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Michigan Supreme Court hears arguments on prevailing wage law

LANSING — The Michigan Supreme Court heard oral arguments this past week in a case that will decide whether municipalities have the power to require contractors to pay union-scale wages and benefits on local building projects.

The state’s high court is hearing the case, Associated Builders and Contractors v. City of Lansing, on appeal from Associated Builders and Contractors of Michigan, a Lansing-based trade group that represents mostly nonunion contractors. ABC sued the city in 2012 in a bid to get its local prevailing wage ordinance tossed out as unconstitutional.

At issue is whether cities and townships have the authority to set local prevailing wages or whether that is the role of the state. How the Supreme Court decides could influence a broader debate about repealing the state’s prevailing wage law playing out at the Capitol.

ABC’s argument hinges on a 1923 Michigan court ruling, Attorney General, ex rel. Lennane v. City of Detroit, which says only states can set wages and benefits for contractors. Attorneys for the city of Lansing argue the Lennane ruling was superseded by the 1963 state constitution, which more broadly interprets municipal powers.

Because Michigan and the federal government have prevailing wage laws, which apply to public construction projects, “the Lansing ordinance would pose no more difficulty than what contractors are dealing with on the state and federal levels,” F. Joseph Abood, an attorney representing the city, said in court.

Yet Kraig Schutter, an attorney representing ABC, testified that the court’s earlier decision in Lennane remains binding and even broad powers are not limitless.

“A city ordinance has to relate to its municipal concerns,” he said, “and that term has to have some boundaries.”

In May, a divided Michigan Court of Appeals panel reversed a decision from Ingham County Circuit Court, which initially sided with ABC. The appeals court said Lansing’s ordinance, adopted in 1992, is “a valid exercise of municipal power because it does not conflict with the Michigan Constitution or state law.”

Lansing’s ordinance requires contractors to commit to paying wages and benefits comparable to those paid to other workers in the same field — often union-scale — before city leaders will approve development agreements. The prevailing wage requirement also must be printed in bid documents.

City administrators have maintained that prevailing wages follow the market and the decision to require them is a local one. Justice Richard Bernstein raised that point while questioning Schutter, asking: “(Cities) don’t have the right to say, ‘If you want to work with us, here are the requirements?’”

That concept was challenged this summer, when lawmakers passed a bill that prevents cities from setting their own local minimum wages. Justice Brian Zahra, during the hearing, cited the new law and the fact that legislators have not applied the same standard to prevailing wages.

The Supreme Court is hearing ABC’s appeal as the organization leads a petition drive to overturn the state’s 50-year-old prevailing wage law. Top Republican lawmakers in the House and Senate have said ending prevailing wage is a legislative priority.

ABC is funding a ballot committee called Protecting Michigan Taxpayers, which recently submitted nearly 391,000 signatures to the Michigan Bureau of Elections to get its petition before the Legislature.

Protecting Michigan Taxpayers needs at least 252,523 valid signatures from registered Michigan voters to send its petition to lawmakers, who can either adopt it or let voters decide in November 2016. Gov. Rick Snyder would not be able to veto the legislation if it passed either way.

Snyder, Michigan’s building trades unions and Associated General Contractors of Michigan, a trade group for about 200 construction firms across the state, say killing prevailing wages would undermine the state’s efforts to strengthen its skilled workforce amid a labor shortage.

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