Opinion
Review Granted July 9, 1997.
Previously published at 54 Cal.App.4th 1291
Stephen P. Berzon, Scott A. Kronland, San Francisco, Jonathan Weissglass, New York City, Altshuler, Berzon, Nussbaum, Berzon & Rubin, San Francisco, Sandra Rae Benson, Mary Leichliter, Van Bourg, Weinberg, Roger & Rosenfeld, Oakland, Mark S. Renner, Wylie, McBride, Jesinger, Sure & Platten, San Jose, Jeffrey L. Cutler, Wohlner, Kaplon, Phillips, Young & Barsh, Encino, for Petitioners.
John M. Rea, Chief Counsel, Vanessa L. Holton, Asst. Chief Counsel, Martin J. Fassler, Dept. of Indus. Relations, for Real Party in Interest.
POCHE, Acting Presiding Justice.
The dispute before us arises from the manner by which the Department of Industrial Relations (Department) determines prevailing wage rates. For 40 years the prevailing wage rate in this state had been defined by regulation as "[t]he basic hourly rate being paid to a majority of workers engaged in the particular craft, classification or type of work within the locality and in the nearest labor market area, if a majority of such workers is paid at a single rate...." (Cal.Code Regs., tit. 8, § 16000.) Until January 26th of this year the regulation went on to provide when there is "no single rate being paid to a majority, then the single rate (modal rate) being paid to the greater number of workers is prevailing." As of January 26 an amended The promulgation of this new regulatory definition by the Director of Industrial Relations (Director) took place against a backdrop of legislative and budgetary proposals. In 1995 Assembly Bill No. 138 was introduced which would have amended various portions of the Labor Code. Among its provisions was one to amend Labor Code section 1773 to provide that when no single wage rate is paid to more than 50 percent of the workers in a craft, the prevailing wage shall be "an average of the wage rates paid, weighted by the total employed" in the craft. (Assem. Bill No. 138, § 6 amending Lab.Code, § 1773, subd. (b).) The Director supported the legislation and testified on its behalf, but Assembly Bill No. 138 was not passed by the Legislature.
Although the legislation failed to pass, in October of 1995 the Director set in motion the process of amending the agency's regulations to replace the former modal method of calculating the prevailing wage standard with a weighted-average method. (Cal. Reg. Notice Register 95, No. 43-Z, pp. 1753-1755.)
Simultaneously the executive branch was seeking funding to implement the weighted-average method. Thus, the Governor's proposed budget for 1996-1997 included a general fund appropriation of $1,266,000 and 19 positions "for prevailing wage reform." (Governor's Budget, General Government, G-24.) In a budget change document of September l995 which was signed by the Director "Prevailing Wage Reform" is explained as being the appropriation and the additional staff "to implement, beginning with this year and every year thereafter, the new methodology of determining prevailing rate. To find the prevailing rate of per diem wages, surveys covering up to 80,000 contractors must be performed." The rationale advanced by the Director for the change was that a shift from a modal to a weighted-average wage rate "would result in savings of approximately 20%" in labor costs for public construction.
The Legislative Analyst recommended deletion of the appropriation from the budget "because this policy proposal and associated costs should be considered in prevailing wage legislation rather than the Budget Bill." She recommended the prevailing wage issue be addressed either through Assembly Bill No. 138 which was pending or through similar legislation. (Analysis of the 1996-1997 Budget Bill: Report of the Legislative Analyst's Office to the Joint Legislative Budget Committee, pp. G-44-G-45.) As adopted in July of 1996 the Budget Act deleted the appropriation after the conference committee unanimously rejected what it described as a "proposal to augment by $1,266,000 and 20 positions to change the method for calculating prevailing wages." (Conference Committee Agenda on the 1996-1997 Budget Bill, p. 294.)
