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Oregon Gov. Tina Kotek is facing backlash from the construction industry after she issued an executive order requiring project labor agreements for nearly all state construction projects.

Kotek鈥檚 Dec. 19 order mandates project labor agreements, or PLAs, for all state contracts where labor represents 15 percent or more of total costs 鈥� the vast majority of state projects, according to construction experts.

The governor鈥檚 order requires contractors and subcontractors to 鈥渘egotiate or become a party to a project labor agreement with one or more appropriate labor organizations.鈥�

Oregon construction industry groups blasted Kotek鈥檚 order.

鈥淚n our view, this is bad policy for the state,鈥� said Mike Salsgiver, executive director of the聽Associated General Contractors鈥櫬燨regon-Columbia chapter, in an interview.

The executive order took immediate effect. It鈥檚 likely to apply to most large-scale construction projects in the state and projects that receive state funding, including city and county infrastructure projects and affordable housing projects.

鈥淲hile we respect the right of workers to organize and collectively bargain, mandating union-only agreements on every major project adds costs, reduces competition and shuts out small minority and emerging contractors who are vital to Oregon鈥檚 economy,鈥� Salsgiver stated in a news release.

Construction groups said the agreements add unnecessary costs. The potential for added costs comes at a time when the Oregon Department of Transportation faces a projected $354 million budget shortfall in 2025-27.

The PLA policy 鈥渨ill needlessly inflate the cost of state government-procured and -funded construction projects by 12 percent to 20 percent and discourage competition from local quality contractors and their skilled workforce who have successfully built public works projects in Oregon for decades,鈥� Laurie Kendall, president of Associated Builders and Contractors鈥� Pacific Northwest chapter, stated in a news release.

To some observers, Kotek鈥檚 order demonstrated the sway of organized labor on the state鈥檚 Democratic leadership.

鈥淜otek鈥檚 anti-competitive and inflationary executive order ensures that taxpayer-funded construction projects are steered to union-signatory firms and will be built by union labor 鈥攊ncluding out-of-state union labor 鈥� even though only 14.9 percent of Oregon鈥檚 construction workforce is unionized,鈥� Kendall stated.

The construction industry groups noted that one of Kotek鈥檚 blue-state peers, California Gov. Gavin Newsom, in September vetoed a bill that would have required the California State University system and the state Judicial Council to require at least three projects each to adopt project labor agreements.

鈥淲hile I am generally supportive of PLAs as an option for public works projects, the new requirements proposed in this bill could result in additional cost pressures that were not accounted for in this year鈥檚 budget,鈥� Newsom wrote in his veto letter.

In addition to requiring PLAs, Kotek鈥檚 order requires state agencies to set targets for utilizing firms certified by the Certification Office for Business Inclusion and Diversity, known as COBID. These firms are owned by racial minorities or other disadvantaged groups. Labor participation data must be tracked.

Oregon鈥檚 largest group representing minority contractors, however, said it is not on board.

鈥淪weeping changes like this harm minority contractors, exacerbating systemic disparities and leaving many businesses shut out of opportunities they鈥檝e worked hard to access,鈥� Nate McCoy, president and CEO of the National Association of Minority Contractors, Oregon, stated in a news release.

The governor鈥檚 office did not respond to a message seeking comment on Monday. In December, Kotek portrayed PLAs as widely beneficial.

鈥淥regon will soon embark on multiple large-scale infrastructure projects across the state,鈥� she stated in a news release. 鈥溾�� With the broad use of PLAs across state projects, Oregonians will know that public dollars are spent efficiently and benefit the communities in which they鈥檙e spent.鈥�

When asked if legal action is an option, Salsgiver said Monday that he鈥檚 considering what steps the AGC chapter should take.

鈥淲e鈥檙e evaluating the situation and determining what our options are,鈥� he said. 鈥淚 don鈥檛 think there鈥檚 much I can or should say before that process is completed.鈥