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Prevailing Wage Expansion In State Budget

The $177 billion state budget, which state lawmakers finished passing very early this morning, includes a provision that extends prevailing wage laws to cover workers on some private construction projects that receive public funds.

This expansion, scheduled to take effect next January, applies to projects that are worth $5 million or more and receive at least 30 percent of their financing from public funds.

The definition of "public funds" in this case includes grants from a public entity, savings achieved by using public loans, and tax savings as a result of credits, abatements, or payment in lieu of tax known as PILOT agreements, as well as industrial development agency exemptions.

Lawmakers and the governor also agreed to create a 13-member “Public Subsidy Board” to study and make recommendations on prevailing wage going forward. The board will be made up of state agency heads, members of the construction industry and organizations representing building owners and developers.

The board would be able to recommend and make changes to rules regarding the minimum threshold percentage of public funds, minimum dollar threshold of project costs, which work is exempt, defining construction, and what constitutes public funds.

The board can also delay implementation past the Jan. 1, 2020 target date if it determines that the prevailing wage requirement will, as the industry has long suggested, have a significantly negative economic impact.

Labor unions and advocates have been pushing this measure for some time, and it came close to making it into last year's budget only to be rejected at the eleventh hour.

Trade groups, developers and members of the construction industry have vociferously opposed the prevailing wage expansion, saying it will increase labor costs by 30 percent or more, depending on where projects are located in the state.

Some projects, such as small residential or school construction, nonprofit projects, and brownfields rehabilitation under a state program for properties contaminated with hazardous waste, will be exempt from this new requirement.

Projects receiving 421-A benefits in New York City, which are intended to encourage affordable housing development, also are exempt.

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