Legislation to prohibit local governments from making tax breaks or subsidies conditional on the wage, benefit and hiring policies of businesses died in the House last Friday morning at one minute after midnight.

Under House Bill 5977, local governments would no longer have been allowed to make tax breaks and subsidies, for which a business would otherwise be eligible, contingent on their engaging particular employees, contractors or local businesses; paying a specified level of wages or benefits; or making a contractor pay "prevailing wages," which are based on local-union pay scales that tend to be above the market rate.

Introduced by State Rep. Earl Poleski, R-Jackson, on Dec. 2, 2014, the legislation was titled the “Local Government Employer Mandate Prohibition Act.” It squeaked out of the House Competitiveness Committee, passing by an 8-7 vote on Dec. 9.

In spite of the closeness of the vote, legislative observers believed House Bill 5977 might have had a better-than-average chance of making it through the Legislature and being sent to the Governor. However, time ran out on the measure and it was never brought up for a vote in the House. It remains unclear whether the bill was prevented from moving due to a lack of sufficient support or because it became entangled in the ongoing negotiations over road funding.

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With Dec. 18 scheduled as the last day of the lame duck session, under the State Constitution, Dec. 11 became the last possible day on which a bill could make the initial move from either the House to the Senate or vice versa and still be eligible to be signed into law.

According to news media accounts, Poleski has said he plans on introducing the legislation again next year.

Charles Owens, the state director of the National Federation of Independent Business, said that local governments should not be allowed to duplicate the role of state government.

“The issue here is that we have lawmakers at the state level working hard to change our business climate to one that retains and attracts businesses and the jobs they provide,” Owens said. “Due to important tax, regulatory and labor reforms, we have gone a long way in transforming the image of our state from the way things were during the ‘lost decade.’ But those accomplishments are put in jeopardy when local governments attempt to create their own islands of regulation and micro-management.”

However, the Michigan Municipal League opposed House Bill 5977, issuing the following statement: “The League vehemently opposes this bill because it is an egregious violation of local control. It would prohibit local units of government from having resolutions, ordinances or policies related to any sort of employment issue when it comes to certain development projects. We do not need state lawmakers in Lansing telling local municipalities what kind of development projects we should have in our communities.”

In addition to the NFIB, organizations that indicated support for House Bill 5977 include: Detroit Regional Chamber of Commerce; Associated Builders and Contractors; Michigan Chamber of Commerce; Michigan Restaurant Association; Michigan Manufacturers Association; Michigan Retailers Association; and Grand Rapids Area Chamber of Commerce.

A number of organizations joined the Michigan Municipal League in opposing House Bill 5977. These include: International Brotherhood of Electrical Workers; Great Lakes Fabricators Association; American Federation of State, County and Municipal Workers; American Federation of Teachers Michigan; Michigan Regional Council of Carpenters; United Auto Workers; Michigan Townships Association; Michigan Association of Counties; Michigan League for Public Policy; the mayor of Detroit and the president of the Detroit City Council; and Detroit Economic Growth Corporation.

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See also:

Cost of School Millage Approvals Inflated Because of Prevailing Wage Law

Study: Prevailing Wage Costs Taxpayers, Schools $224 Million Per Year

Is Repeal In The Cards For Michigan's Prevailing Wage Law?

County Prevailing Wage Law Could Add Millions To Taxpayer Costs

Commentary: It's Time to Repeal Prevailing Wage Law

Bay City Repeals Prevailing Wage Ordinance

Eaton County Dumps Prevailing Wage Law

Republican U.S. Rep. Upton Jons Dems To Uphold Mandatory Union-Scale Wages


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