Proposal Could Slash School Construction Costs, Reduce Property Tax Burden for Delaware Property Owners
A pending bill in the Delaware House of Representatives could save property owners in the state untold millions of dollars in tax payments. House Bill 296, sponsored by State Representative Bryan Shupe, would allow school district and charter school officials to decide if they want to pay ‘prevailing wage’ rates for school construction projects. The prevailing wage is the state-mandated minimum wage* paid to workers employed on any project where state funds are used. State Senator Eric Buckson, the prime Senate sponsor of the measure, notes the current prevailing wage scale is also grossly unfair to some workers, with rates for some occupations swinging wildly from one county to another. He adds that allowing school district officials the flexibility to decide how to issue bid proposals for construction and renovation projects can increase efficiency and slash the obligations on state and local taxpayers.
Additional Information from Legislative Hall
The Delaware Department of Labor sets the rates annually based on a survey of employers. The rates vary by occupation, type of project, and the county where the work is being performed. Prevailing wage rates must be paid on new construction projects that cost more than $500,000 and on repair and renovation projects exceeding $45,000.
However, Delaware’s rate-setting process has long been criticized for being flawed and inaccurate, producing results far exceeding market conditions. In some cases, hourly rates for workers performing the same job on identical projects differ markedly from one county to the next.
“The prevailing wage mandate inflates the bottom line of any project using state money by at least 15% to 20%,” Rep. Shupe said. “The result is roads and schools that cost much more than they should, leaving taxpayers to dig deeper into their pockets.”
In The First State, school construction costs are split between the state and local school districts, typically 70% to 30%, respectively. The prevailing wage rate applies to the entire project because of the inclusion of state money.
Between the last fiscal year and the current Fiscal Year 2024, Delaware school districts and charter schools saw the collective cost of ongoing school construction increase by more than $260 million due to inflation. School officials asked the state to cover $175.3 million of that expense, which was recently approved.
“We cannot do much to stop inflation,” Rep. Shupe said, “but we can do something about forcing our school districts to use a defective system that needlessly wastes taxpayer money.”
Comparing Delaware’s prevailing wage rates to federal wage statistics reveals the gaps between the state-mandated pay scales and the rates paid in the market.
According to the Federal Bureau of Labor Statistics, 90% of the people employed in the following occupations made at or below the indicated hourly rates in Delaware in 2022**:
- carpenters $36.71
- construction laborers $28.15
- electricians $45.60
- plumbers and pipefitters $46.38
By contrast, Delaware’s current (2023) hourly prevailing wage rates for these occupations working on building projects are the following:
- carpenters $47.80 to $59.56 (varies by county)
- construction laborers $53.65
- electricians $79.17
- plumbers and pipefitters $68.46 to $77.38 (varies by county)
“When I served as the mayor of Milford, we decided to have Airport Road repaved,” Rep. Shupe said. “This is a high-traffic road between US 113 and State Route 15. The contractors and sub-contractors had been selected, and the agreement was signed. With everything done, we asked our legislative delegation if the state would finance a portion of it. We quickly learned that state assistance would have increased the project’s cost by an additional $300,000 because of the prevailing wage mandate.
“This shows the expensive disconnect between allowing the competitive market to work on behalf of taxpayers and state intervention that hamstrings this system, adds huge costs, and increases the financial burden on working families,” Rep. Shupe said.
State Sen. Eric Buckson (R-Dover South), the prime Senate sponsor of the measure, notes the current prevailing wage scale is also grossly unfair to some workers, with rates for some occupations swinging wildly from one county to another.
Sen. Buckson notes that a truck driver working on a building project in Seaford would get an hourly prevailing wage rate of $26.04, while the same driver working on an identical project in Middletown would receive an hourly prevailing wage rate more than twice as high, $53.07. “Someone doing cement finishing work in Wilmington would receive an hourly prevailing wage of $88.04 per hour, while the same worker doing the same job on a Lewes construction site would receive less than a third of that, $27.02 per hour,” he said.
“Allowing school district officials the flexibility to decide how to issue bid proposals for construction and renovation projects can increase efficiency and slash the obligations on state and local taxpayers,” Sen. Buckson said. “There is no excuse not to give them this reasonable autonomy.”
* Where applicable, the wage rates may combine the hourly wage and the value of certain fringe benefits, like health insurance contributions.
** the most recent year for which data is available.
