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3/22/2017 House Minority Leader Patricia Morgan Testifies Before House Labor Committee On Legislation to Increase Prevailing Wage Cap For Small Building Project Competition
STATE HOUSE -- House Minority Leader Representative Patricia Morgan (R-District 26 Coventry, Warwick, West Warwick), testified on her recently submitted legislation (H-5602) which seeks to raise the  limit for requiring the use of the prevailing wage.  The goal of H-5602 is allow municipalities to save money by exempting small projects which cost less than $200,000 from the prevailing wage mandate.  It is important to all Rhode Islanders for our cities and towns to save money and relieve the pressure to raise property taxes.
 
Patricia Morgan said, “This bill is part of a larger package which is comprised of tools to help municipalities control their spending.  In my town, the Town Council raises taxes every single year.  It is causing financial distress for many residents by increasing the cost-of-living for home owners, renters and businesses alike.  I have talked with several mayors who believe that these tools will be helpful to give control over their spending budgets. 
 
She added, “Many construction workers have not recovered from the Great Recession. In the past few years the state has approved spending on many state funded projects which benefit the union shops: tolls, several URI buildings, the new veteran’s home, a parking garage for the 195 land, building renovations at the Howard complex in Cranston and other public works.  However, we have not helped the non-union construction workers and too many are still feeling the effects of our stagnant economy.  A small municipal project would go a long way to help their families and would not greatly impact the unions.  However, it would increase competition and help our towns save money.”
 
"Over the past few years Ohio launched a billion dollar effort to build and renovate schools across the state. They exempted the projects from prevailing wage mandates. Their data shows that that exemption saved taxpayers 10.7% on the cost for the buildings without negatively impacting quality or wages.  In other words, the exemption allowed for cost savings and made taxpayer money go farther.  Another study from Michigan likewise concluded that the exemption saved 10-15% on the cost of construction projects.”
 
"Helping municipalities save money and make their precious repair dollars go farther is a worthy goal in our state that has the dubious distinction of having among the highest property taxes in the country," stated Rep. Morgan.
 
Currently, 28 states have some form of prevailing wage law on the books while 22 states have no such law. The cost threshold above which a government funded project would be subject to prevailing wage requirements varies greatly among the 28 states.  But at just $1,000 Rhode Island has the distinction, along with California, of maintaining the lowest threshold above which these requirements would apply—meaning that only construction projects that cost less than $1,000 would be exempt from the prevailing wage laws. Set in law in the early 1950s, that low threshold with the extra paperwork, fees and red tape makes it impractical for smaller firms to bid on a project.
 
Representative Helda J. Cunha (D-District 64 East Providence) is a contractor and agrees with Representative Morgan’s legislation, saying, “This will allow for a bigger and better playing field.”
 
Brian Daniels, Executive Director of the Rhode Island League of Cities and Towns said, “Why $200,000? Massachusetts does not have a cut off.  As far as other New England states, Connecticut is at $400k for new and $100k for renovation projects.  Vermont is at $100k, and New Hampshire has no prevailing wage law.  We are out of step with the rest of NE.  There is a cost of complying with prevailing wage, weekly paperwork and payments records, and some companies do not want to deal with that. You might get more qualified bidders if this bill is approved.  Therefore, we support H5602.”
 
Fred Mason of ABC RI said, “We are a national organization. We are non-union but not anti-union. We support this bill. The $200k does not go as far as it did 60 years ago. We believe this threshold needs to be changed. Most of these jobs are small repair jobs. We have a lot of small communities with small facilities. The $200k meets this requirement and lowers the cost to the taxpayers. We have a labor shortage in this industry which will keep wages up.  There are 20 states that do not have a prevailing wage at all. We think this is opportunity to save money on municipal construction projects and allow workers make a very good wage. This will help with all DPW small pesky projects that have to get done. Some of our members are bidding on prevailing wage jobs but some cannot bid due to the cost of red tape and fees.  These workers are only bidding on the small projects; they are interested in these and without those layers of paperwork they will do a good job and it is what they want to work for.”
 
Ben Wilterdink, Director of the Commerce, Insurance and Economic Development Task Force at the American Legislative Exchange Council (ALEC) said, "Increasing the threshold above which public infrastructure projects are subject to prevailing wage requirements would be a strong step in the right direction. By easing this requirement, fewer projects would be subject to the cost inflation inherent in prevailing wage requirements and Rhode Island taxpayers will benefit from a more competitive construction market.”
 
Three union lobbyists, Greg Mancini of Building RI, Providence Central Labor Union Council President Paul MacDonald, and Richard Sinapi of NEMCA , opposed the bill on the grounds that the unions should maintain control of the work. 


For more information, contact:
Raina C. Smith, House Minority Office
State House Room 106
Providence, RI 02903
(401) 222-2259