In November 1996 petitioners, consisting of some 37 unions representing construction trades and a taxpayer, sought a writ of mandate in San Francisco Superior Court. They challenged the right of the Director to proceed with four wage surveys which they argue are designed to implement the new weighted-average methodology. By their third cause of action petitioners sought to enjoin the Director from spending other appropriated funds on the four surveys as violative of Government Code section 13332.15. Government Code section 13332.15 states "[n]o appropriation may be combined or used in any manner to avoid budgeting the salary or operating expenses of any position or to achieve any purpose which has been denied by any formal action of the Legislature." (Italics added.) In petitioners' view when the Legislature deleted funding for the weighted-average prevailing wage standard it took a "formal action" within the meaning of the section which precludes the Director from spending other budgeted funds to gather information required to determine the weighted-average prevailing wage rate.
The four surveys are as follows: Commercial Electrical Construction Statewide survey; Commercial Glaziers Statewide survey; Commercial Sheet Metal and Roofers Statewide survey, and Residential Construction survey, Los Angeles County. In superior court by their first and second causes of action petitioners alleged the Director was violating Labor Code section 1770 which requires him to determine prevailing wages in accordance with the standards of Labor Code section 1773. They alleged that the Director was violating his duty under section 1773 to obtain data from labor organizations and from contractors working under collective bargaining agreements. In addition they alleged that the four surveys being conducted do not ask for information which is needed to calculate prevailing wage rates as required by section 1770.
The Superior Court in ruling on the third cause of action denied injunctive relief to halt the surveys. It found that the failure of the Legislature to appropriate the requested funds was not indicative of a legislative purpose to prohibit the Director from conducting "construction craft wage surveys generally, or these surveys in particular," and, that even if the deletion of the appropriation was a formal action whose purpose was to prevent implementation of the weighted-average prevailing wage rate, the surveys in question are "consistent with" the past survey practices of the Department. The court also refused to enjoin the Director from using other appropriated funds to implement the weighted-average methodology because there was no evidence before it of the pertinent regulation or of the reasons for its adoption by the Department.
Petitioners sought writ relief in this court, and we issued an order to show cause why the Superior Court's order should not be vacated and replaced by an order prohibiting the Director from using appropriated funds to implement the weighted-average method of computing prevailing wage rate. In addition we directed the Superior Court to show cause why it should not permit discovery on the purpose of the four wage surveys and then consider on the merits petitioners' claim those surveys are being conducted to implement the weighted-average methodology. We now conclude that in this instance the deletion by the Legislature of a proposed line item appropriation constitutes a "formal action" within the meaning of Government Code section 13332.15.
Discussion
Were we to defer to an appeal our review of Government Code section 13332.15 and its interplay with the single subject provisions of our state constitution the budget process would be thrown into considerable turmoil, leaving both the legislative and the executive branches of government unclear as to the purposes for which appropriations may not be spent. We issued an order to show cause in part because this petition presents an issue of substantial public importance and one which would benefit from speedy resolution. (Britt v. Superior Court (1978) 20 Cal.3d 844, 851, 143 Cal.Rptr. 695, 574 P.2d 766.) By issuance of an order to show cause we necessarily concluded that there is no adequate remedy at law. (People ex rel. Younger v. County of El Dorado (1971) 5 Cal.3d 480, 492, 96 Cal.Rptr. 553, 487 P.2d 1193.)
Both the President of the State Senate and the Speaker of the Assembly have urged us to hear and resolve the petition no later than May 15, 1997, so as not to impede the orderly passage of this year's state budget.
The Chair of the Senate Budget and Fiscal Review Committee, Senator Mike Thompson, and Assemblymember Denise M. Ducheny submitted a brief as amici curiae in the Superior Court. A copy of that brief was appended to the letter from the President and the Speaker which urges us to adopt petitioners' position.
Government Code Section 13332.15
Government Code section 13332.15 which prohibits combining or using an appropriation to achieve a purpose which has been denied by a formal action of the Legislature was first codified in l983. (Stats.1983, ch. 323, § 44, p. 970.) However, exactly the same language had been included in each annual budget act from 1976 through 1982. Indeed, in Mandel v. Myers (1981) 29 Cal.3d The only case in which a claim that Government Code section 13332.15 applied, likewise, did not decide the issue before us because the parties conceded "the Legislature's deletion of [the counties'] claim from the l981 special appropriations bill constituted a formal action of denial...." (County of Sacramento v. Loeb (1984) 160 Cal.App.3d 446, 459, 206 Cal.Rptr. 626.) Thus, although there are two opinions suggesting that a legislative deletion of a line item appropriation constitutes a formal action for section 13332.15 purposes, the question has never been decided.
