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City Council to examine 'common wage' law next month

Adopting non-union scale could save taxpayers millions, some members say

Tuesday, March 26, 2013 - 9:03 am

Before City Council considers a possible tax increase, it plans a public examination of a policy critics say may needlessly cost taxpayers millions of dollars every year.

On April 30, Council will conduct a "Fifth Tuesday" forum devoted to Indiana's “common wage” law, which requires governments to establish minimum construction wages on most projects costing more than $350,000. Five-member committees selected by each government normally choose between wage scales proposed by the AFL-CIO and the non-union Associated Builders and Contractors (ABC), which claims its scale can reduce a project's cost between 15 and 30 percent.

Under Democratic Mayor Tom Henry, the city normally selects the higher wages. But some members of the Republican-controlled Council insist that policy should be reviewed now that a task force has suggested Council should consider increasing the local income tax as one way to balance the city budget.

“We have told taxpayers we would look at everything before raising taxes,” said Councilman Tom Smith, R-1st, who was also a member of Henry's bipartisan fiscal task force. “The hope is we can lower the cost of government even this year and next year for sure. We don't want to walk away with money (to be saved) on the table. I suspect it's in the millions of dollars.”

ABC spokesman Ken Neumeister has said the city awards between $50 million and $80 million in contracts every year that could be governed by the state law. Fifteen percent of $50 million is $7.5 million; a 15 percent cost reduction on $80 million in projects would save taxpayers $12 million.

Supporters of the law, however, claim it and the similar Davis-Bacon law covering federally funded projects are needed to protect workers' wages from erosion caused by competition for large governmental contracts. Some also suspect contractors simply pocket most of the savings instead of passing it on to taxpayers.

Councilman Russ Jehl, R-2nd, has suggested Council could even consider linking approval of a tax increase to Henry's willingness to allow Council to make one of the city's two appointees to the common-wage committee, which would likely swing the balance in favor of the ABC.

“We could ask for an appointee, but I don't want to get in the position of saying 'no,' ” said Smith, who suggested a shift to ABC wages should be done on a trial basis to ensure the projected savings actually materialize. Smith said he believes Henry will be willing to discuss the issue.

"We just want to understand the issue better, whether we can be more efficient with taxpayers' money," Jehl said, adding that representatives of the Henry administration, ABC, AFL-CIO and the GOP-dominated Allen County government – which normally adopts ABC wages – could be invited to testify.