Word of the Day – February 18, 2009

Word of the Day
Moonflaw – The wild fancy of a lunatic.
Charles Mackay’s Lost Beauties of the English Language, 1874

  • The prevailing wage bill favors large contractors at the expense of small rural contractors. The fringe benefit requirements contained in the bill price many small contractors out of the bidding process.
  • The bill requires all contractors to offer fringe benefits such as a pension and vacation. The problem for small rural contractors is that since some of their job will only last a few weeks, instead of paying the fringe benefits they are required to increase the pay of the employee by the same amount.
  • A 2007 Fiscal Note from the nonpartisan Legislative Services Agency stated that a prevailing wage law will force the state to hire 17 new employees and cost almost $1.4 million.
  • The same Fiscal Note estimated that project costs would increase 10 percent to 12 percent increase due to prevailing wage.
  • Prevailing wage laws negative economic impact derives not from requiring union rates, but from requiring rates higher than the free market would offer.

  • There are 18 states without prevailing wage laws and there are construction workers and even union contractors operating successfully in those states.
  • Nonunion firms have been more successful on projects because of their ability to defray costs and diversify job skills versus union models which restrict tasks union employees can perform.
  • The last state to pass prevailing wage legislation was Minnesota, in 1973. Nine states have since repealed their laws, including Ohio. When Ohio repealed the prevailing wage for school construction, the projects saw a 10 percent reduction in project costs.
  • The Governor claims that he is not raising taxes and yet his budget will increase property taxes and taxes on Iowa’s businesses. House Republicans will for alternatives to raising taxes.
  • House Republicans will challenge any attempt to raise taxes on Iowa families or businesses during these tough economic times.
  • Instead of ordering an across the board budget cut, House Republicans would rather examine the budget line by line and protect the areas that are successful and eliminate the programs that are failures.
  • As we comb through the details, we will make public our concerns about what we uncover. Republicans look forward to a bipartisan and open discussion with the governor and Democrats.
  • House Republicans are concerned about using $200 million from the Cash Reserve Fund to balance the budget. It is unwise to blow our savings account as act of first resort instead of last resort.
  • Republicans are skeptical of the governor’s request to borrow more money through bonding. According to the State Auditor, using the RIIF for infrastructure (vertical or horizontal) would provide in just a 3-year period more than the $700 million of bonding proposed by the Governor that requires a 20-year payback.
  • Republicans believe the Governor and Legislature should accept our share of the blame for the fiscal mess the state is experiencing. It is not the fault of misguided federal policies, greedy Wall Street bankers or the natural disasters. We must be clear– when we left last May we had already had built ourselves a $563 million shortfall. We now face a $779 million shortfall. Most of the shortfall was caused by a lack of discipline and a failure of duties with Iowans’ dollars not by Washington or Wall Street or natural disasters.
  • We cannot rely on the federal government to bail us out. It’s time to take responsibility for our share of the financial mess. Republicans will dive into budgets to find savings and bring truth and transparency to state government.

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