Budget Acts from 1976 through 1982 included the provision. (Stats.1976, ch. 320, § 14, p. 821; Stats.1977, ch. 219, § 15, pp. 993-994; Stats 1978, ch. 359, § 15, p. 1006; Stats.1979, ch. 259, § 15, p. 844; Stats.1980, ch. 510, § 15, pp. 1362-1363; Stats.1981, ch. 99, § 15, p. 587; Stats. l982, ch. 326, § 15, p. 1398.)
While the language of the section appears clear and unambiguous, the Director urges us to read it as having an extremely limited application because it is codified in Government Code, title 2, division 3, part 3, chapter 3, article 2.5 (article 2.5), which contains a variety of what the Director characterizes as "housekeeping and bookkeeping" provisions. Surely more telling than the section's location in the statutory scheme is its language--language which seemed so unambiguous that in both Mandel and Loeb it was assumed a line item appropriation would constitute a formal action. We conclude the statutes adjacent to Government Code section 13332.15 in article 2.5 shed little light on the Legislature's intended meaning of a "formal action."
Nor is there much to be inferred from the only other case to mention the section, Tirapelle v. Davis (1993) 20 Cal.App.4th 1317, 1321, 26 Cal.Rptr.2d 666, which mentions its provisions in the context of two sections (both codified in article 2) having to do with the reallocation of appropriations made by the Department of Finance and with a prohibition of expenditures in excess of such reallocations. (Gov.Code, §§ 13323, 13324.)
The 1996-1997 budget proposed by the Governor included an item of $1,266,000 and 19 positions "for prevailing wage reform." (Governor's Budget, General Government, G-24.) As described by the Legislative Analyst the proposed appropriation was "to implement a change in the methodology of computing prevailing wages for public works." The analyst's report goes on to describe the differences between the current modal rate and a weighted-average rate, explaining that the appropriation would cover "annual surveys for more than 4,000 job classifications in each of 58 counties." (Analysis of the 1996-1997 Budget Bill: Report of the Legislative Analyst's Office to the Joint Legislative Budget Committee, pp. G-44-G-45.) The requested appropriation was included in the Assembly's version of the budget. (Assembly Budget Committee, Subcommittee Reports of Major Actions on Assembly Bill No. 2049, 1996-1997 Budget Bill, pp. 4-17.) In the Senate, however, the line item was deleted by the Senate Budget and Fiscal Review Committee from the Senate's budget bill. (Department of Finance Change Book Worksheet--Senate Actions.) Likewise the Conference Committee deleted the appropriation from the final budget bill submitted to, and passed by the Legislature. (Conference Committee Agenda on the 1996-1997 Budget Bill, p. 294; Department of Finance, Final Change Book, List of Changes to the Governor's Budget (Reflecting Changes Included in Chapter 162, Statutes 1996), p. 480; 1996 Stats., ch. 162, No. 5 West's Cal. Legis. Service, p. 633.)
When the line item was specifically deleted from the Governor's proposed budget the Legislature took the only action necessary to reject funding this activity. Passage of a Budget Act without a specific appropriation must be distinguished from the Legislature's failure to pass a bill, such as a provision amending the Labor Code to mandate a change in the manner in which prevailing Here, the budget bill was passed. In effect, the Budget Act as passed had been amended to delete this line item. Under Government Code section 13332.15 we are not required to divine the legislative intent behind that deletion. Our inquiry is limited to determining whether by deleting the appropriation the Legislature took formal action to deny funding for the implementation of the weighted-average prevailing wage rates. Short of requiring the Legislature to pass a separate resolution indicating what purpose or positions for which it intends to deny funding, we cannot imagine what more it could do than it did here to take formal action to preclude an expenditure. Therefore, we conclude when the requested appropriation for "prevailing wage reform"--namely funding to finance surveys required for implementing a weighted-average prevailing wage methodology--was rejected, its deletion from the Budget Act was a formal action of the Legislature within the meaning of Government Code section 13332.15 to deny funding for the purpose of implementing the weighted-average methodology.
