Fiscal Note - SB 0033 - Exempts Certain Public Works Projects From Prevailing Wage Law
L.R. NO. 0339-01
BILL NO. SB 33
SUBJECT: Prevailing Wage
TYPE: Original
DATE: January 13, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Conservation
Commission Fund Unknown Unknown Unknown
Road Fund Unknown Unknown Unknown
Natural Resources
Dedicated Funds Unknown Unknown Unknown
Partial Estimated
Net Effect on All
State Funds Unknown Unknown Unknown
*Unknown savings.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Total Estimated
Net Effect on All
Federal Funds $0 $0 $0
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government* Unknown Unknown Unknown
*Unknown savings.
FISCAL ANALYSIS
ASSUMPTION
The Office of Administration (COA), Division of Design & Construction and the
Department of Agriculture (AGR) do not expect to be fiscally impacted.
The Department of Conservation (MDC) estimates an unknown fiscal impact since
it handles very few projects under $100,000. It is conceivable that there
could potentially be a minimal savings on labor costs, but an estimate could
not be provided.
The Department of Transportation (DHT) assumes that this proposal could
result in lower construction costs for state funded projects meeting the
criteria. However, DHT awards projects with estimated costs of less than
$100,000 which have partial or total federal funding. Federal regulations
require the employer to pay federal prevailing wages; even though, the state
would not require it. As a result, DHT assumes that it would not be able to
estimate any savings.
The Department of Natural Resources (DNR) assumes that it could experience a
savings as a result of this proposal, but the amount could not be estimated
given the uncertainties of the nature of the contracts (i.e., actual
projects, bids, specialties, etc.). The DNR assumes that there could be a
labor cost savings on projects exempted from the prevailing wage law and on
public works projects funded with department monies. A savings of funds
would allow the department to distribute the funds to projects which may have
otherwise been unfunded. Oversight has shown an unknown savings.
Greene County assumes that it would experience a savings as a result of
certain projects being exempted from the prevailing wage law. It was
estimated that prevailing wage rates increase the costs of public works and
maintenance projects by 25%. Greene County averages $300,000 per year in
such projects. Based on these amounts, Greene County would experience
savings of $62,500 in FY98; $77,250 in FY99; and $79,568 in FY00. A 3%
inflationary factor was assumed.
The Jackson County Public Works Department estimates a savings of
approximately $10,000 per year as a result of this proposal. Jackson County
averages approximately $3.0 million in public works projects per year, but
only two projects were under the $100,000 limit.
The Department of Labor & Industrial Relations (DOL), Division of Labor
Standards assumes a net fiscal impact of zero. DOL assumes that there could
potentially be a decrease in the number of projects subject to the state
prevailing wage law; thus, lowering the number of projects to be investigated
once a determination of applicability has been made. However, the decrease
would not result in the need for less resources (i.e., staff, travel, etc.)
due to the potential for increased complaints on potential circumvention by
public bodies that break larger projects down into several smaller projects
beneath the threshold limits. This would create a slight increase in
investigation time due to the need to verify applicability on all projects
being investigated. It may become necessary, in the future, to subscribe to
a construction report such as Dodge Reports or Construction Market Data
Reports that list project costs in order to verify applicability.
The division also indicates that even though the basic assumption for
establishing a threshold would be to save public bodies money, it could be
negated by the loss of tax revenues and cost overruns. This effect was noted
in studies by the University of Utah Economic Development, February, 1995.
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(10 Mo.)
CONSERVATION COMMISSION FUND
Department of Conservation (MDC)
Exemption from Prevailing Wage Unknown Unknown Unknown
PARTIAL ESTIMATED NET EFFECT ON
CONSERVATION COMMISSION FUND Unknown Unknown Unknown
ROAD FUND
Department of Transportation (DHT)
Exemption from Prevailing Wage Unknown Unknown Unknown
PARTIAL ESTIMATED NET EFFECT
ON ROAD FUND Unknown Unknown Unknown
NATURAL RESOURCES DEDICATED FUNDS
Department of Natural Resources (DNR)
Exemption from Prevailing Wage Unknown Unknown Unknown
PARTIAL ESTIMATED NET EFFECT ON
NATURAL RESOURCES DEDICATED
FUNDS Unknown Unknown Unknown
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
LOCAL GOVERNMENT
Savings-Greene County
Exemption from Prevailing Wage Law $62,500 $77,250 $79,568
Savings-Jackson Public Works Department
Exemption from Prevailing Wage Law $8,330 $10,000 $10,000
Savings-Other Political Subdivisions
Exemption from Prevailing Wage Law Unknown Unknown Unknown
PARTIAL ESTIMATED NET EFFECT
ON LOCAL GOVERNMENT Unknown Unknown Unknown
FISCAL IMPACT - Small Business
This proposal could have a direct fiscal impact on small businesses as a
result of being exempted from the prevailing wage law. This could result in
lower costs for small businesses.
DESCRIPTION
The proposal would provide that new public works projects costing less than
$100,000 and the renovation of existing buildings costing less than $50,000
would be exempt from the prevailing wage provisions. The projected costs
would be adjusted annually in accordance with the consumer price index.
This legislation is not federally mandated, would not duplicate any other
program and would not require additional capital improvements or rental
space.
SOURCES OF INFORMATION
Department of Labor & Industrial Relations
Office of Administration
Division of Design & Construction
Department of Transportation
Department of Conservation
Department of Natural Resources
Department of Corrections
Department of Agriculture
Jackson County
Greene County
NOT RESPONDING: St. Louis County
This Fiscal Note is not an official copy and should not be quoted or cited.