Prevailing Wage Bill Could Increase School Construction Costs

MACo Research Director, Robin Clark Eilenberg testified in opposition to SB 711, Prevailing Wage Rates Reform Act of 2016, to the Senate Finance Committee on March 17, 2016.

This legislation expands prevailing wage laws applicable to school construction projects in Maryland and other public works projects.

A recent update to statewide prevailing wage laws created stricter, more inclusive laws for school construction projects. While most public works projects are subject to the prevailing wage if they receive at least 50% state funding, school construction projects are subject to the prevailing wage if they receive 25% state funding.

This change, enacted by the General Assembly in 2014, results in many more school construction projects falling under prevailing wage mandates.

From the MACo testimony,

Prevailing wage laws, expanded through Chapter 282 of 2014 to include more school construction projects, are leading to increased costs in school construction. These increased costs are coming at a time when our State needs more funding for school construction.

Maryland needs to maintain its aging stock of schools, expand school capacity in areas of increasing student enrollment, and provide updated classroom environments to accommodate new curriculum and provide access to technology. From year-to-year, millions of dollars in school construction requests are unfulfilled due to a lack of state and local funding.

The provisions of SB 711 include lowering the threshold of prevailing wage application to $25,000 – meaning even many of the smallest projects would trigger this comprehensive and costly state law. This change would be likely to directly increase the costs of school construction and reduce the number of small contractors who bid on these projects.

Cost increases in school construction reduce the state and local ability to keep pace with education needs and to provide safe and healthy learning environments for Maryland’s school children.

For these reasons, MACo requests the Committee give an UNFAVORABLE report to SB 711.

An identical cross-filed bill, HB 721, was heard on March 4 in the House.