Single Subject Rule
The Director maintains Government Code section 13332.15 must not be construed to limit his funding of survey activities because the effect of such an interpretation is to impliedly amend those sections of the Labor Code which give him responsibility for determining prevailing wage rates and empower him to establish a regulatory scheme for doing so. (Lab.Code, §§ 1773, 1173.4, 1773.5.) In his view deletion from the Budget Act of funding for surveys necessary to implement a weighted-average methodology cannot preclude him from proceeding with such survey activity without violating the single subject provision of the California Constitution in article IV, section 9.
"A statute shall embrace but one subject, which shall be expressed in its title. If a statute embraces a subject not expressed in its title, only the part not expressed is void. A statute may not be amended by reference to its title. A section of a statute may not be amended unless the section is re-enacted as amended." (Cal. Const., art. IV, § 9.)
The Director has turned the problem inside out. The Budget Act consists solely of appropriations with no language purporting to limit the use of the appropriated funds. The language of limitation appears in Government Code section 13332.15. Therefore on its face the Budget Act does not attempt to do the impermissible task of both appropriating and purporting to change a statutory scheme.
Had the Legislature attached a budget rider or inserted some provision in the Budget Act telling the Director he could not use any of the funds appropriated to him for surveys designed to support determination of weighted-average wage rates we would have a very different problem. (Association for Retarded Citizens v. Department of Developmental Services (1985) 38 Cal.3d 384, 394, 211 Cal.Rptr. 758, 696 P.2d 150) (to construe language in the Budget Act which mandates the Director of Developmental Services to establish priorities for expenditures as permitting him categorically to limit services provided by regional agencies which under the statutory scheme were charged with the duty of providing services as required by individual clients "would raise serious constitutional questions under the single subject rule"); Planned Parenthood Affiliates of California v. Swoap (1985) 173 Cal.App.3d 1187, 1201, 219 Cal.Rptr. 664 (a provision in the Budget Act barring use of family planning funds for organizations providing abortion-related services violated the single subject provision by granting new authority to a state agency and thus amending the Family Planning Act); California Lab. Federation v. Occupational Safety & Health Standards Bd. (1992) 5 Cal.App.4th 985, 995, 7 Cal.Rptr.2d 399 (a budget rider which capped hourly attorney fees at a fixed sum violated the single subject rule by altering the limitation of a "reasonable" sum impliedly contained in Code of Civil Procedure section 1021.5); Homan v. Gomez (1995) 37 Cal.App.4th 597, 43 Cal.Rptr.2d 647 (a budget rider which directed Other Constitutional Claims
The Director argues unpersuasively that our reading of Government Code section 13332.15 is unconstitutional because it deprives the Governor of the power of the veto. Under our state Constitution the Governor proposes a budget to the Legislature. (Cal. Const., art. IV, § 12, subd. (a).) Likewise from the budget bill passed by the Legislature the Governor "may reduce or eliminate one or more items of appropriation while approving other portions of a bill." (Cal. Const., art. IV, § 10, subd. (e).) Our Constitution does not, however, give the Governor the ultimate power to appropriate by permitting the Governor to restore appropriations to the budget bill which the Legislature has removed from it. The Governor's remedy in such a situation is a veto of the entire budget bill.
