News Story

Here's How Much Michigan's 'Prevailing Wage' Law Costs Your School District

Taxpayers paying hundreds of millions extra

Michigan’s “prevailing wage” law costs residents more than $224 million each year, according to the Anderson Economic Group. Now there’s a website that brings the impact of that even closer to home.

Created by the Associated Builders and Contractors (ABC) of Michigan, the new site, www.TimeForRepeal.com/waste-calculator/, lets people learn the cost of prevailing wage mandates for individual school districts. ABC of Michigan, which represents commercial, governmental and industrial construction industries, has consistently advocated for eliminating the state’s prevailing wage law, which essentially requires construction firms doing work for the government to pay union scale wages and follow union work rules.

“Unlike 44 other states that either have no prevailing wage or that attempt to use more market-driven practices found in the private sector, Michigan’s prevailing wage law mandates that union agreements supersede all other work rules and wage classifications on government construction,” ABC Michigan President Chris Fisher said. “Repealing the prevailing wage seems to be taking the region by storm. Indiana has repealed the prevailing wage and its governor Mike Pence is about to sign the repeal into law. Ohio has already gotten rid of the prevailing wage on school construction and in Wisconsin Scott Walker is expected to include some sort of action on prevailing wage in his legislative agenda.”

In Michigan, House Bill 4001, sponsored by Rep. Amanda Price, R-Holland, would repeal the law and on the Senate side Senate Bill 3, sponsored by Sen. David Robertson, R-Grand Blanc, would do the same. There are also numerous bills sponsored by other lawmakers that address various aspects of the issue. Senate Majority Leader Arlan Meekhof, R-West Olive, has announced that Senate hearings on repealing the prevailing wage will begin soon.

As part of negotiations that led to Proposal 1 being placed on the May 5 ballot, Gov. Rick Snyder reportedly pledged not to sign any bill that would repeal the prevailing wage requirement. The extent to which that commitment remains in force now that Proposal 1 has been rejected by the voters is unclear.

Michigan Capitol Confidential asked Fisher to comment on Snyder’s pledge.

“We think repealing the prevailing wage is an issue the Legislature should be taking up and deserves to be under discussion,” Fisher said. “Lansing is definitely in search of solutions right now.”

Fisher said the data used by the new website are from the Michigan Department of Treasury.

“Treasury keeps track every time school districts go to the voters asking for construction,” Fisher said. “Their records go back to 1996. From 7 percent to 7.5 percent of the costs are due to prevailing wage, so it is a very straightforward calculation to be able to find out the costs for every school district in the state from Alpena to Zeeland.”

“By the way, Zeeland passed a millage proposal for a project last night (May 5),” Fisher continued. “If not for the prevailing wage, that $106 million project would have cost $98 million, which would have saved taxpayers $8 million. Last night overall, in districts that approved millage increases, the prevailing wage cost taxpayers over $25 million.”

The new website includes a “waste calculator” that compares construction costs each district pays to what their costs would be if they were allowed to follow private sector standards.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.

News Story

Township Votes Down Wind Energy Project

Meade voters shot down plan for 48 wind turbines

Voters in Huron County’s Meade Township have given a big thumbs down to a prospective Detroit Edison wind energy project. On May 5, voters rejected a proposal to allow Detroit Edison to erect up to 48 wind turbines in the township. The vote was 222 to 147, which is slightly more than a 60 percent to 40 percent margin.

Special significance might be attached to the election because it took place in Huron County, which has more wind turbines than all of Michigan’s other counties combined. Huron County has recently declared a temporary moratorium on further wind development while its officials work on adopting tighter siting restrictions for turbines.

In November, the Meade Township board voted 4-1 to approve the project. In reaction, local residents gathered enough signatures to place the issue on the ballot and have the board’s decision overturned.

"The Meade vote was no surprise at all,” said Kevon Martis, director of the Interstate Informed Citizens Coalition (IICC), a nonprofit organization that is concerned about the construction of wind turbines in the region. “When the people who will actually live inside wind energy plants get to vote on whether they prefer their community as it has been since time immemorial or covered with dozens of 50-story noisy mechanical devices, peace and tranquillity wins every time.”

“In every Michigan township that has ever had the opportunity to vote on wind, the ratio of voters who disapprove to those who approve is always the same: roughly 60 percent opposed, 40 percent in favor,” Martis added. “Take away the wind lease money and the ratio would be more like 85 percent opposed to 15 percent in favor.”

Following the election, The Huron Daily Tribune quoted Detroit Edison's spokesman Scott Simons saying that the utility was disappointed by the election result and is now “exploring different sites outside of Huron County.” Simons was also quoted pointing out that the proposed wind plant was part of the company's “commitment to a state mandate requiring utilities to generate 10 percent from renewable energy sources.”

Simons was referring to Michigan's renewable energy mandate, which was passed by the Legislature and signed into law in 2008. That mandate requires that 10 percent of the state's energy be produced by in-state renewable energy sources by 2015. However, the term “renewable energy sources” has virtually become a euphemism for wind energy. Though the mandate was ostensibly aimed at reducing carbon emissions, the law did not require that emissions be monitored to measure whether the mandate is having any impact on the level of emission.

This year, the Legislature is reviewing the law and changes to it are expected. For example, lawmakers might eliminate the requirement that only energy produced in-state can satisfy the mandate. Such a change would allow utilities to purchase electricity from wind energy projects in other states, such as Iowa, where wind energy is more efficient, cheaper, and turbines can be erected further away from the residences.

In Michigan and elsewhere, wind plants erected near homes have spurred health and safety complaints and lawsuits. These include allegations that turbines cause dizziness, sleeplessness, headaches and other physical symptoms because of the noise, which is not limited to audible sound. Vibrations and flickering lights are also frequently cited as causing problems for people living in proximity to wind turbines. Some critics have cited negative effects on property values.

In 2012 Michigan voters rejected Proposal 3 by a vote of 62 to 38 percent. That statewide initiative, sponsored by environmentalists and wind industry interests, would have increased the 10 percent mandate to 25 percent. In the current Legislature, a majority of Democratic lawmakers has co-sponsored identical bills in both the House and Senate to increase the mandate to 20 percent.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.