NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

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SOURCES OF INFORMATION

General Services Department

SUMMARY

Synopsis of Bill

House Bill 663 amends the public works minimum wage act by increasing the size of contracts exempted from its requirements from $20,000 to $250,000.

The minimum wage act requires that public works projects and contracts, at a minimum, pay the prevailing wage to various classes of laborers and mechanics. The minimum is determined by the director of the Labor and Industrial Division of the Labor Department.

PERFORMANCE IMPLICATIONS

The department proposed no performance measure. An obvious measure would compare the cost of projects under the new provisions to those under the old (adjusted for inflation)

FISCAL IMPLICATIONS

The bill carries no appropriation. However, the General Services Department, Property Control Division, reports that most of the their capital projects cost between $20.0 and $250.0. They say that building costs would decrease by 10 percent. However, no methodology or rationale is provided to demonstrate how such savings would be realized. A rigorous analysis would report the share of total construction costs represented by labor and the expected average wage under the proposed changes as compared to current law.

BT/sb/njw