Branstad, Cedar Rapids government on collision course over labor agreement

Governor Terry Branstad and the Republican mayor of Iowa’s second-largest city are at odds over a project labor agreement for construction of the $76.5-million Cedar Rapids Convention Complex. The Branstad administration has threatened to withdraw a $15 million I-JOBS grant for building the convention center, and the dispute could end up in court.

Join me after the jump to discuss on the biggest state-local power struggle Iowa’s seen in years.

If I’d been asked to predict which Iowa mayor would first clash with the new Branstad administration, I wouldn’t have guessed Ron Corbett of Cedar Rapids. Not only is he a Republican, he’s a former Iowa House speaker who knows state government well. Corbett didn’t endorse a candidate in last year’s gubernatorial race, but both Branstad and Governor Chet Culver praised his work during their debate in Cedar Rapids.

Rick Smith reported this week on the project labor agreement that sparked the current dispute.

In a letter to Mayor Corbett, the Iowa Finance Authority’s general counsel Mark Thompson states that the city of Cedar Rapids is in jeopardy of losing its $15 million in state I-JOBS funds for the Convention Complex project if the city persists with its project labor agreement as the city prepares to seek bids on construction contracts for which the labor agreement applies.

In response, Corbett argued again Tuesday that the city’s labor agreement went into effect on Dec. 14, a month before Branstad issued Executive Order 69, which prohibits the use of state funds on public works projects using project labor agreements.

However, in his letter to Corbett, Thompson states that Executive Order 69 is in full effect on projects “for which a construction contract had not been entered into” before Jan. 14. Thompson adds that the governor’s office has informed the authority that Executive Order 69 should apply to the Cedar Rapids Convention Complex project. […]

Corbett said again that he’s willing to honor the governor’s order for city building projects like the new library and new central fire station that are not as far along as the Convention Complex project. But he said he doesn’t want to go back on the labor agreement that the council already has put in place on the Convention Complex. […]

Corbett, as part of a Cedar Rapids City Council majority, put the project labor agreement in place in hopes of guaranteeing that local workers do much of the work on the Convention Complex project. Opponents of such agreements – Branstad’s predecessor, Gov. Chet Culver, encouraged them – say they drive project costs up and keep some contractors from bidding on projects.

Branstad issued Executive Order 69 (pdf) within hours of his inauguration last month. Todd Dorman points out that it is quite broad in scope:

Branstad’s office and the media portray Executive Order 69 as simply banning the use of pro-labor PLAs on state-funded projects. It goes much further than that.

In fact, Branstad’s order prohibits any government subdivision in the state, from state agencies to cities, counties, heck, even tribal councils, from using a PLA on any project that spends public money from virtually any source imaginable. Branstad even tries to revoke contracts forged before his order.

Check out these definitions from the order:

…I order and issue this Executive Order prohibiting the use of Project Labor Agreements by the State of Iowa and its Political Subdivisions on Public Works Projects effective immediately:

a. “State Funds” as used in this order includes any tax payer dollars or other funds of the State, including, but not limited to, general fund obligations, funds derived from the assessment of fines, fees of any sort, income taxes, corporate taxes, property taxes, sales taxes, taxes on gaming revenues, funds derived from the proceeds on the issuance general purpose, appropriation and/or revenue bonds, projects funded from the Rebuild Iowa Infrastructure Fund, projects funded by road use tax funds, projects funded in whole or in part by state grants, financial assistance, loans, forgivable loans, loan guarantees, subsidies, tax exemptions and tax credits.

b. “Political Subdivision” as used in this Order includes a city, county, township, school district, area education agency, institutions under the control of the State Board of Regents, community colleges, or any other local board, commission, committee, council, association or tribal council that receives or uses any State Funds.

So the guy who ran on reducing the “size and scope” of state government is now seeking to dictate the terms of every public works project in Iowa. This is the sort of thing that drives conservatives crazy when it’s done by the big, bad federal government.

Dorman sees this as a separation of powers issue, since banning all project labor agreements in Iowa would presumably require legislative action. State Senator Rob Hogg, a Democrat representing a Cedar Rapids district, believes Branstad has exceeded his authority:

“I have asked Attorney General Miller to prepare a formal opinion about the legality of the scope of Executive Order No. 69.

“In that Executive Order, Governor Branstad purports to prohibit ‘the use of Project Labor Agreements by … [the State’s] Political Subdivisions on Public Works Projects effective immediately.’

