Tempe City Council approves new prevailing wage ordinance

PHOENIX — Tempe City Council approved the establishment of a prevailing wage ordinance on May 9 with a 5-1 vote.

The new ordinance ensures that workers involved with City of Tempe construction projects are compensated fairly, according to a press release. The ordinance establishes wage standards for workers on projects valued at more than $4 million.

The release states that the wage for each position is determined by the U.S. Department of Labor under the provision of the Davis-Bacon Act.

The Davis-Bacon Act is a federal law that establishes the requirement for paying the local prevailing wages on public works projects for laborers and mechanics.

It is estimated the new prevailing wage ordinance may increase costs to the city from approximately 2.3 percent to seven percent annually, based on an independent consultant’s report that was included in the release.

Using the 2023-24 fiscal year as an example, the costs to the city would go from $2.4 million to $7.3 million.

“While no one would say that the millions this will cost is a small amount of money, it is a small amount to ensure the equity and fair treatment of the workers who build our city projects,” councilmember Randy Keating said in the release.

The City of Tempe had been evaluating the need for a prevailing wage ordinance since 2019.

Councilmember Doreen Garlid was the lone vote against the ordinance. The release says that she voted against the ordinance because of the additional costs, with Tempe preparing for budget reductions due to the repeal of the $21 million in residential rent tax. She also feels it’s likely a lawsuit that would come with its adoption.

“I support the fair treatment of the men and women who build our community,” she said in the release. “But passing this ordinance will pull our city into an existing lawsuit that will cost hundreds of thousands of dollars. Those legal fees will be 100% borne by the residents of Tempe at a time that I believe we need to be prudent.”

The cities of Phoenix and Tucson are currently being sued over their prevailing wage ordinances.

The ordinance will be located in Chapter 26 A of Tempe City Code, according to the release. Failing to follow the new ordinance could result in the suspension of a contractor from responding to solicitations for all city construction contracts for one year.