Will Common Sense Prevail?
The General Assembly and the Governor just finished work on a
contentious state budget where they had to find billions of dollars in
savings in order to balance it. It is a testimony to the power of
organized labor in Ohio that common sense state construction law
reforms were ignored in this process. The power of Big Labor is also
why the state's archaic -- and costly -- prevailing wage law is still
on the books. But what's a few hundred million dollars in savings for
the taxpayer when you can keep union bosses happy?Taxpayers pay around $3 billion every year for government entities at the state and local level to build schools, government buildings, and university structures. It's a lot of money, especially during an economic downturn when local governments and the State of Ohio are struggling to find ways to balance their budgets.
Given the large amount of money at stake, it makes sense to look for better ways to complete the construction at a lower cost to taxpayers. That's exactly what the Ohio Construction Reform Panel did, and in April its members overwhelmingly approved a set of proposals that have the potential to shave 10% off the cost of government construction. That's a $40 million a year in savings to the state and a $300 million a year in savings when applied to all government entities.
These common-sense reforms were absent from the recently-passed state budget, though. Labor unions and some construction firms are not keen on any reforms that may cut state construction spending. Efficiency and a good deal for the taxpayer do not produce as much money for union workers or some construction firms as does the state's current inefficient process.
This is the same reason why Ohio's prevailing wage law is still in effect. This law artificially inflates wages on some state construction projects, meaning that taxpayers fork over anywhere from 5% to 15% more than they should for these projects.
There are vested interests who do not want these laws repealed. The prevailing wage law and other construction laws benefit firms that are older, well-established, and unionized. These companies and their unions lobby hard against any true reforms to current construction laws.
On the other side are many construction firms that, logically, think they would have a better chance to get state construction jobs if the playing field weren't rigged. They would love to be able to submit lower bids and compete for the chance to work on our communities' schools and other government buildings, but they don't have a fair chance today.
In the end, the problems the state's construction laws cause these firms is nothing compared to the problems these laws cause Ohio's taxpayers. If the recommendations of the Ohio Construction Reform Panel were adopted and the prevailing wage law were repealed, it could mean anywhere from $450 million to $750 million in savings every year for state taxpayers.
Competition for state construction jobs should not be rigged to benefit a few. It should be a fair process that looks for the best quality at the best price. Unfortunately for Ohio's taxpayers, legislators have steadfastly resisted calls to change the state's construction laws to streamline the process, increase competition, and lower costs. Those who benefit from inefficiency have a lot of sway in Columbus.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