The Director raises additional objections which he characterizes as being of constitutional magnitude. He does so by assuming that any limitation on how the Department conducts the four wage surveys is equivalent to a ban on its power to conduct all wage surveys. From this false premise the Director constructs the following syllogism: if the Department is not free to conduct any wage survey it chooses it will be forced to accept the wage rates provided for in union-supplied collective bargaining agreements. If the only source of wage data available to the Department is that contained in the bargaining agreements the Director cannot exercise his discretion to determine what wage is prevailing. In support of his contention that such reliance upon bargaining agreements would amount to an unconstitutional delegation of the Director's quasi-legislative function of rule-making to private parties, the Director relies upon two recent decisions. (Pipe Trades Dist. Council No. 51 v. Aubry (1996) 41 Cal.App.4th 1457, 49 Cal.Rptr.2d 208; Independent Roofing Contractors v. Department of Industrial Relations (1994) 23 Cal.App.4th 345, 28 Cal.Rptr.2d 550.)
Both those cases involved a single on-going dispute which began when the Department was asked to determine the prevailing wage for a group of employees, so-called craft tenders, a craft for which it had not previously made such a determination. (Independent Roofing Contractors v. Department of Industrial Relations, supra, 23 Cal.App.4th at pp. 349-350, 28 Cal.Rptr.2d 550.) It did so, but rescinded its wage determinations after it was informed that a collective bargaining agreement covering one group of such workers had been itself rescinded. The Department's action was then challenged by a group of contractors who argued the Department had unconstitutionally delegated its rule-making power to a private party--the craft tender's local which had initiated the original request for a wage rate determination. As the Court of Appeal noted the "Department's authority to make prevailing wage determinations and the subsumed power to determine craft classifications is quasi-legislative." (Id. at p. 354, 28 Cal.Rptr.2d 550.) That quasi-legislative authority represents a delegation by the Legislature of its power. (Ibid.) In Independent Roofing the court found that there was no evidence the Department had failed to exercise its legislative discretion to rescind the craft tenders' wage determination, and in any event, the Department did nothing improper by relying upon the existence or nonexistence of a collective bargaining agreement. (Id. at pp. 354-355, 28 Cal.Rptr.2d 550.)
In our view the Director misreads Independent Roofing Contractorsand Pipe Trades Dist. Council No. 51. Neither case holds that the Director is constitutionally required to conduct surveys. The court noted "there might indeed be a constitutional problem" if the Director were to "simply and uncritically" adopt as the prevailing wage the wage in a collective bargaining agreement. (Pipe Trades Dist. Council No. 51 v. Aubry, That, however, is not the problem before us. In this instance the Legislature has refused to appropriate funding for implementation of a weighted-average prevailing wage methodology. The Director retains the quasi-legislative power granted to him by Labor Code section 1773.5 to prescribe administrative rules and regulations. (First Industrial Loan Co. v. Daugherty (1945) 26 Cal.2d 545, 549, 159 P.2d 921.) Moreover, the Director retains his power to gather information incident to determining prevailing wage rates; he may survey. (Lab.Code, §§ 1773, 1773.4.) What he may not do is spend funds otherwise appropriated to the Department on surveys designed to determine weighted-average prevailing wage rates. That the Director has now adopted a new prevailing wage rate regulation but lacks an appropriation to implement it raises a practical problem, not a constitutional one. In our view a constitutional problem would arise were we to hold that the Director by adopting a regulation could thereby compel the Legislature to pay for implementation of the regulation, despite deletion by the Legislature of a line item appropriation for that purpose. The Governor of this state has no power to appropriate funds; subordinate officers of the executive branch are similarly without such power.
Four Wage Surveys
In denying petitioners injunctive relief the superior court declined to order discovery directed to determine the purpose of the four surveys. As we have explained that purpose is critical to whether the surveys can be funded by the Department, and therefore such discovery must be permitted.
Disposition
Let a peremptory writ issue directing the Superior Court to issue a new order: (a) prohibiting the Director of the Department of Industrial Relations from spending appropriated funds to implement the weighted-average methodology for determining prevailing wage rates, and (b) permitting discovery as to the four wage surveys. After this discovery is completed the Superior Court is directed to consider on the merits petitioners' claim that the surveys are being conducted in order to implement a weighted-average method for determining prevailing wages.
Consistent with the stipulation of the parties made in open court, this opinion shall be final as to this court forthwith. (Cal. Rules of Court, rule 25(b).)
REARDON and HANLON, JJ., concur.