The Building Tradesman Newspaper

Friday, May 23, 2014

House OKs more road money, but prevailing wage repeal is lurking

By Marty Mulcahy, Editor

LANSING – More money to improve Michigan’s crumbling roads and repair its bridges seems to be on the way, as the state House on May 12 adopted a 10-bill package that adds $450 million to the Michigan Department of Transportation budget.

The legislation is now in the state Senate, where Senate Majority Leader Randy Richardville has acknowledged what MDOT has been saying for years: that the state needs to be spending an additional $1.5 billion a year or so on road work to maintain a “good” rating.

But few lawmakers in the GOP caucus, which controls all levers of power in Lansing, want to have anything to do with raising gas taxes or creating other revenue for additional, new road money. The package adopted by the House mostly relies on the allocation of some $370 million in future General Fund dollars to roads, increases fines on overweight trucks, and converts the state’s flat gas tax to a percentage-based tax.

“Today was a very good start,” said House Speaker Jase Bolger (R-Marshall) to MIRS News Service. “Today was important progress toward building better roads in Michigan.” Added state Rep. Marilyn Lane (D-Fraser): “It is a good first step that hasn’t been taken in a decade.”
There is no consensus on where any future road money will come from. But it should come as no surprise that Michigan’s Prevailing Wage Act of 1965 will become a target for repeal during this process, and purportedly, to create a savings of taxpayer dollars. State Rep. Greg MacMaster (R-Kewadin) is pushing a plan to repeal prevailing wage in Michigan, which he said inflates road repair costs by 25 percent. He gets his numbers, of course, from the conservative Mackinac Center for Public Policy, a Midland-based think-tank which has dubiously called for prevailing wage repeal for years.

There are no less than six bills on the Michigan Legislature’s docket that would repeal prevailing wage for school work and/or for all taxpayer-funded construction. “If the state realized the savings forecast by the Mackinac Center study it could result in a savings of $415 million that could be reallocated to roads,” MacMaster said.

Those claims of taxpayer savings for prevailing wage repeal fly in the face of numerous academic studies, some of which were performed by Michigan State University Human Resources and Labor Relations Professor Dr. Dale Belman. He and others have found that in states where prevailing wage laws have been repealed, taxpayers have not saved any money, but construction workers’ wages have fallen.

Prevailing wage “helps create a better construction industry,” Belman said at a prevailing wage symposium held in Lansing in March. “Higher wages,” he said, “are very strongly related to higher productivity.” But at the same time, he said, “lower wage rates and the absence of benefits do not necessarily imply lower total costs” for contractors. “You can’t assume worker productivity is the same at a lower wage,” Belman said. “It’s an erroneous assumption.”

Whether prevailing wage repeal gets traction during the road repair debate remains to be seen. But the fact that the state House was able to move forward on getting a fairly good chunk of dollars allocated for road work was welcome news in many corners of the state.

“More money to improve roads is the best kind of stimulus for the construction industry, and it really benefits the entire state,” said Michigan Building and Construction Trades Council Legislative Director Patrick “Shorty” Gleason, who testified before the House Transportation Committee. “Our workers travel on the same bad roads as everyone else, and experience the same bills for broken tie rods and rims on their cars.

“When more money is put into roads, not only does Michigan become a better place to do business, it becomes a better place to live. Money that is paid to road workers becomes re-circulated into local communities, who are able to pay their taxes, pay for their groceries and take a vacation.”

Some elements of the road repair package passed by the House include increasing and extending road work warranties and efficiencies and increasing competitive bidding.

MITA, the Michigan Infrastructure and Transportation Association – a consortium that includes building trades unions pushing for road repairs – issued a statement that said “we are encouraged by the House action this week and view it as a real opportunity to get a full solution before the Legislature breaks for their summer recess.”

The Michigan Chamber of Commerce, also a strong supporter of more road work, said “if the Michigan Senate works together in the same spirit of cooperation and determination as the House, a broader and more comprehensive plan to fix the roads and improve public transit can and should be signed into law by the 4th of July.”