Organized Labor

By Doug Perry
'Organized Labor'

It seems like only yesterday that we were rejoicing over the defeat of Schwarzenegger’s propositions that would have taken labor out of the political process. In fact the governor’s special election was held only two months ago. However, 2006 is the regularly scheduled year for the off-year congressional elections. All of our representatives in the house will be campaigning for re-election. Political analysts are saying that the Democrats have an opportunity to regain control of Congress. Opposition to the conduct of the war in Iraq, the bungling of the relief effort on the Gulf Coast after Hurricane Katrina, and the Tom Delay and Abramoff scandals are having a measurable effect on the public’s perception of the performance of lame-duck president, George Bush; and their larger view of the Republican party. The president’s approval rating is currently hovering around 40%.

The statewide races in 2006 can be confusing because of term limits. Members of the assembly are limited to (3) two-year terms, while senators and major office holders in the Executive branch are limited to (2) four-year terms. When their terms expire most political candidates seek office in another branch of government. It’s really a game of musical chairs.

In the governor’s race, the current State Treasurer Phil Angelides and State Controller, Steve Westly are both competing in the Democratic primary to be held on June 6th and will probably face incumbent Republican Governor, Arnold Swarzenegger in November. Steve Westly by the way is a former top executive with the Internet powerhouse eBay and provides most of his own campaign financing. According to the SF Chronicle, Westly currently has $24 million in his campaign account, of which he has supplied $20 million. (SF Chroncicle, 1/13/06)

In the Lieutenant Governors race Cruz Bustamante is termed out and has announced that he will seek the office of Insurance Commissioner now occupied by Democrat John Garemendi. The Lt. Governor’s race is quite competitive with three well -qualified candidates seeking the democratic nomination, including John Garamendi the current Insurance Commissioner, and State Senators Liz Figueroa, and Jackie Speier. Bill Lockyer, the present Attorney General, is running for State Treasurer and will be opposed in the Democratic primary by State Senator Kevin Murray from Los Angeles and Los Angeles County Treasurer, Mark Saldino. Assemblyman Keith Richmond, who had proposed the legislation to destroy the CalPERS defined benefit pension plan for public employees in 2005, will by running for the Treasurer’s office on the Republican ticket.

Three Democrats and two Republicans have announced for Steve Westley’s current job as State Controller, including John Chiang(D) of the Board of Equalization, State Senator Joe Dunn (D) of Garden Grove and Assemblyman Dario Frommer (D) of Los Angeles County. Two Republicans, Abel Maldonado from San Luis Obispo and Tony Strickland, former Assemblyman from Ventura , are also seeking the office.

For Secretary of State, the incumbent, Bruce McPherson (R) will seek re-election. McPherson was appointed to the office by Governor Schwarzenegger in 2005 after the resignation of Kevin Shelley. In the Democratic party two state senators, Debra Bowen of Redondo Beach and Debra Ortiz of Sacramento have also announced their candidacy.

Oakland Mayor Jerry Brown who served for two terms as Governor between 1975 and 1983, has launched an aggressive campaign for Attorney General. He will be opposed in the Democratic primary by Los Angeles City Attorney Rocky Delgadillo who announced his candidacy on August 31st. The winner will face Chuck Poochigian, Republican from Fresno.

And finally, the Democratic incumbent, Jack T. O’Connell will seek re-election as the Superintendent of Public Instruction. As they used to say in the military, if you aren’t confused by now then you haven’t been paying attention. The outcome for many of the races for the state constitutional offices will probably turn on the Governor’s race.

Also, an initiative of real interest that has qualified for the November ballot would increase income taxes on the wealthy to provide preschool education for all California children. The proposal would increase taxes by 1.7% on individuals with incomes above $400,000 and on couples with incomes over $800,000, beginning in 2007. The program would provide preschool education for all four-year olds beginning in 2010-11.

Arnold’ - The Wild Card

In California we are witnessing an amazing transformation in our Governor. When it became apparent the state voters were rejecting all of Arnold’s propositions to downgrade labor or to approve sweeping new powers for the governor’s office; Schwarzenegger made an abrupt, 180-degree about face. On election night he read from a new script, thanking, “those who were so passionately against us.” He said that, “the people of California are sick and tired of all the fighting,” and that, “we also need more bipartisan cooperation.”

And for the record, we need to remember that the governor had personally supported Proposition 74, that would have extended the probationary period for teachers from 2 to 5 years; Proposition 75 that would have required unions to obtain individual approval from members before spending any dues money on political campaigns; Proposition 76 that would have given the Governor the ability to cut individual budget expenditures without the consent of the legislature; and Proposition 77 that would that would have transferred the power to redraw political districts from the legislature to a panel of retired judges. It is estimated that labor has been forced to spend thousands of hours and roughly $100 million in dues money to defend its right to participate in the political process.

