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February 7, 2013: Volume 5, Issue 3


In This Issue
Legislation Introduced to Repeal Prevailing Wage
Snyder Releases FY 2014 and 2015 Executive Budget Recommendation
Snyder Appoints Arwood as LARA Director
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Legislation Introduced to Repeal Prevailing Wage


Legislation introduced to repeal the "prevailing wage" law will eliminate unnecessary costs to taxpayers, as much as $250 million, says Associated Builders and Contractors (ABC) of Michigan, which commended House and Senate members for taking another bold step toward improving Michigan's economy.


           "The prevailing wage act denies construction contractors a competitive ability that every other small business enjoys - paying market wages," says Chris Fisher, ABC of Michigan president, following introduction of a bill by Sen. Arlan Meekhof (R-West Olive) and cosponsored by 15 other senators.


The association points to studies indicating a savings of 10 to 15 percent when prevailing wage mandates are removed. For example, had prevailing wage not been in effect in 2002, the state would have saved an estimated $216 million. In 2007 the number rises to $250 million. From 2010 to 2012, an estimated $188 million could have been saved on public school and higher education construction alone. Although the State of Michigan reports that the average free market construction wage is already at a healthy $23 an hour, prevailing wage drives the rate up to artificial levels as much as 60 percent higher for some trades.


"Nearly every peer-reviewed study concludes that prevailing wage is a job killer and tax dollar waster," Fisher explains. "Far from 'prevailing,' the current law dictates that unions, which represented only 17 percent of the construction workforce in 2012, set wage rates and determine inefficient trade classifications for the rest of the industry. Such decisions are not subject to any oversight or negotiation and vary from trade to trade and from locality to locality,creating a red tape nightmare for contractors.


"Because construction is such a key jobs provider in Michigan's economy," says Fisher, "we believe the time is now to repeal prevailing wage to create more good paying jobs and help the industry compete with more than 43 other states that have no such artificial mandates or that base wage rates on more accurate and reliable measures."


"Prevailing wage is a mandate not imposed on any other industry in the state," Fisher points out, noting that it is also a bureaucratic burden. "It forces contractors to constantly monitor thousands of different pay and benefit rates for different job functions that vary greatly among localities and trades. Nothing is so misunderstood or applied as absurdly as the prevailing wage law. We applaud the bill sponsors for making another courageous move that will benefit our industry, the state's economy and Michigan taxpayers as well."  


Repeal bills were also introduced yesterday in the House by Reps. Amanda Price (R-Park Township), Bradford Jacobsen (R-Oxford) and Peter MacGregor (R-Rockford). House leadership last week made prevailing wage repeal a priority, stating, "We will repeal Michigan's Prevailing Wage Law to save the state and local units of government almost $250 million every year." (2013-14 Action Plan for Hard-Working Michigan Taxpayers)


"It's simply a matter of good public policy," says Chris Beckering, director of business development at Pioneer Construction in Grand Rapids and chair of the ABCMI board of directors. "It should not be the responsibility of Michigan taxpayers to pay artificially inflated prices on public construction projects. Michigan citizens deserve the additional job opportunities and fiscal accountability that will result by eliminating this antiquated mandate."


Snyder Releases FY 2014 and 2015 Executive Budget Recommendations


Building on the success and stability of the previous two years, Governor Rick Snyder's Executive Budget Recommendation continues to focus on reinvention and strategic investments to move Michigan forward. Through prioritized budgeting, the governor's plan is designed to improve the quality of life for Michigan residents by continuing to invest in education, health and human services, public safety, veteran services, natural resources and infrastructure.


Committed to the responsible management of taxpayer dollars, the governor's balanced two-year budget plan is the right combination of funding for the priorities and needs of our great state. In order to maintain structural balance, continue Michigan's economic comeback and further our fiscal sustainability, the state must continue along the path of financial responsibility.


The following list of recommendations is important to Michigan's construction industry and ABC will be diligently following and working with the Governor and Legislative Leaders on each item:


  • Investing in Infrastructure - The governor's proposed transportation budget recommends an additional $1.2 billion to adequately maintain and improve Michigan's roads. The plan addresses the lack of appropriate road funding by creating a new funding model based on gasoline and diesel tax of 33 cents a gallon; and increasing registration taxes for vehicles and heavy trucks.


  • Supporting Job Creation - Governor Snyder's budget recommends $10 million for a new skilled trades training program to better match talent with employers' needs.


  • Protecting our Natural Resources - The proposed budget includes $97 million for the Department of Environmental Quality to issue grants and low-interest loans to municipalities across the state to improve water quality. The funds will be made available to local units of government in the form of grants and loans to design, develop and implement sanitary sewer and storm sewer infrastructure.


Full Executive Budget Recommendations


FY 2014 and 2015 Budget Presentation


Snyder Appoints Arwood as LARA Director


Governor Rick Snyder announced the appointment of Steve Arwood as director of the Michigan Department of Licensing and Regulatory Affairs (LARA). Arwood had been serving as acting director since December when then-director Steve Hilfinger became chief operating officer at the Michigan Economic Development Corp.


"Steve Arwood has done a great job leading LARA, in addition to his work as head of the state's Unemployment Insurance Agency," Snyder said. "Steve is a talented and experienced professional whose strong leadership has been instrumental in the reinvention of Michigan and I can't think of a better person to take on this important role. I look forward to continuing our work to create a more practical and efficient regulatory system in our state."Steve Arwood


As chief regulatory officer at LARA, Arwood will have principal oversight of licensing and regulatory functions of the state of Michigan, including Licensing and Regulatory, Office of Regulatory Reinvention, Michigan Administrative Hearing System, and Employment Security and Workplace Safety.


Arwood joined LARA in 2011. In addition to his most recent roles, he also served as deputy director overseeing employment security and workplace safety, which includes the Michigan Occupational Safety & Health Administration, Employment Relations, and Worker's Compensation. Before joining LARA, Arwood worked at Windlab Developments, USA, LTD, where he served as U.S. regional director, and has extensive experience in wind energy development, conservation, and business development. He previously served as deputy director and held other executive management positions at the Michigan Jobs Commission under Gov. John Engler. He also served as director for the House of Representatives Programs and Policy office, Associated Builders and Contractors of Michigan, and the National Federation for Independent Business-Michigan. Arwood is a graduate of the James Madison College at Michigan State University


Arwood will continue to head the Unemployment Insurance Agency until a replacement is named.

Save the Date 
Associated Builders and Contractors of Michigan is a statewide trade association, working in partnership with three local chapters, dedicated to providing Michigan with high-quality, affordable, safe and on-time construction.  ABC of Michigan is an equal opportunity organization that opposes all discrimination in the construction industry including discrimination based on union affiliation. A leading construction industry voice with state government, ABC provides many member services including legislative advocacy, networking opportunities, member benefits, legal updates, business development and educational opportunities.