Job Preference Dropped From Transit Bill

Gov. Pete Wilson, who is making revitalization of the California economy a cornerstone of his Administration, has squelched a legislative initiative that would have given bidding preference in Los Angeles County transit contracts to companies that create local jobs.

The Republican governor signaled his opposition to the proposal--a Los Angeles version of the controversial “buy America” theme--early in April as the Legislature was preparing to send him a bill that would reorganize the county’s transportation bureaucracies.

To avoid the possibility that Wilson would veto the entire bill, the measure’s author, Assemblyman Richard Katz (D-Sylmar), said Friday that he agreed to remove the preference that would have been given to California-based companies over competitors in other states or abroad.

Wilson, who opposes protectionist trade policies, argued that such preferential treatment might backfire by triggering retaliation from other states or countries.

The provision Wilson found objectionable was added February after controversy over the aborted award of a $121.8-million Metro Green Line contract to Japan-based Sumitomo Corp. to build rail cars.

Katz said he intends to seek final passage next week of the transit reorganization bill, which seeks to make transportation planning more efficient by creating a transportation authority and abolishing the Southern California Rapid Transit District and the Los Angeles County Transportation Commission.

The favorable treatment feature of the bill, which Katz described as far less strict than earlier proposals, would have given an edge to contract bidders who would “create new, permanent full-time jobs within California and Los Angeles County.”

It also would have enabled the proposed new Los Angeles County Metropolitan Transit Authority to grant favorable consideration to enterprises located within the county or in California.

But Wilson sent word through Business, Transportation and Housing Secretary Carl D. Covitz that rather than helping boost the California economy, the preferential treatment might backfire.

“Other states will retaliate against California businesses if we favor our firms at the expense of theirs,” Covitz said in a letter to Katz. “The end result could be an overall reduction in trade that hurts the California economy.”

Further, Covitz told Katz that favoring California companies and industries “could reduce their incentive to innovate and improve, and make them less competitive in international markets.”

Katz said he learned of Wilson’s opposition to the bill from the Capitol rumor mill and asked Wilson to state any objections before the measure reached his desk. It was at that point that he deleted the favorable treatment provision.

“I don’t view it as protectionist,” Katz said Friday. “The irony is that the bill (reflects) virtually what every other country in the world requires of American companies when we go overseas.”

He said that because local taxpayers are paying for new transit development in Los Angeles County, they should benefit from the expanded local economic activity. Katz said he was a bit surprised by Wilson’s late opposition, asserting that “all along we have been very much upfront about saying let’s use these dollars to create jobs for (Los Angeles) people.”

The preferential treatment provision would have applied to companies that bid on contracts for such transit equipment as rail cars, train control systems, communications, fare collection systems and buses.