Budget Buster Fix: Prohibit Collective Bargaining By Public Employees

Nebraska’s government budgets are hurting most everywhere, but particularly in the State’s two largest cities. Enough fed up Omahans were paying attention when taxes were raised recently, that it kicked off a drive to recall Mayor Jim Suttle and resulted in a rare recall election. (Suttle appears to have narrowly escaped removal Tuesday).

Omahans’ taxes were raised in part because of the high cost of paying City employees. While those in favor of removing Suttle had a list of reasons for doing so, the primary cause was the Mayor’s proposed deal with the Omaha Police Union.

Suttle argued that there is “limited wiggle room in negotiating contracts for city unions”, citing the fact that the city unions would simply take their case elsewhere and, likely, the City of Omaha would be overruled. (See this Omaha World-Herald article from January 6 for more.)

Jim Suttle’s statement, in this case, was actually correct, even if politically expedient. When public employee unions in Nebraska are not satisfied with contract negotiations, there is a specially created court-like entity to which they can appeal, and, when they do, they are likely to get any and everything they request.

A January 5, 2011, Omaha World-Herald report illustrates this fact; the Omaha firefighters’ union was awarded a 2009 pay raise, even though the union had agreed to wage concessions at the bargaining table.  Cost for 2009 is estimated to be $2.2 million dollars.  Total cost, covering 2009 to the present, could amount to $7 million or more.

The special court to which the firefighters union appealed, believing there were not enough votes on the Omaha City Council to get what they really wanted, is the Nebraska Commission of Industrial Relations.

The Commission of Industrial Relations, commonly called “the CIR”, as the Omaha World-Herald January 6, 2011, story informed, “settles labor disputes between employee unions and governments, has long been a source of frustration for county boards, school boards, and city councils across Nebraska.”

One of the reasons the CIR is a source of frustration –

“The commission is not allowed to take into account a public employer’s ability to pay for a contract.”

Lincolnites seemed not to notice or be bothered by the recent results of City negotiations with firefighters. As reported in the Lincoln Journal Star on December 13, 2010:

  • Lincoln firefighters were already paid an average of $80,000 per year
  • The raise negotiated by the Mayor and approved by the City Council provides a 6% pay increase and an increase in longevity pay, resulting in some firefighters receiving a 10% total pay boost
  • The City Council approved the contract on a 4 to 3 vote, split along party lines
  • “We have to look at what comparable cities are paying. That is the state law. Those are the rules we operate under,” Councilman John Cook said.

Councilman Cook’s citation requires additional explanation. His statement does not explain what comparables are used – those are determined by the CIR, ultimately, since both the government body and the public employee union knows the negotiations could land there if the union does not like the negotiation.

Many Nebraskans do not understand that there IS such an entity as the CIR and, therefore, have no idea the impact it is having on government budgets. Personnel costs are at the top of the expense list for most government entities; so, of course, their pay and benefits are going to affect budgets tremendously.

CIR basics:

What IS the CIR?

C I R stands for COMMISSION OF INDUSTRIAL RELATIONS

● The CIR is an administrative agency created by state law and given certain legislative and judicial powers

● The CIR settles industrial disputes between governmental employers and their unionized employees.

INDUSTRIAL DISPUTES ARE:

“[C]ontroversies concerning terms, tenure, or conditions of employment,” which may include wages, benefits, rates of pay, hours of employment, or conditions of work.

GOVERNMENTAL EMPLOYERS

INCLUDE:

● State of Nebraska

● University of Nebraska

● School districts

● Counties

● Municipalities

● Public power districts

● Public power and irrigation districts

● Public utilities

● Others

We all know, or should know, what public employee unions are…

the only unions that are GROWING in membership in the U.S. primarily because growth in government is outstripping growth in the private sector.

NEBRASKA IS 10TH OUT OF THE 50 STATES IN THE NUMBER OF STATE AND LOCAL GOVERNMENT EMPLOYEES — (16%)

Likely, some of what is wrong with the CIR is already obvious, but here is a bullet-pointed list. (Remember Lincoln Councilman Cook and the comparables? That’s explained in the list, below.)

WHAT’S WRONG WITH THE CIR?

● Public employee pay in Nebraska must be COMPARABLE to that which is PREVALENT

■ The CIR is NOT bound by any geographical or population standard when choosing a labor market to use for comparison

■ There is NO objective standard for the CIR to follow when it determines whether two or more jobs are comparable based on job duties

■ There is NO statutory definition of “prevalent,” so the CIR has made up its own broad, general definition

■ The CIR is NOT required to consider the employer’s ability to pay the wages or benefits the CIR orders them to pay

■ The CIR is concerned with comparability, NOT the most reasonable outcome

PROPOSALS TO “FIX” WHAT’S BROKEN

There are SIX bills pending in the Unicameral to reform the CIR. We’ve included a brief explanation and link to the bill text for each.

We encourage people to read each bill for themselves and research this issue, of course, but we are laying out here our position on each of the bills and recommendations.

