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Earlier this week, I explained why opponents of a June 2012 ballot proposal say it could cost San Diego up to $250 million in state funding annually.

Organized labor argues a new state law would disqualify San Diego from certain state funds if voters approve banning the city from ever requiring union-friendly construction agreements. The business groups leading the ban’s charge say there’s a loophole in their ballot measure to make sure that won’t happen.

Since I still don’t know who’s correct, I’ve continued digging into the issue. The outcome would have a major impact in San Diego and in Chula Vista and Oceanside, where voters approved similar ballot measures last year.

I’ve asked state officials, lobbyists and local officials to weigh in. So far, there’s no consensus, but the Oceanside City Attorney John Mullen added an interesting argument. He told me Oceanside is following the new state law even without having a loophole like the ballot measure in San Diego.

The state law says city officials must be allowed to consider the union-friendly construction pacts. If they are prohibited from considering the pact for a project, no state funds or financial aid will be provided for that project. The pacts are known as project labor agreements, or PLAs.

“I don’t think we’ve banned consideration of a PLA,” Mullen said. “Our council can still consider project labor agreements on a case by case basis if a contractor has agreed to it. It remains to be seen whether that’s sufficient to avoid the application of this statute.”

Let’s break this down. Oceanside’s rules are similar to the proposal in San Diego. They say the City Council can’t require a contractor to use the construction pacts but contractors can still voluntarily use them on city projects.

Mullen argues this arrangement allows the council to seek using the construction pacts with a contractor’s approval, and that means the council can still consider the pacts. Because there’s an element of consideration, he argues the state penalties don’t apply to Oceanside.

“We’ll see if that holds up,” Mullen said. “I admit that this is an open question.”

In the coming weeks, Mullen said the city of Oceanside will discuss the new law with other local governments facing similar questions and seek clarification from the state. If Oceanside does face the state penalties, he said the city would seek to add a loophole so state funds aren’t at risk.

Either way, Oceanside’s got time to decipher the issue. The law says cities with project labor agreement bans in the books before November this year won’t be financially penalized until after 2015.

That’s more time than San Diego, which is proposing to put a ban in the books next June. If the state’s financial penalties apply to San Diego, they would take effect immediately.

I’m continuing to examine San Diego’s ballot measure and the new state law. If you have any insight to share about the potential impact of either, please contact me. You can read the law here.

Keegan Kyle is a news reporter for voiceofsandiego.org. He writes about public safety and handles the Fact Check Blog. What should he write about next?

Please contact him directly at keegan.kyle@voiceofsandiego.org or 619.550.5668. You can also find him on Twitter (@keegankyle) and Facebook.

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