Thursday, Nov. 5, 2015 12:19 am
Prevailing wage debate rooted in ideology
But one of the most important things missing from the debate over that “Turnaround Agenda” is how much money the governor’s proposals will truly save state and local governments. Is it really worth all this pain?
There is simply no hard, reliable, trustworthy data out there because numbers from both sides of the debate on union-related subjects like the prevailing wage are so steeped in ideology.
Among other things, the governor is demanding that local governments, including school districts, be allowed to opt out of paying the prevailing wage on construction and other projects. The amount is set by county and all publicly financed projects must pay those wages. Unions say killing off the prevailing wage won’t save much if any money because productivity will drop when inexperienced, low-wage employees are used to replace trained construction and trades workers.
But, just for the sake of argument, let’s take the proponents at their word on this particular topic.
A June 2014 study conducted by the Anderson Economic Group for the far-right Illinois Policy Institute, the Illinois Association of School Boards, the Illinois Chamber and the Illinois Black Chamber found that eliminating the prevailing wage would’ve saved local school districts $126.4 million in 2011 (that’s in 2013 dollars, by the way).
According to the state’s Commission on Governmental Forecasting and Accountability, local school districts extended (billed) $16.4 billion in property taxes in 2011. Adjust that 2011 amount to 2013 dollars to even it out with the Anderson study and we get $16.98 billion.
So, even if every single local school district throughout Illinois immediately stopped paying prevailing wage rates on construction projects (not gonna happen) and even if eliminating the prevailing wage does indeed save as much as the Anderson study projected (doubtful), school districts could’ve saved a grand total of 0.74 percent of their property tax budgets, which is not much more than a rounding error. Now figure, in reality, savings of at most half that amount and we’re looking at about a third of a percentage point. That’s not even a rounding error.
Not to mention that the total percentage saved from allowing local governments to opt-in to eliminate the prevailing wage in their actual operating budgets is quite a bit smaller because to get an accurate count you’d have to add in revenues from local sales taxes, state and federal money, etc. Charitably, are we talking maybe a quarter of a percentage point saved here? If that?
Whenever you make a huge investment of time and effort, you should always calculate what’s known as the Return on Investment, or ROI. As far as the prevailing wage goes, this doesn’t look to my eyes like a good enough ROI to continue refusing to negotiate on the budget.
I mean, really, you’re gonna shut down critical state services for months on end for a few million bucks – on a bill that the pro-union majority Democratic General Assembly will never support anyway?
Either change the proposal (perhaps to apply it to only smaller projects) or move along. The benefit is nowhere near worth the current pain.
And, by the way, I am not by any means saying that the governor has to be the only one who needs to start talking about a budget deal.
Legislative Democrats have completely eluded the topic of higher revenues all year. Yes, they say in general that they want a “mixture” of budget cuts and tax hikes. That’s nice and all, but if they truly support the programs they say they hold so dear, like child care assistance and need-based college grants, then they’re gonna have to pay for them.
I’ve said it before and I’ll say it again, voting to fund these programs without voting for any revenue to pay for them is like the college student who can’t get it in his head that having checks in his checkbook doesn’t translate into having money in his bank account.
Somehow, some way, we need to get our leaders to start facing reality.
Rich Miller also publishes Capitol Fax, a daily political newsletter, and CapitolFax.com.