The state's Prevailing Wage law, modeled after the federal Davis-Bacon Act, should be
statutorily repealed, and the Legislature should place limits on the ability of local
governments to impose such rules. The courts have recently struck down the state law but
the Legislature needs to finish the job as part of any gas tax increase that might be
necessary. Professor Gary Wolfram of Hillsdale College estimates that repeal of the state
law could save 35% on the wage component of many construction projects, although
significant savings in actual construction outlays will require repeal of the federal
Davis-Bacon Act as well.44
Potential savings from removal of the state law would affect primarily local capital
outlay projects, where there is less likelihood of federal funds being involved, and where
local governments are most likely to be contracting out work. If one assumes that half of
the $186.6 million in local capital outlay projects in 1992 were contracted out, and that
wages represented 20.6% of costs, then $19.2 million in wages would be subject to
increased competition.45 If Professor Wolfram's savings estimate of 35% is
used, a cost savings of $6.72 million per year would be possible on the local system, or.
15 cents per gallon.