Local county and municipal economic development officials are arguing that confusion over state prevailing-wage laws are driving away economic development.

Local county and municipal economic development officials are arguing that confusion over state prevailing-wage laws are driving away economic development.

Licking County economic development manager Rob Klinger said two companies have turned down "Rapid Outreach Grants" from Ohio, although both companies still plan to expand in the area.

"We ran into a bit of a jam, with two companies, both declined the grants, because of prevailing wage," Klinger said. "It would cost them more in their project than the grant was worth. One company was already here and was going to expand here or look at going to West Virginia. Another company declined it because it increased the project cost. They've got to look at the bottom line to decide if it's worth it. It becomes financially not feasible because they lose money."

Ohio's prevailing-wage law, according to the state's Department of Commerce, requires public authorities "to pay the workers on most of their construction projects the local 'prevailing wage.' As long as the cost of the public authority's project exceeds a threshold amount (adjusted the first of January in every even-numbered

year), and the type of project is not specifically exempted by law, the prevailing wage requirement is triggered. The amount is currently $73,891 for construction projects and $22,166 for reconstruction, enlargement, alteration, repair, remodeling, renovation or painting projects."

The problem becomes acute when other states offer equivalent grants without imposing prevailing-wage conditions, Klinger said.

Prevailing wage is usually tied to union-contract wage rates. The Ohio Division of Industrial Compliance and Labor states that prevailing wage includes the hourly rate of pay, the pension contribution made by the employer and the benefits cost paid by the employer.

Licking County has more than two dozen prevailing-wage categories associated with specific union contracts. One bricklayer contract, for example, provides a base wage of $25 per hour and $35 per hour in total compensation with all benefits.

Actual prevailing-wage rates for any individual project are determined by the Department of Industrial Compliance and Labor.

Chris Strayer, vice president of the Ohio Economic Development Association, said his organization has requested that Gov. John Kasich's administration issue an executive order that would not change existing law but would confirm that a previous administration order is no longer effective.

"We're asking for an executive order from the governor's office that states what the rules are pertaining to prevailing wage," Strayer said. "We're not asking for anything to change. We're just asking for it to be recognized that this is the way the rules are going to be applied. It's more or less a PR statement that we can take out to site selectors and say this is the way it's going to be while Gov. Kasich is in office."

Before Gov. Ted Strickland took office, prevailing-wage rules would apply to a roadway project in an industrial park if the roadway were funded with state money, Strayer said, but not to every project in the park. Gov. Strickland changed that.

"A few years ago under Gov. Strickland, they reread the rules regarding how prevailing wage was applied to projects," Strayer said. "Before then, if you had an industrial park and you got state funds for a roadway, prevailing wage was used only for the construction of the roadway. The rereading of the rules by Gov. Strickland was that, if you received public funds for the roadway, then every single project, every private development in that industrial park also had to be built with prevailing wage."

The Ohio Supreme Court eventually reversed Strickland's executive order, Strayer said, but national site selectors often are not aware of the reversal.

"There was a lot of turmoil about that -- a lot of confusion," Strayer said. "The state Supreme Court had reversed that, but the problem is, there are a lot of national site selectors and corporate real estate people out there who do not know that this has been reversed. They're still confused by what the reading of the rules is. We've asked that Gov. Kasich make an executive statement to give clarity to what the prevailing-wage rules are."

Strayer said it is difficult to quantify lost business because no one knows how many times the state simply was not included as an option for a new site.

"The state of Ohio has lost a lot of projects because of this confusion," Strayer said. "We can't really quantify it because what happened with a lot of national site selectors, when the reinterpretation of the rule came out, they just crossed Ohio off their list. There were a lot of projects we were never even considered for because no one wanted to pay the prevailing wage on their private project. You can't quantify how many millions of dollars were lost by the state for that, but now we are trying to repair our image with national site selectors and get back to attracting new jobs."