State of the State

On January 5th the Governor made his annual State of the State address in the Capital building and presented a preview of his 2006-07 budget. He apologized again for his special election propositions, saying that; “I have learned my lesson. And the people, who always have the last word sent a clear message, cut the warfare, cool the rhetoric, find common ground and fix the problems together.” Schwarzenegger confounded his critics and proposed what seemed like large investments in California’s infrastructure. “We will need more roads, more hospitals, more schools, more nurses, more teachers, more police and fire, more water, more energy, more ports and the need is urgent,” he said. He estimated that the state would need more than $500 billion in new infrastructure over the next 20 years.

The Governor also surprised the legislature and his special guests at the Capitol, including former Governor Gray Davis and Mayor Jerry Brown of Oakland, with the news that he would support a $1 increase in the minimum wage over the next two years. He said that it was, “time for those who often work the hardest and earn the least to benefit from California’s growth.” Only a few months ago he had vetoed a bill by Assemblywoman Sally Lieber (D) that would have raised the current minimum of $6.75 an hour to $7.25 in July 2006 and to $7.75 in July 2007. An initiative currently being circulated would increase the minimum wage to $7.50 by January 2007, to $8.25 by 2008 and to $8.75 by January 2009. The initiative carries a provision that has been supported by labor, that would require annual wage adjustments based on the change in the California Consumer Price Index for All Urban Consumers. The Governor had been opposed to this provision in the bill he vetoed last year. The current minimum wage under federal law is only $5.15 an hour. In San Francisco the minimum wage law has an automatic cost of living adjustment and is currently $8.82 per hour.

The Governor also had a pleasant surprise for California teachers, by proposing a $4.1 billion increase in Prop 98 funding for education in the 2006-07 budget. And he surprised the state colleges and universities by saying he would provide general fund money to avoid proposed increases in student fees.

The Governor’s Budget

On January 10th, Arnold presented his July 1, 2006-June 30, 2007 budget. He also outlined a detailed plan for spending $222 billion on infrastructure investments over the next ten years, financed out of general fund revenues and with new general obligation bonds of $68 billion.

State investments over the 10- year period would include $107 billion for transportation and air quality, $48.2 billion for schools and colleges, $35 billion for water resources and flood control and $20.7 for public safety and the criminal justice system. For those of us in construction the question is, What’s not to like? But be patient, the devil as they say, is in the details. The bond measures are in fact quite modest. Bond financing in the next fiscal year is substantial and would total $25.2 billion; including $6.0 billion for transportation, $12.4 billion for education, and $3.0 billion for flood control and water resources. Bond sales however tail off fairly dramatically. The bond funding for the entire ten-year period would reach only $68 billion. And, according to the San Francisco Chronicle, (1/6/06) “a $9.9 billion bond that has qualified for the November 2006 ballot to generate seed money for a high speed rail system linking Northern and Southern California would be taken off the ballot under the Governor’s proposal.” SB 1856, the Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century was introduced back in 2002 and has now qualified for the November 2006 ballot.

Bond financing over the next ten years would total only $12 billion for transportation, $38 billion for education, $9 billion for levee protection and flood control, and $10 billion for public safety and the courts. Much of the state spending on transportation will still be generated by highway user taxes and Prop 42. The $9 billion for water resources and flood control would be supplemented with another $26 billion from non-state funding sources. He pointed out that the California State Water Project needed to be expanded to serve the projected growth in population of 8.5 million over the next ten years.

Moving to education, the governor estimated that more than 1 million new students would be entering public schools in the next ten years with roughly 500,000 students entering college. He proposed the construction of 2,000 small schools for K through 12, with 40,000 new classrooms. His Strategic Growth Plan would also include significant construction and expansion of the state colleges and university systems. Population is projected to increase by 450,000 per year over the next ten years. California residents currently number 37 million.

To accommodate the expanding prison population and avoid overcrowding the Governor would also seek new bond financing of $14.8 billion. Additional bonds in the amount of $2.2 billion would be issued for the courts and other public services.

Given the Spartan allocations for highways and mass transit over the last five years, the Governor’s numbers become less imposing. In the words of the Governor, these investments are also directly dependent on continued fiscal discipline and would be generated from Proposition 42 gas tax funds-$47 billion; new funding-$48 billion, and bond financing of $6 billion in 2006 and $6 billion in 2008.

The Governor’s plan would use more design-build projects and would be dependent on privately owned highways and tolls.

2006-07 Fiscal Year

Thanks to an improving economy the state’s financial position had improved dramatically over the last two years and the operating deficit for the next fiscal year is estimated at only $4.7 billion, as per Michael Genest, the Director of Finance. General fund revenues and transfers are projected to increase by $3.9 billion in 2006-07 from $87.7 billion to $91.5 billion or 4.4%. Expenditures will again exceed revenue, increasing by 8.4% from $90.3 billion to $97.9 billion.

