA bans. Charter cities lose state funds if they limit PLAs. Since the passing of the state law, public agencies have started backtracking on PLA bans. Escondido removed its proposed ban on PLAs by revising its draft charter proposal citing the potential loss of state funds. El Cajon followed, also removing the language banning PLAs from a proposed charter, and the Palmdale Water District Board voted unanimously to repeal its ban on PLAs. Other cities that have adopted PLA bans are also considering repealing them.

PLA bans at a local level started a few years ago in Southern California. With fiscal repercussions looming, they will likely end here as well.


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