The Arizona-based Goldwater Institute (GI) sent a letter to the City of Phoenix Thursday, demanding it repeals a new “Prevailing Wage Ordinance for City Projects” ordinance.
“It’s important that the public be aware of burdensome mandates that will hurt not only businesses and employees, but all taxpayers. Concerned taxpayers can reach out to their councilmember to urge them to repeal this mandate,” a GI spokesperson told The Arizona Sun Times via email.
The Phoenix City Council passed the ordinance in question in March and passed by a five-to-four vote. As reported by Axios, the policy was voted on in a special meeting called by progressive Council Members Carlos Garcia, Laura Pastor, and Betty Guardado. Their colleagues only had a day to review the ordinance before voting.
Under the ordinance, if a contracted project costs more than $250,000, the contractor must pay its employees “not less than the wages and fringe benefits prevailing for the same class and kind of work in the local area,” as determined by the Phoenix Procurement Division. Companies must also provide wage reports. Any ordinance violations could result in civil penalties or the company being suspended from working with the city for up to a year.
The members behind the meeting claimed the ordinance would “stimulate local tax revenue” and support “high-quality, middle-class jobs in the construction industry.” The deciding vote came from outgoing Conservative Council Member Sal DiCiccio, who reportedly said he supported the policy because it requires the developers to receive subsidies from the city to cover the increased wages. However, Phoenix Mayor Kate Gallego was not on board. She voted against the ordinance to no avail and said pushing it through last second was “a terrible way to do public policy.”
Phoenix is the only city in Arizona to implement a prevailing wage policy.
Since the ordinance’s passage, the Chamber Business News has reported on the financial impacts it could have. The city is estimated to have to pay an additional $93 million for construction projects because of the policy, which it had not previously budgeted.
Beyond the financial concerns, GI staff attorney John Thorpe wrote to Phoenix that this ordinance also presents legal problems. Arizona law currently prohibits any prevailing wage policies. Arizona Revised Statute (ARS) § 34-321 (B) directly states that a subdivision of the state “shall not require” any public work contracts to provide wages “not less than the prevailing wages for work of a similar nature[.]” Thorpe argued that this law directly contradicts the new ordinance and takes priority as a Legislative measure that covers the entire state.
“When private businesses compete to provide the best services at the best price, everybody wins. But when the government saddles those businesses with burdensome regulations, it hurts entrepreneurs, employees, residents, and taxpayers alike,” wrote GI staff attorney John Thorpe.
A spokesperson for Phoenix told The Sun Times via email that the city has received the letter and is currently reviewing the impacts of the ordinance.
While Thorpe’s letter did not directly mention legal action, that does not mean it is not a future possibility.
“Although all legal options are on the table, we hope that the city council will act quickly to repeal this illegal, burdensome mandate,” the GI spokesperson told The Sun Times.
Additionally, the GI may not be the city’s only entity to look out for. Some construction companies are reportedly gearing up to sue the city, utilizing the same statute.
– – –
Neil Jones is a reporter for The Arizona Sun Times and The Star News Network. Follow Neil on Twitter. Email tips to [email protected].
Photo “Woman Working” by AllGo.