The cash flow budget for the State including special tax funds such as vehicle fees and the highway user tax amounts to $116.2 billion in expenditures. When matching funds and bond funding are added, the total expenditures by all agencies is expected to amount to $125.6 billion.

Health and Human Services spending will exceed general fund income by $6.9 billion. There will be little change in the overall budget with only a 4.5% increase to $28.4 billion. With federal matching funds total expenditures will bump up to $35.3 billion. A slight increase of $34.2 million is projected for the budget in the Medicare and Healthy Families Program and a decrease of $198.9 in CalWORKS expenditures.

As already mentioned the largest dollar increase in the budget will go to Prop 98 funding for education with an increase from $36.3 billion to $40.4 billion or 11.4%. There is also an increase of 9.4% in non Prop 98 expenditures including $130.8 million allocated from the general fund for eliminating the fee increases that had been proposed by the California State Universities and the University of California governing boards. The projected expenditures for education including selected bond funds are estimated at $40.1 billion for K-12 and $14.2 billion for higher education.

According to the state budget analyst the deficit can be managed only if the economy does reasonably well. Genest says that, “The biggest risk to the outlook, particularly for the California economy, is a sharp slowdown in home building.” On the national economy he comments that there will be some cooling of the housing markets, a drop in residential construction and, “an 11% drop in housing starts in 2006.” On a positive note he said that the California economy strengthened in 2005, as exports of California goods increased and, also that, “job growth resumed in the San Francisco Bay Area.”

It’s interesting that the major sources of tax revenue, including transfers, is derived from the personal income tax, 42.5% and the sales tax, 28.4%. The corporation tax only provides 8.6% of the total. The personal income tax does include revenue from Chapter S corporate income and capital gains as well as stock options, and is not comprised only of wage and salary income. The point is much of the corporate income flows through into the personal income category.

With the presentation of the 2006-07 state budget we are seeing a ‘new and improved’ Governor. Arnold now talks about raising the minimum wage, providing billions more for education, rebuilding our transportation systems, and has appointed a Democrat as his new chief of staff. The transformation is almost miraculous. It is not unlike his role changes from Terminator I in which he tries to kill John Conners, the future leader of the resistance movement opposing the anti-human machines; to his role in Terminator II in which he returns from the future as the good guy to save the life of John Conners. I guess this time around he’s the good guy. However our political representatives need to be judged by their records, and held accountable.

Certainly the change is an expedient one. In a Field Research poll of California voters conducted a few weeks before the November election, only 36% of probable voters said they would be inclined to re-elect Schwarzenegger as Governor. The abrupt change in advocacy by the Governor makes us question his sincerity. How can you veto an increase in the minimum wage for two years and then aggressively promote an increase? How can you severely cut education funding for two years and than propose funding education in the new budget substantially above the legally mandated amounts proscribed in Prop 98? How can you transfer tax money earmarked for transportation into the general fund and then propose a 2006 bond issue for $6 billion in new projects? The governor’s changes in announced public policy objectives are suspect. We have to ask if he really believes in his new program to improve the well being of California residents or whether he is just trying to get elected in November.

In keeping with Arnold’s move to the left of center, he turned up in San Francisco on Martin Luther King Jr. Day and again apologized for his past behavior. The Governor was introduced by former Mayor Willie Brown as, “A friend of mine.” In his comments Arnold said that, “How wrong I was when I said everyone has an equal opportunity to make it in America.” Mayor Gavin Newsom who also attended the breakfast commented, “He’s becoming a Democrat again,” and, “It’s a good sign for him and a bad sign for the Democratic Party. The largely labor crowd pretty much sat on their hands during the Governors remarks. Tim Paulson the Executive Secretary of the San Francisco Labor Council spoke after the Governor and was quite critical, saying “Arnold Swartzenegger for the last year and a half, has been attacking all of us in the (labor) community.”

San Francisco Construction Unions Assess the Candidates

At the Business Reps Meeting on January 10th the San Francisco Building Trades Council initiated their review of candidates for statewide office who will be running in the June Primary. Business representatives listened to presentations from Both Jerry Brown, the Mayor of Oakland who is running for Attorney General; and, State Senator Jackie Speier who is running for Lt. Governor. Neither of the two could attend the regular candidates night meeting scheduled for Thursday, January 19th at 5:00 p.m.

Jackie Speier achieved instant name recognition shortly after she graduated from the UC Hastings College of Law. In 1978 she had accompanied Congressman Leo Ryan as a staff person on a fateful trip to Guyana to investigate the activities of the Reverend Jim Jones and the Peoples Temple. Jones had attracted many Bay Area residents to his jungle ‘paradise’ in Central America. The deluded Jones convinced more than 900 of his followers to drink poisoned cool aid on the very day the temple was visited by Ryan and Jackie Speier. Jackie was shot 5 times while trying to escape, and Congressman Ryan was killed.

