Reform of prevailing wage law will benefit state
To the Editor:
One of my chief authored bills, HF508, updates prevailing wage provisions and raises the cost threshold for state government-funded projects that require prevailing wage. Currently, prevailing wage laws only apply to state subsidized projects that exceed a certain dollar amount.
Since infrastructure projects in Greater Minnesota tend to cost less than those in the Metro, raising this cost threshold will allow private contractors to bid on smaller projects without being forced to use union wage scales. The result will be that state tax dollars will go further in funding smaller infrastructure projects, which are more common in Greater Minnesota.
According to the Minnesota Chamber of Commerce, Minnesota is one of four states that uses a prevailing wage formula that artificially inflates the cost of state-subsidized projects such as Minnesota State Colleges and Universities (MNSCU), University of Minnesota, roads, bridges, city and county projects, etc. Minnesota’s prevailing wage formula is among the highest in the nation.
An example in my district is the construction of a building which cost $2.5 million using the required Minnesota prevailing wage. A county commissioner stated that without prevailing wage, the cost of construction would have been $1.7 million, an $800,000 tax savings just on this one building. As we look across the state, reforming prevailing wage would save millions of tax dollars per year, allowing us to complete more necessary projects without raising property or income taxes!
This bill also will require the commissioner of Labor and Industry to end these automatic project cost increases connected to inflation, so that these project costs remain static in the future instead of growing exponentially, further burdening rural property tax owners.
This bill is long overdue, and puts forward some common sense reforms that will help infrastructure dollars go further in Greater Minnesota, and encourage small private contractors to bid for state-funded projects and create more local jobs. I will be advocating for this bill in the coming months, and I appreciate your support.
There are many critical transportation and infrastructure needs in rural Minnesota. Reforming the prevailing wage law will help complete many of these projects with fewer tax dollars and negate crushing property tax increases on our counties, city residents, farms and businesses.
Please let me know if you have any questions on this issue, or others as we move forward. I always appreciate hearing from you.
State Rep. Glenn Gruenhagen