Newspaper Column: Prevailing wage law change will cost taxpayers

A fool and his money are soon parted.

In Nevada those fools are the taxpayers who keep electing Democrat majorities to send to Carson City to pick their pockets.

Assembly Bill 154, sponsored by a raft of Democrats, would roll back the minor headway made just two years ago to cut the cost of public works. It would raise the cost of construction of university and public school buildings by reimposing the so-called prevailing wage on more projects.

Prevailing wage laws require that workers on public construction jobs to be paid no less than the “prevailing” wage in the area where the work is being done. The wage rate is set by the state Labor Commissioner based on a survey of contractors. The survey is so time consuming that in reality only union shops bother to comply, meaning the prevailing wage is the highest union wage.

AB154 would require that contractors doing any university or public school work exceeding $100,000 pay prevailing wage, down from the current $250,00. It also requires the full prevailing wage instead of the current 90 percent.

Las Vegas Democratic Assemblyman Chris Brooks, chief sponsor of the bill, testified before the Assembly Government Affairs Committee recently and actually claimed the bill would save money.

“Research shows that prevailing wage laws lead to more workforce training, a more educated and experienced workforce, safer construction and government savings because workers depend less on social programs,” Brooks said. “Prevailing wage laws are better for the economy because they support the middle-class incomes that boost consumer spending. Eliminating the prevailing wage does not save money and can actually cost more money.”

Warren Hardy of the Associated Builders and Contractors contested this allegation of savings by pointing out that a contract for construction of a middle school in Clark County received a low bid of $2.7 million during a brief period a couple of years ago when the prevailing wage was dropped for schools, but when the prevailing wage was reinstated the low bid jumped to $3.6 million.

In 2000, A.D. Hopkins wrote a series of articles for the Las Vegas Review-Journal, outlining the profligacy of the prevailing wage law. One article stated: “Nevada’s prevailing wage law costs taxpayers about $2.3 million extra on every new public high school being built in Clark County, according to a database analysis by the Review-Journal.”

In 2012, Geoffrey Lawrence penned a column for the Nevada Policy Research Institute website on Nevada’s expensive prevailing wage law. He noted how a plumber in Mesquite might expect to be paid less than $20 an hour for most jobs, but, if it is a public works project by a state or local government entity, that same plumber would be paid, by law, more than $70 an hour.

Lawrence’s piece pointed out that an NPRI analysis estimated that prevailing wage requirements cost Nevada taxpayers nearly $1 billion extra over 2009 and 2010. The state’s biennial general fund budget is less than $7 billion. “That’s why prevailing wage reform needs to be at the top of the agenda for the Nevada Legislature in 2013,” Lawrence wrote.

NPRI in its “Solutions 2015” handbook estimated the law required the state, cities, counties, school districts and other government entities to pay 45 percent higher wages than necessary — a cost to taxpayers of $1 billion a year.

For a little historical perspective, the prevailing wage law is a vestige of the Jim Crow era and is modeled on the Davis-Bacon Act of 1931 that was expressly intended to keep cheaper Southern black laborers from getting jobs on public works projects.

The discriminatory nature of prevailing wages persists to this day.

Hardy of the Associated Builders and Contractors said during testimony on the bill that his organization does not have a problem with federal prevailing wage law but does object to the way the wage is calculated in Nevada, which results in unions setting the prevailing wage.

“The overwhelming majority of small businesses, the overwhelming majority of minority-owned businesses, the overwhelming majority of women-owned businesses are non-union,” Hardy said. “These folks are not union contractors. So what you’re saying is, we need to build laws, which is what the prevailing law does in this state quite frankly, to incent the hiring of union contractors. That disenfranchises small businesses, women- and minority-owned businesses because they are overwhelmingly nonunion contractors.”

A version of this column appeared this week in many of the Battle Born Media newspapers — The Ely Times, the Mesquite Local News, the Mineral County Independent-News, the Eureka Sentinel and the Lincoln County Record — and the Elko Daily Free Press.

Newspaper column: Think tank provides road map for 2015 lawmakers

The state of Nevada — for the first time since before the Great Depression — has a Republican governor and Republican majorities in both the Assembly and state Senate, as well as all the statewide elective offices, providing an opportunity to finally attempt to curb the growth of state spending and address much-needed reforms in education, land management, commerce, health care, taxation, debt, labor and public employee pensions.

To achieve these objectives there ought to be a guidebook, something like Newt Gingrich’s “Contract with America” or Paul Ryan’s “A Road Map for America’s Future.”

As luck would have it — actually as good planning would have it, because luck had nothing to do with it — the libertarian-leaning Nevada Policy Research Institute this week has published “Solutions 2015: A Sourcebook for Nevada Policymakers,” a 114-page compendium of facts, figures, charts, graphs and recommendations for putting the ship of state on a more even keel, as related in this week’s newspaper column available online at The Ely Times, the Mesquite Local News and the Elko Daily Free Press. The book’s contents expand upon “Solutions 2013,” also penned by Geoffrey Lawrence, NPRI’s director of research.

Lawrence uses historical Nevada data, as well as hundreds of hours of research into the best practices in other states, to buoy his reasoning for recommendations on more than 50 issues our 2015 Legislature needs to address.

The first rattle out of the “Solutions 2015” box is a call for one of the most significant and fundamental initiatives to curb state spending growth — Tax and Spending Control. TASC would limit real, per capita spending growth to that warranted by population growth and inflation.

This is needed because since 2003 spending outpaced population and inflation by $5 billion more than spending in the previous decade.