Jackie has amassed a solid legislative record in Sacramento in support of labor. She has also been a strong advocate for Health Care Improvements and consumer protection and represents San Mateo and San Francisco Counties in the state Senate. In talking to the business agents last week she made no bones about her dislike for Governor Schwarzenegger.

“The Governor’s intent is to cut the fabric of our society and to take apart our democratic principals,” she said, citing his special election in December of last year. She pointed out that his attacks on public employee pensions, worker political rights, and reasonable spending for education and social programs were part of his defeated initiatives, and revealed his true political values. She talked about the Governors obvious conflict of interest when he vetoed her bill to regulate the consumption of steroids and dietary supplements while he at the same time collected millions from the American Media Corporation for his promotion of these very drugs in Muscle and Fitness magazine.

Speier’s comments follow.

“I have a 96% voting record with Labor and have supported the Burton Bill, SB2, that would have required employers to provide health care for their workers; and, that was passed by the state legislature in 2003 and signed into law by former Governor Gray Davis. I was a strong supporter of the family leave act that now requires employers to continue wage payments when employees need to take time off to care for members of their immediate family. I have spent 10 years in the State Assembly and am serving my second tern as a state senator. I am running for Lieutenant Governor to replace termed-out Cruz Bustamante. As Lt. Governor I would work to increase funding for higher education. I also want to be a consumer advocate. I am asking for your endorsement in the Democratic Primary in June.”

Senator Speier faces a difficult fight in the upcoming primary. Insurance Commissioner John Garamendi who ran for Governor on the state Democratic ticket in 1982 and 1984 is also seeking the office; as is the Democratic State Senator from the East Bay, Liz Figueroa. The winner of the three-way race will face Republican State Senator Tom McClintock from Ventura County.

Our second political guest on January 10th was the honorable Jerry Brown, former governor and combative Mayor of the City of Oakland for the last eight years. By the way, the race to replace Mayor Brown in November is hotly contested by Council member and labor leader Ignacio De La Fuente and the venerable former congressman Ron Dellums. De La Fuente has been a power on the Oakland City Council for years and by many accounts has worked hard for his constituents and has taken care of labor. He is the long-time Business Manager of Oakland local 164-B, Glass Molders, Pottery, Plastics & Allied Workers. Ron Dellums has been a political leader in the East Bay since the late 1960’s and a state and national leader in the civil rights movement. But I digress.

In his comments to the building trades Jerry Brown talked about his experience serving as California’s governor between 1975 and 1983, and as the mayor of Oakland from 1999 to 2006. Excerpts from his remarks follow.

I have been a strong supporter of labor and the building trades unions since I began my career in politics some 30 years ago. As governor, I worked hard to improve the apprenticeship training programs, and I increased program spending by 25%. I also substantially increased workers compensation benefits. I believe that I have the best labor record of any governor in California. It has always been a priority of mine to enforce payment of the prevailing wage by going after contractors in the underground economy.

As the Mayor of Oakland I have actively promoted new construction and development and in the process have generated new jobs for union construction workers. In my two terms as mayor I have brought substantial investment in both housing and commercial structures into the City. I have tried to bring people back to the downtown, and succeeded in my initial objective to bring 10,000 new residents back to the central business district. Since I became mayor over 6,400 new housing units have been approved in this area. Oakland has become more prosperous during my time as Mayor with new homes, new businesses and new jobs.

Mayor Brown has also worked hard to reduce crime in Oakland. Violent crime was reduced by 27% during his tenure. He has also worked hard to improve public schools, advocating in some cases military style programs for difficult youth. The major was responsible for the creation of the Oakland Military Institute a discipline-oriented Charter School.

In the question and answer period that followed the Mayor was challenged on his association with the infamous Joe O’Donahue of the Residential Builders Association who is currently building several medium-size residential projects in Oakland. Carpenters local 22 business agent Judy Gatewood pointed out that the RBA is non-union and has been often accused of paying less than the prevailing wage and of paying in cash to avoid payroll taxes. His honor the Mayor responded that he had not been aware of the reputation of the RBA and said that if they were in fact not paying the prevailing wage, “we will go after them.”

John Crowley of the Sprinkler Fitter asked the former Governor what he thought about Arnold’s proposals for rebuilding California in his 2006-07 budget that had been just released. Brown said that the Democrats would probably work with the governor if they received assurances that the prevailing wage would apply on all public works construction. He noted that in the last few years there has been a deterioration in public investment and he agreed that the proposed $222 billion in infrastructure investment over the next 10 years was needed. He said that, “we must find ways to cooperate and to reach across the isle. We need to make sure the proposed new infrastructure is built with union workers.”