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Millions in tax revenue at stake

By Therese Hart HAGATNA, Guam (Pacific Daily News, Sept. 9, 2010) - Vice Speaker Benjamin J.F. Cruz warned yesterday Guam could lose millions in terms of income tax revenues if the Davis-Bacon wages for construction-related positions are not adjusted before projects for the military buildup begins.

Cruz raised the issue to Congresswoman Madeleine Bordallo in a letter sent yesterday.

"This matter needs to be resolved immediately; preferably before the Record of Decision and not after. I implore you to take the necessary actions to resolve this matter," he told her.

He asked Bordallo to communicate with the Department of Defense its obligations as a contracting agency under the Davis-Bacon law.

He stressed that further contract bidding and awards for the buildup need to be held in abeyance until Guam’s Davis-Bacon wages are properly updated.

The senator disclosed this week Guam’s Davis-Bacon wages listed on a federal website were copied from a decade-old H2B prevailing wage determination.

He urged U.S. Department of Labor Secretary Hilda Solis to update Guam’s Davis-Bacon wages.

"Often, out-of-date errors, and wrong assumptions regarding the application of Davis-Bacon wage determinations can be corrected prior to bid/award, which if not corrected then, and brought to light later will be deemed untimely complaints," states the Davis-Bacon Wage Determinations section of the U.S. DOL’s Prevailing Wage Book 2009.

Cruz warned Bordallo after the Record of Decision for the buildup is signed, contractors awarded construction projects could lock in wages for workers that are based on decade-old information.

"Updated wages for workers in buildup construction projects will mean millions of dollars in income tax revenues, considering the size and scope of projects needed for the buildup," Cruz wrote in his letter. "Additionally, the intent of the Davis-Bacon Act is clearly to ensure workers are paid no less than the local prevailing wages."

Japan and the U.S. will spend at least $10 billion to finance the buildup, the biggest realignment of forces seen since the end of the Vietnam War.

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