TASC was first championed in Nevada a decade ago by then-state Sen. Bob Beers, currently the only announced candidate for the U.S. Senate seat now held by Harry Reid.

As with its 2013 predecessor, “Solutions” is notable less for what it suggests lawmakers do as undo.

For example, the book notes that Nevada has the highest electric power bills in the Intermountain West and its per kilowatt-hour retail electricity cost is 37 percent higher than neighboring Utah’s.

The first recommendation is repeal of the so-called renewable portfolio standard (RPS) that requires 25 percent of all electricity sold in the state by 2025 to be generated by expensive solar, wind or geothermal facilities. According to “Solutions,” Nevada power bills are expected to rise 6 percent in the next decade due to RPS alone.

Next, repeal the 2013 law that requires the shutting down of all coal-fired power plants and deregulate the monopoly electricity market, which, by the way, the state was planning to do before the Enron market manipulation threw lawmakers into a panic.

Then there is the topic I have been fulminating about for decades, the 1937 prevailing wage law, which requires all public works projects in the state to pay wages based on a flawed survey of construction companies that always comes out to be union scale.

According to Lawrence’s research, this law requires the state, cities, counties, school districts and other government entities to pay 45 percent higher wages than necessary at a cost to taxpayers of $1 billion a year.

But probably the most important recommendations in “Solutions” are found in the section on public education, which recommends real reform and not just more funding. “Nevada has nearly tripled per-pupil funding, on an inflation-adjusted basis, while educational quality has deteriorated,” the book notes. “The U.S. Department of Education reports that, between FY1960 and FY2011, real, per-pupil funding for ‘current expenditures’ (not accounting for employee benefits, capital outlays and debt repayment) increased from $3,268 to $9,035. Over the same time period, test scores have remained flat while graduation rates have dramatically declined.”

The fundamental solution is competition through choice — private schools, charter schools, education savings accounts, education tax credits and scholarship programs.

In addition there needs to be competition in the classroom, where teachers would be paid based on merit — how much students progress during the school years — and not seniority alone, as is the case now.

Though Nevada has spent $2.5 billion on class-size reduction in kindergarten through third grade over the past 25 years, there has been no observable improvement in educational outcomes. In fact, according to reports Lawrence uncovered, Nevada students in classes of less than 15 on average did not score as well in reading and math as students in larger classes. End class-size reduction.

Also, all-day kindergarten and early childhood programs have shown no lasting benefit.

Perhaps this election will have consequences.

Welcome to Nevada’s money trough where government pigs slop

Illustration by Steven Miller

Nevada’s version of Sen. Tom Coburn’s “Wastebook” hit the ether today — “The Nevada Piglet Book 2014” by NPRI’s Geoffrey Lawrence and Cameron Belt.

It was apparently put to bed prior to the special legislative session that gave away $1.3 billion in tax exemptions, tax credits and outright gifts to Tesla Motors to entice the company to build a battery manufacturing plant in Storey County, because the deal gets no mention.

Nearly a third of the book is devoted to the fiasco known as the Silver State Health Insurance Exchange. The authors rightly conclude bungling of the exchange is due to central planners being so conceited as to think they can create a system more efficient and more smooth-running that the chaotic free market — like the invisible hand hasn’t been proven right since 1776.

It was the lust for free federal money — since Nevadans don’t pay federal taxes, right? — that lured Nevada into the trap.

“Under the leadership of Gov. Brian Sandoval, who proposed, championed and signed the bill to create one of the first staterun ACA exchanges, Nevada’s political class rushed to get the state out front where it could posture as an industry leader. Every state lawmaker present voted for the 2011 legislation,” the Piglet Book explains.

“Nevada’s political class wanted to act quickly in order to become eligible for federal grant funding for state-run exchanges. The Obama administration had committed to shelling out over $1 billion in 2010, 2011 and 2012 to assist states establishing such exchanges. By acting quickly, and without pause, state leaders would position Nevada to be one of seven states awarded the Tier 2 federal grant that amounted to $50 million.”

Xerox got the $72 million contract to build the exchange and everything was downhill from there.

Tests of the system prior to rollout failed, but the rollout went forward, just like the federal one.

Even the executive director of the exchange was unable to enroll using his own, personal account. There were thousands of bugs to be fixed. Enrollment numbers were a fraction of projections. And those who thought they enrolled found their paperwork was lost in the bureaucratic maze.

Xerox’s contract was canceled but the contract contained nothing allowing the state to recoup squandered money.

The Piglet Book nails part of the problem: “While governments also have many disparate functional areas, little incentive actually exists for these functional areas to operate cohesively. That’s because governments receive revenues through taxes long before any services are actually provided and independently of the quality of those services.”

Another reason is that no one is ever held accountable. The executive director resigned, but no one so much as had their wrists slapped.

Like its 2012 version, the books goes on to describe a compendium of pork, profligacy and political proclivity to poltroonery.

After describing cases of theft, incompetence, lack of due diligence, nonfeasance and malfeasance, this year’s book concludes:

“By their nature, governments are plagued by inefficiency, duplication of efforts, wasteful spending and employee theft. And because of the widespread ignorance concerning the superiority of markets, Nevada governments are becoming too big to succeed.

“This year’s edition of The Piglet Book makes clear that government must be restricted to a size and scope that protects the rule of law and allows free individuals to supply the needs of society through the profound intelligences that operate within the marketplace. Any other approach will, inevitably, merely yield more stories of waste and tragic outcomes — such as the ones detailed above.”