PORTLAND — As the City Council Finance Committee continues to discuss a prevailing wage ordinance, Mayor Ethan Strimling said he wants a more objective look at the potential cost of the proposal.
“If it were going to increase costs by 30 percent, I’d vote no, too,” Strimling said Nov. 1 during a committee workshop on the ordinance he is sponsoring.
Strimling has objected to an Aug. 27 memo by city intern Marguerite Fleming suggesting prevailing wages could add as much as 37 percent to project costs.
The ordinance draft has not been written, but could require contractors on municipal construction and infrastructure jobs of at least $50,000 to pay prevailing wages as determined by the Maine Department of Labor.
Strimling said he would like the ordinance to require contractors to have apprenticeship programs, although he might also support giving bonus points on bids to companies that have programs for worker training.
The committee, led by Councilor Nick Mavodones, also includes Councilor Justin Costa. It is scheduled to meet again at 5:30 p.m. Wednesday, Nov. 28, to discuss prevailing wages and the $7 million Strimling would like to borrow to capitalize the city’s Housing Trust Fund.
On Nov. 29, the committee is also scheduled to meet with School Superintendent Xavier Botana to begin discussions on the fiscal year 2020 education budget.
Prevailing wages are already required for construction on projects where the city has entered credit enhancement agreements on tax increment financing that returns any share of increased valuations to a developer.
“This proposal is incredibly limited in scope and impacted a maximum of (one to three) developer-funded TIF projects per year and did not impact any City projects,” Fleming said her memo.
At the workshop, city Finance Director Brendan O’Connell said the city has spent $150 million over the last five years on projects that would have been affected by prevailing wage rules.
O’Connell said annual spending will likely increase as the city renovates and rebuilds four elementary schools and accelerates its work to separate stormwater and wastewater sewers.
Fleming said a prevailing wage requirement could add at least 9 percent to construction costs on projects including housing. For schools, prevailing wages could add $127 million to $480 million annually to construction costs.
The city would also have to add one or two staffers to monitor compliance with the rules, Fleming found.
While citing 14 studies, Fleming noted there are limits to the conclusions, because finding comparable projects identical in ways besides prevailing wage requirements is difficult. The percentage of labor costs in projects also varies, and researchers have not agreed about methodologies.
Strimling asked City Manager Jon Jennings to completely withdraw the study from council materials because he found 80 percent of the prior studies cited were biased and commissioned by “conservative free-market think tanks/lobbyist organizations, right-wing policy networks and/or right-wing funders like the Koch Brothers and the Bradley Foundation.”
The mayor said he was unhappy Fleming did not cite studies he has seen that draw different conclusions.
“A lot of the research I have found has summarized that it does not impact costs when you look at the entire impact,” Strimling said. “I am very comfortable with the research.”
Strimling suggested the University of Southern Maine Muskie School of Public Service could help the city evaluate research and determine how studies have been influenced.
At the workshop, Joan M. Dolan, the Maine Department of Labor Director of Apprenticeships, said apprenticeship programs using workplace and classroom training may return as much as $1.47 for every $1 spent because companies gain a skilled workforce that has a 90 percent retention rate for employees.
Contractors working on combined sewer overflow projects such as this at Washington Avenue and Madison Street on Oct. 31 could be required to guarantee prevailing wages in a proposed ordinance covering all city work.