“At this point, it is unclear whether Attorney General Miller will prepare such an opinion.

“Regardless, I believe that Executive Order No. 69 is a dangerous grab for power by Governor Branstad – as dangerous as the executive order proposed by Bob Vander Plaats during the 2010 gubernatorial campaign.

“Like Vander Plaats’ proposal, Executive Order No. 69 disregards and contradicts the binding decision of the Iowa Supreme Court in Master Builders of Iowa, Inc. v. Polk County, 653 N.W.2d 382 (Iowa 2002).

“In that case, the Iowa Supreme Court squarely held that the use of project labor agreements by cities or counties for state-funded public works projects was permissible under Iowa law.

“There has been no Iowa statute adopted since that decision that changed the status of project labor agreements under Iowa law.

“Moreover, I believe that Executive Order No. 69 violates the Home Rule provision in Article III, Section 38A, of the Iowa Constitution, which gives cities local control over their decisions, including the use of project labor agreements, unless the city decision conflicts with ‘the laws of the general assembly.’

“Again, there was no such law of the general assembly at the time of the Master Builders decision, nor has any such law been adopted since that decision.

“Executive Order No. 69 also purports to assert control over the appropriations process which is constitutionally committed to the legislative branch.

“When the Iowa Legislature appropriated money for the I-JOBS program, we did not include any conditions limiting the ability of cities or counties to use project labor agreements.

“Governor Branstad cannot, by executive fiat, impose such conditions through an executive order. If Governor Branstad wants such a condition on future appropriations, he is free to propose such a bill to the Iowa Legislature. Without legislative action, however, he cannot impose such conditions on appropriations by executive order.

“These limits on Governor Branstad’s executive authority are especially important when the state has already signed a contract with the city of Cedar Rapids and has already begun providing the funds for use on the project. Governor Branstad cannot unilaterally change the terms of the state’s contract with Cedar Rapids.

“I urge the City of Cedar Rapids to move forward with its project, using the project labor agreement it had entered before Governor Branstad took office.

“If Governor Branstad pursues legal action in an attempt to enforce Executive Order No. 69, I will seek to intervene in any such legal action – just as I did when Speaker Rants sued Governor Vilsack over the alleged unlawful use of his item veto authority – in order to protect the integrity of the Legislature’s authority under Iowa’s Constitution and to challenge the validity of Governor Branstad’s Executive Order No. 69 for the reasons given above.”

Dorman’s latest Cedar Rapids Gazette column revisits the issue:

With federal bucks and federal labor rules governing the project, the argument that a PLA will raise labor costs in this case doesn’t ring true. The state’s portion of the project, a $15 million I-JOBS grant, is capped. No matter how much the project costs, the state’s share is set in stone.

The PLA in this case was signed before you became governor. The I-JOBS grant was awarded long before that. Executive orders can be potent, but I’m not sure they can erase history.

I understand you’re motivated to stand firm. But I also know leaders here were motivated by a strong desire to make sure local workers got jobs on local public works projects.

The city wants to make sure at least half of the workers building its convention complex are from around here. There will still be competitive bidding on the project – it’s just that an out-of-state company, for example, won’t be able to win the bid and bring all of its workers in from elsewhere.

Leaders, both in the city and Linn County, both Republicans and Democrats, didn’t want to see out-of-state-workers roll into town and roll out with our economic impact in their pockets. And PLAs are the only legal way to make sure that didn’t happen. In the wake of a catastrophic flood and in the middle of a sour economy, it seems reasonable.

I don’t see Branstad backing down. He has long opposed anything organized labor wants. During the gubernatorial campaign, he promised to block all of organized labor’s legislative priorities if elected. He’s not going to rescind Executive Order 69 regardless of what, if anything, Attorney General Tom Miller says about it. (Branstad’s legal counsel Brenna Findley is probably already drafting a defense of the order.)

Going to war with Cedar Rapids over a project labor agreement will send a strong signal to local officials across the state, and Branstad has little to lose by standing his ground.

Corbett has more at stake, because if Cedar Rapids honors the project labor agreement and loses the I-JOBS money, 20 percent of the convention center funding is gone. If Cedar Rapids sues the state for the I-JOBS grant already awarded, a long delay in construction is probably inevitable. The convention center is too important for Cedar Rapids’ redevelopment to let that happen.

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