California’s nonprofits have been dragged into a bitter legislative battle with some of the state’s most powerful labor organizations over local government contracts with non-union workers.

Democratic Assemblymember Liz Ortega took a shot at the chief executives of the nearly 190 nonprofits that wrote in to oppose her legislation, Assembly Bill 2557, that would add new disclosure requirements for private organizations — many of them nonprofits — that do work for local governments under contract.

“Looking at several of the executives who signed the nonprofit opposition letter, it was brought to my attention that many of them make upwards of over $200,000 per year,” Ortega, a former Alameda County union official, told the Senate’s Local Government Committee last week. “Some make even more than $300,000, while many of their staff are in line for services that we provide in the nonprofit sector.”

It was the latest salvo in a big-money lobbying fight between labor unions and local governments over the hiring of private contractors that perform services for the state’s 4,800 counties, cities, special districts and schools.

Local governments rely on contractors to perform a wide range of services paid with taxpayer funds. Contractors run animal shelters and after-school programs. They provide health care in local jails as well as homeless, legal aid and immigration services. Contractors cut fire breaks around rural communities, perform engineering services for public works projects, build affordable housing and fix government computer systems.

Unions have long demanded cities and counties hire their dues-paying members to do government work. They say the outsourcing to contractors erodes middle-class jobs, and they cite concerns about misuse of taxpayer funds. This has led to clashes with local officials who argue contractors help keep down costs for taxpayers as they provide vital services for communities across California, particularly during an ongoing local government labor shortage.

Despite the tensions, Geoff Green, who heads the California Association of Nonprofits, said he was still surprised by Ortega’s attack that kicked off the start of last week’s committee hearing.

He said his member organizations strive to get local government contracts that pay nonprofit workers as much as what union members make. He didn’t dispute the executive salary ranges, which Ortega’s office told CalMatters had been pulled from the tax forms of eight large nonprofits that opposed her bill. But Green called it a “non-starter argument” for her to attack the pay of the people running “some of the most successful nonprofit organizations that serve millions of Californians.”

“It really impugns the sector, the whole nonprofit sector, and insults those who work in it and lead it,” Green told CalMatters.

Unions highly influential in California politics

There are few groups more influential in state politics than unions in California, despite only representing one-sixth of the state’s workforce.

As CalMatters reported, they regularly get their way on bills at higher rates than other prolific lobbying groups, due in part to the massive amounts of money they spend on state politics. Unions have donated at least $22 million to sitting legislators’ campaigns since 2020, according to the Digital Democracy database.

The California Labor Federation, which has donated at least $729,600 to campaigns since 2020, is “a proud co-sponsor” of Ortega’s bill.  So is the American Federation of State, County and Municipal Employees, which has donated at least $1.8 million. Service Employees International Union, which has donated at least $2.7 million, is another cosponsor.

Ivan Fernández, a California Labor Federation lobbyist, told the Senate committee last week that contracting out instead of hiring union members has led to a decline in middle class jobs, particularly for women and workers of color.

“Previously viewed as the backbone of the middle class, public sector jobs provided community members with long-term, sustainable employment,” he said. “Today, many simply do not have these opportunities due to local governments choosing to utilize a quick, contracted workforce.”

Local governments are prohibited from spending taxpayer money on political campaigns. But they’re no slouches when it comes to lobbying, though they tend to get their way less often on bills than unions do.

The League of California Cities, which opposed Ortega’s bill, is one of the top lobbying spenders in California. The group reported to the Secretary of State it spent nearly $2.6 million since January 2023 on lobbying. The California State Association of Counties (CSAC) spent $1.1 million.

“CSAC opposes AB 2557 quite simply because it will harm our ability to care for the 39 million Californians your chamber and our boards mutually serve,” the association’s president, San Luis Obispo County Supervisor Bruce Gibson, told the senate committee.

Bill watered down in Senate

Ortega is one of at least 32 lawmakers who are current or former union members or who have close ties to the labor movement. She was secretary-treasurer of the Alameda Labor Council and statewide political director for the University of California’s largest employee union, AFSCME Local 3299. Since winning her first election in 2022, she’s authored several union-sponsored bills.

Her latest bill would have originally put more requirements on contractors than the version California’s 40 state senators are now considering.

The version of the bill that passed the Assembly this spring would have required local government contractors to pay for regular audits of their own job performance, and it would have required that names of contractors and their employees — as well as their compensation and benefits — be publicly disclosed.

After local government, business and nonprofit lobbying groups complained that the requirements were wildly impractical, expensive and burdensome, the bill was amended last week in the Senate to remove the self-auditing requirements and the public naming of private-sector employees.

The new version would require that contracts be posted on local government websites and that unions be informed of new contracts and changes in existing ones. Now, only the number of contracted employees, their job classes and salaries would be made public.

Ortega told the Senate committee last week the measure is intended to improve transparency and accountability.

“As lawmakers, we have the right to know what our taxpayers’ monies are going for and making sure that the results that we’re looking for are achieved,” she said.

Asked why the measure was necessary, her office provided CalMatters with a list of nine recent news stories that detailed problems with local governments’ contracts with nonprofits. They included an article about a San Francisco nonprofit accused of spending around $80,000 of taxpayer funds on luxury gift boxes, limo rides and a Lake Tahoe trip; and another that detailed how a nonprofit mismanaged Sacramento County funds.

Lone Democrat casts ‘no’ vote

The original version of Ortega’s bill sailed through the Assembly earlier this year without any of the chamber’s 62 Democrats voting “no.”

However, 11 Democratic lawmakers — most of them former local elected officials — didn’t vote on the bill when it was on the Assembly floor last month. As CalMatters reported, not voting counts the same as voting “no,” and lawmakers regularly don’t vote on controversial bills to avoid angering influential groups such as unions.

When the bill passed the Senate’s local government committee last week, Sen. Steve Glazer, the former mayor of Orinda, became the lone Democrat in the Legislature to cast a “no” vote so far on the proposal.

Glazer is one of the few Democrats in the Legislature who regularly sides against unions on legislation.

For instance, he’s aligned with the California Labor Federation with its position on bills just 54% of the time, according to Digital Democracy. The four other Democratic senators on the local government committee — Nancy Skinner, Aisha Wahab, Scott Weiner and María Elena Durazo — align with the federation between 83% and 97% of the time.

Glazer, who is stepping down at the end of this year, told CalMatters he voted against Ortega’s bill because it creates “an added burden” on local governments, and he “didn’t see the justification for what they claimed was the purpose of the measure.”

Despite his group’s opposition, Green, the nonprofit association CEO, said it doesn’t mean nonprofits are out to take jobs from local government union members.

“We are not in competition with public-sector workers,” he said. “That is the bottom line.”

Ryan Sabalow is a reporter with CalMatters.