Local boards will no longer set minimum wages for public construction projects in Indiana under a law signed Wednesday by Gov. Mike Pence.
The bill will eliminate the boards that set what is known as the common construction wage that workers must be paid on most state or local government projects.
Pence said the change will allow the free market to determine pay scales rather than government boards, saving taxpayer dollars on public projects.
The GOP-backed bill marks a victory for the governor, who has campaigned hard for the measure this session, including through television ads and touts on social media from his campaign committee.
Repeal supporters say the local boards, made up of people appointed by labor unions and an association of non-union contractors, set wages for tax-funded projects that are artificially high. They argue that the repeal will save tens of millions of tax dollars each year by cutting much as 20 percent from the cost of building projects as more contractors would be allowed to pay wages below union scale.
"By repealing the common construction wage, our state is putting hard-working taxpayers first, lessening the burden on cash-strapped local governments and schools, and opening doors of opportunity for small businesses across our state," Pence said in a written statement.
Critics say those savings are a fallacy and that repealing the state's decades-old law will only ease the way for low-paying, out-of-state contractors to underbid Indiana companies.
Rep. David Niezgodski, D-South Bend, whose family owns a plumbing contracting business, said the common construction law created a stable work environment and ensured that local projects were done by in-state contractors. Its repeal "is a slap in the face to not only our hard-working men and women, but Hoosier business owners and taxpayers as well," he said.
The measure sparked fierce debate this session, and a rally against it brought thousands of contractors and union members to the Statehouse lawn in April. Several Indiana mayors, including Karen Freeman-Wilson of Gary and Ron Meer of Michigan City, opposed the measure as well.
Democrats lambasted the repeal as being pushed by out-of-state conservative groups, such as Americans for Prosperity, a political organization backed by industrialist billionaires Charles and David Koch that bought radio ads in Indiana to support the bill.
Even Republicans seemed divided. The House voted 54-40 last month in favor of the repeal, with 13 Republicans splitting from the GOP supermajority to join Democrats in opposing it. The measure narrowly passed the Senate after lawmakers from both sides of the aisle expressed concern about its effect on Indiana's middle class.
Sen. Phil Boots, R-Crawfordsville, has consistently said he wasn't in favor of taking up the proposal this session and believed a special committee should review the construction wages law.
As chairman of the Senate Labor Committee, many believed Boots would have control over the bill's progress this session. But Republican Senate President Pro Tem David Long, who supports the measure, assigned it to the Tax and Fiscal Policy committee, where it advanced with an 8-5 vote.
The measure will take effect in July and establish a mandatory E-Verify program to ensure that all workers are U.S. citizens and prohibit businesses from paying workers in cash. It would also require contractors to be certified by the state Department of Administration or the state Department of Transportation and have an employee training program.
Contractors who violate these rules will face punishments such as criminal charges or temporary suspension from bidding on future government projects.