From the State of Connecticut’s Office of Legislative Research

 

 

 

You asked what states place prevailing wage requirements on economic development projects.

SUMMARY

We found four states that place prevailing wage requirements on private economic development construction projects. For purposes of this report economic development projects involve private sector entities receiving state funds or other public financial assistance to construct, expand, repair, or rehabilitate their own facility or property.

BACKGROUND

Thirty-three states and the federal government have prevailing wage laws that apply to public works construction projects, which typically mean a project such as a school, state building, or local or state road being built by a government entity with public funds. A much smaller group of states apply prevailing wage requirements to private construction projects that are funded entirely or in part with public money.

Connecticut's prevailing wage law requires contactors pay the prevailing hourly wage, as determined by the state Labor Department using federal wage surveys, to all mechanics, laborers, or workers on state and municipal construction jobs. This requirement increases pay for these types of construction jobs. It applies to state and municipal (1) new construction projects of $ 400,000 or more and (2) repair or remodeling jobs of $ 100,000 or more. The law's punishments include fines and suspension from bidding on future public projects.

MINNESOTA

Prevailing wage requirements apply to economic development projects that receive:

1. a state grant of $ 200,000 or more,

2. a loan, loan guarantee, or purchase of a loan made by a state agency when a single business receives $ 500,000 or more, or

3. any tax abatement, credit, or reduction granted for economic development purposes.

The law defines economic development as financial assistance provided to a person directly or to a local government or nonprofit organization on behalf of a person who is engaged in the manufacture or sale of goods and services. It exempts financial assistance for (a) rehabilitation of existing housing or (b) new housing construction in which total financial assistance at a single project site is less than $ 100,000.

NEW JERSEY

New Jersey's prevailing wage law applies to private projects financed in whole or part by (1) the New Jersey Economic Development Authority or (2) the Casino Redevelopment Authority. The economic development authority's financial assistance means any loan, loan guarantee, grant, incentive, tax exemption, or other financial assistance the authority approves, funds, authorizes, or provides. It exempts wages paid for construction that begins more than two years after the assistance is received. The casino authority's financial assistance means loans, loan guarantees, expenditures, investments, incentives or other financial assistance the authority provides or authorizes.

On April 26, the New Jersey acting governor signed an expansion of the prevailing wage into law. The new law (Bill A-3890) places any construction work on publicly owned property under prevailing wage, regardless of (1) whether the project receives any public funding or (2) any lease agreement. The new law is expected to cover the Meadowlands Sports Complex where a new $ 1. 4 billion football stadium is being built for the New York Giants and New York Jets.

OHIO

In Ohio, prevailing wage applies to any project financed by the Department of Development, unless the project is (1) already subject to federal prevailing wage or (2) an employment project and the participants' labor is used to construct a public improvement.

WASHINGTON

Washington has the most far-reaching prevailing wage law for private projects. It defines a public work project as a construction, alteration, repair, or improvement project that receives any amount of state or local government funding. There is no dollar threshold. The definition of government funding excludes government loans that must be paid back.

The state also deems a construction or improvement project to be prevailing wage if 50% or more of the building or improvement is for a state or local government entity. In other words, if a four-story building is being constructed and 50% or more of the office space is being leased by the state, the project is considered prevailing wage. If 49% or less of the space is leased by local or state government, the project is not prevailing wage.

CURRENT LEGISLATION

Massachusetts is considering legislation (SB 148) to impose prevailing wage requirements on all tax incremental financing projects. Oregon is considering legislation (HB 2944) to require prevailing wage pay on (1) any economic development projects receiving $ 750,000 or above in state assistance (excluding property tax breaks) or (2) private projects where the state will lease 25% or more of the floor space.

JM: dw