The California Supreme Court dealt a potential blow to cities trying to ease their financial burdens by privatizing services and firing municipal workers when it refused to hear a Costa Mesa appeal of a lower-court ruling that killed its jobs plan.

The earlier appellate decision effectively prohibits most cities from privatization except for certain “specialized services” such as legal or financial functions.

In March 2011, the Costa Mesa City Council approved a move to plug a $15 million budget hole by privatizing a big chunk of the city’s operations. Fire protection, street sweeping, animal control and other basic services were all put on the table for outsource consideration. The Costa Mesa City Employees’ Association filed suit, arguing that the city’s plan to outsource municipal jobs violates state law and the union contract, and won a Superior Court preliminary injunction.

In August, the Fourth District Court of Appeals upheld the lower court’s ruling and on Wednesday the state Supreme Court refused to hear the case. It also denied a motion to remove the appellate court decision from case law, leaving it as a precedent affirming state law that prohibits general-law cities from farming out basic services.

Costa Mesa Mayor Pro Tem Jim Righeimer suggested that the court decision would encourage general-law cities, bound closely by state law, to adopt city charters that give them more flexibility in choosing novel types of government structures. Union general manager Nick Beradino said he doubted many cities would leave the jurisdiction and protection of California’s constitution for a system characterized of late by corruption, slack oversight and a general lack of control.

And, in fact, Costa Mesa voters soundly rejected the idea themselves in November when Measure V was defeated 59% to 41%. The initiative would have established a charter that, among its features, targeted union influence by curbing its political fundraising and requiring voters to approve any employee pension increases.

Bernardino told the Los Angeles Times that the court decision was “one of the most significant decisions for labor in the last several decades.”

–Ken Broder   

To Learn More:

State Top Court Won't Hear Costa Mesa Outsourcing Appeal (by Mike Reicher, Orange County Register)

State Supreme Court Rejects Costa Mesa's Appeal on Job Outsourcing  (by Lauren Williams, Los Angeles Times)

Righeimer Calls for Truce With Costa Mesa Union (by Norberto Santana Jr., Voice of Orange County)

Based Upon Questionable Savings Costa Mesa Council Votes to Outsource Two Service Areas (by Joe Hill, The Liberal OC)