S.B. 621

VETOES

Senate Bill 621 requires contractors or subcontractors with a State contract for
services valued at $100,000 or more to pay their employees a "living wage." The living
wage is set at $10.50 for fiscal year 2005 and would be adjusted annually by the
Commissioner of Labor and Industry. If employers provide health insurance to
workers, the employers may reduce the wages paid by all or part of the hourly cost of
the employer's share of the premium for each employee. The bill also provides for the
investigation of complaints, hearings, fines and penalties for noncompliance, and
authorizes an employee to sue for damages when an employer fails to pay the living
wage.

Senate Bill 621 presents significant policy issues that would be detrimental to the
State. Specifically, there is the potential for: 1) significantly higher costs to the State
for procurement contracts; 2) an increase, rather than a decrease, in unemployment;
and 3) small business exclusion in the State procurement market.

Under the State's current fiscal condition, there are already inadequate funds to pay
for State procurements. Unintended consequences could cause Maryland firms that
are currently doing business with the State to move elsewhere or not bid on State
contracts. The message that wages in this State will no longer be set by the
competitive market of employer and employee relations, but rather by the
government, sends the wrong message about Maryland's business climate. Senate
Bill 621 undermines the very purpose of the competitive bidding process, that the
State obtains the best service at the lowest price.

Furthermore, Senate Bill 621 does not consider the jurisdictional cost of living
differences between the urban, suburban and rural regions of the State. No other
state in the country has adopted living wage as a statewide policy. Former Governor
Gray Davis, while supporting the concept of higher wages for workers, vetoed a living
wage measure in California citing the state's fiscal conditions and questioning the
appropriateness of increasing contracting costs for all state departments at a time
when they can least afford it. Senate Bill 621 unfortunately, raises each of these
concerns while breaking the trust of Maryland's taxpayers to use our scarce public
funds wisely for the benefit of Maryland and its citizens.

For the above stated reasons, I have vetoed Senate Bill 621.

Very truly yours,
Robert L. Ehrlich, Jr.
Governor

Senate Bill No. 621

AN ACT concerning

State Procurement Contracts - Living Wage

FOR the purpose of requiring certain contractors and subcontractors to pay certain
employees a certain minimum wage level rate under certain State procurement
contracts; providing certain exemptions and reductions in a certain wage level
rate; requiring the Commissioner of Labor and Industry to prescribe alter a
living certain wage level rate based on a certain Consumer Price Index and to

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