Can the State Use Its Spending Powers to Circumvent Charter Cities' Home Rule Authority?

• Jurisdiction: California,United States
• Author: By Jonathan V. Holtzman, Randy Riddle & Steve Cikes*
• Publication year: 2015
• Citation: Vol. 38 No. 3

Can the State Use Its Spending Powers to Circumvent Charter Cities' Home Rule Authority?

By Jonathan V. Holtzman, Randy Riddle & Steve Cikes*

MCLE SELF-STUDY ARTICLE

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I. INTRODUCTION

Public lawyers have long debated whether California's "home rule" doctrine for charter cities is coming or going. For years, it seemed the doctrine was eroding, as more and more issues were found to be matters of "statewide concern." Then, in State Building and Construction Trades Council of California v. City of Vista (City of Vista),¹ the California Supreme Court held that charter cities did not have to comply with the State's prevailing wage law on locally-funded public works projects—affirming that the expenditure of local revenues on such projects was within a charter city's home rule powers.

The victory for charter cities was short-lived. The next year, the Legislature passed SB 7, a law that conditioned all state construction funding on a charter city's agreement to pay prevailing wages on all public works projects—regardless of whether any state money is involved.

Several cities have sued the State, challenging the constitutionality of SB 7. Remarkably, the superior court presiding over that case ruled that this transparent end-run around City of Visa was constitutional because it represented a permissible exercise of the State's discretionary spending powers. The case is now pending before Fourth District Court of Appeal.

By euphemistically repackaging legislation as a "financial incentive" rather than an explicit mandate or even a punishment for not paying prevailing wages, the State is attempting to do indirectly what the California Constitution prohibits it from doing directly. Most cities receive subsidies from the State for various services. If the Legislature may condition the disbursement of funds on charter cities relinquishing their home rule powers even as to purely local matters the State is not funding, there would appear to be few practical limitations on this authority, placing the continued vitality of the home rule doctrine in serious jeopardy.

This article discusses the City of Vista case, SB 7, and the litigation over SB 7 to date. It also discusses existing state case law, which, in general, seems ill-suited to address this type end-run around the home rule doctrine. Finally, the article proposes a legal test derived from federal law that is better equipped to deal with overbroad legislative attempts to condition funding on the waiver of home rule powers.

II. HOME RULE AUTHORITY OF CHARTER CITIES

Article XI, section 3(a) of the California Constitution authorizes city voters to adopt a charter, the provisions of which "are the law of the State and have the force and effect of legislative enactments." Courts have recognized that a charter serves as the constitution for a city.² The primary advantage of a charter is that it transfers the power to regulate municipal affairs from the State to city voters, giving voters much more control over how their local system of government is structured and operates.³

Article XI, section 5(a) of the California Constitution—known as the "home rule" provision—grants charter cities plenary authority over their "municipal affairs."⁴ Once a city has adopted a charter, the charter becomes the "supreme law" of the city with respect to municipal affairs, subject only to conflicting provisions of the federal and state constitutions.⁵ As one court explained, a charter city's authority over municipal affairs is "all embracing ... free from any interference by the state through general laws."⁶ Where a city has adopted a charter, it "has full control over its municipal affairs . whether or not its charter specifically provides for the particular right sought to be exercised...."⁷

This is not to say that charter cities are immune to state regulation. Over the years, courts have recognized that state law may supersede a charter city's home rule powers if the law addresses a matter of statewide concern and is narrowly tailored towards that end.⁸

In California Federal Savings and Loan Association v. City of Los Angeles (California Federal),⁹ the California Supreme Court articulated a four-part test to resolve an asserted conflict between a state statute and a city's charter. Under this test, a court must first determine if there is an actual conflict between a provision in the city's charter and state law at issue.¹⁰ If not, then there is no need to consider any of the other elements.

If there is an actual conflict, then the court must decide if the issue addresses a "municipal affair."¹¹ If not, the inquiry ends, and the state law governs.

But if the issue does involve a municipal affair, then the question becomes whether the subject matter of the state law is one of "statewide concern."¹² If the subject matter does not address a statewide concern, then the charter provision controls and is "beyond the reach of the legislative enactment."¹³

Finally, if the subject matter does constitute a statewide concern, then the court must determine whether the statute is "reasonably related" and "narrowly tailored" to the resolution of that concern.¹⁴ If not, the charter provision controls.

Using this test, courts have held that charter cities' home rule authority trumps conflicting state laws that do not address a matter of statewide concern or are not narrowly tailored to further that interest.¹⁵ The California Supreme Court's decision in City of Vista is the most recent example of a full-throated articulation of home rule powers.

III. THE SUPREME COURT'S CITY OF VISTA DECISION AND THE LEGISLATURE'S RESPONSE

In City of Vista, the city enacted an ordinance prohibiting the payment of prevailing wages on locally-funded public works projects.¹⁶ The city council then adopted a resolution approving a plan to build two fire stations that did not comply with the State's prevailing wage law.¹⁷

In response, the State Building and Construction Trades Council of California filed a petition for writ of mandate seeking to compel the city to comply with the State's prevailing wage requirements. The superior court denied the union's petition, and the court of appeal affirmed.¹⁸

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On review, the California Supreme Court applied California Federal's four-part test to determine whether application of the State's prevailing wage law would impermissibly impinge on the city's home rule authority. Initially, the Court held that "[t]he wage levels of contract workers constructing locally-funded public works projects are certainly 'municipal affairs.'"¹⁹

Next, the Court found that because the prevailing wage law does not exempt charter cities from its scope, and the city's ordinance prohibits compliance with that law, an actual conflict existed between the two.²⁰ The Court then determined that the wage levels of contract workers constructing locally-funded public works projects did not constitute a matter of statewide concern, finding no basis to distinguish the wage levels of contract workers from the wages of charter city employees, which the Court had previously found was not a matter of statewide concern.²¹ The Court therefore held that application of the prevailing wage law to charter cities would violate...