LB482: Change provisions governing industrial disputes involving municipal corporations under the Industrial Relations Act

Introduced by Senator Utter, co-sponsored by Senators Carlson and Hadley

  • Adds a new section to the Industrial Relations Act that applies solely to cities
  • Makes some changes to the comparables used that are positive
  • Allows health insurance and retirement benefits to be subjects of bargaining
  • Is unfortunately too much “nibbling around the edges” of the problem
  • Does not apply across the board for all public employees, only to municipal employees

LB619: Remove school districts, learning communities, and educational service units from the Industrial Relations Act

Introduced by Senator Larson

  • Only affects education sector
  • Public employees, including educators, can still collectively bargain
  • Would likely subject collective bargaining of the education sector to regulation by the National Labor Relations Board – a Federal body

LB623: Change effect of Industrial Relation Act petitions and provide provisions for counties encompassing a city of the metropolitan class

Introduced by Senator Lautenbaugh

Would only apply to Omaha, as it is the only body in Nebraska that qualifies as a city of the metropolitan class

LB555: Eliminate Special Masters and other provisions of the State Employees Collective Bargaining Act

A Governor’s Bill Introduced by Senator Harms

  • Makes changes to Nebraska’s overall collective bargaining act, is not strictly a CIR bill
  • Only affects the State, not political subdivisions of the State
  • Eliminates the appointment of Special Masters
  • Would not substantively impact existent problems
  • An unfortunate insertion of the Governor in the reform effort without clear or effective purpose

LB564: Change and eliminate provisions of the Industrial Relations Act and the State Employees Collective Bargaining Act

Introduced by Senator Fulton

  • Turns CIR into, largely, a fact-finding body
  • Sets definite benchmarks, in terms of time periods, in which certain negotiations have to occur and a Commission hearing has to be conducted
  • CIR enters into a fact-finding process and then has to come up with recommendations
  • Creates three possible outcomes; last offer of employee, employer, or status quo
  • Has many positive aspects, as it does alleviate a number of problems with the CIR by channeling towards status quo
  • On the negative side, it is a political compromise, as collective bargaining stays in place for public employees, and, therefore, some problems will remain

* Most Effective Strategy *

“Plan A”: Support Initial STATUTORY REPEAL and Constitutional Amendment

LB664: Repeal the Industrial Relations Act and the State Employees Collective Bargaining Act and prohibit public collective bargaining and work stoppage

Introduced by Senator Nelson

LR29CA: Constitutional amendment to prohibit government from engaging in collective bargaining

Introduced by Senator Nelson

  • LB664 and LR29CA accomplish the same goal; governmental entities would no longer engage in collective bargaining with their employees in Nebraska, thereby rendering public employee unions powerless to affect the compensation and benefit determinations for public employees.
  • Public employee unions would, essentially, become political action committees.

The difference between these two measures:

  • LB664 would repeal a STATE STATUTE (law) and go into affect immediately or within a relatively short period of time (i.e. July 1, 2011).
  • LR29CA would make the prohibition on collective bargaining by governmental entities in the State part of the Constitution. If passed by the Legislature, it would go on the November 2012 ballot to be voted on by the people of Nebraska.

Why this is the BEST strategy:

  • Immediately alleviates the problems with collective bargaining
  • Should NOT subject Nebraska public employers / employees to regulation by NRLB
  • 2012 Passage of the Constitutional Amendment makes reversing the prohibition on collective bargaining more difficult

“Plan B”: Support Initial Broad Reform (LB564, Fulton) and (LR29CA) Constitutional Amendment on 2012 Ballot

Why this is a sound strategy:

  • “Defangs” the CIR until the November 2012 Election without subjecting collective bargaining to regulation of Federal government (NRLB)
  • LB564 could provide immediate reform until the November 2012 Election
  • Due to the influence of unions, Senators may not want to take a firm stand on prohibiting collective bargaining

What you can do to help ensure CIR reform takes place:

Share this information with others

While we will be doing follow up on this issue, including, in shorter form, advocating for prohibiting collective bargaining for public employees, consider sharing this information with as many Nebraskans as you can who are interested in fully informing themselves on such an important issue.

A PRINTABLE PDF VERSION OF THIS INFORMATION IS LOCATED *HERE*

Check back here for additional, shorter form printable material, articles, and helpful bullet-pointed lists.

Contact your Senator and encourage others to do the same

Contact the members of the Business and Labor Committee, who will be holding hearings on these bills

To locate your Senator’s contact information and to locate Committee member list and contact information, click HERE.

An initial contact at this stage by enough Nebraskans will help ensure that our Senators understand that Nebraskans want reform. Eliminating collective bargaining for public employees will require significant political will, not a commodity in large supply at our State Capitol, unfortunately, so your contacts at this stage are important.

Prepare to attend hearings for the best-option bills

A large turn out of public support for or against legislation has proven to aid in passage or defeat. CIR bills will be heard by the Business and Labor Committee, which means it will be all the more difficult to pass reform.

Last year’s large turnout out at the LR292 hearing sent a clear message to the Senators that Nebraskans wanted it to pass, although it had been perceived as “controversial”. The measure passed by a wide margin.

It IS difficult to determine when bills will be scheduled for hearings. As CIR is a high priority for GiN, we are monitoring these bills closely so we can alert people ASAP after we know. The duration from scheduling to the actual hearing date can vary.

Prepare to make follow-up contacts with Business and Labor Committee members and your Senator

Since Committee votes are not specifically scheduled and are not even required, a committee can simply “table” a bill and not vote on it, ever. If bills are not being voted on, enough contact with Committee members and your own Senator could help move bills out to the floor for votes.

In the experience we’ve had so far, there are not a large number of calls made to Senators. Unfortunately, there are not a large number of Nebraskans monitoring their Legislators. More contact with them CAN have an impact on the process.

Source of graph: “Where Public Employees Run the Show”

Comments

  1. Anonymous says

    Unions exist to protect workers and ensure that our children receive a quality education and that those who work for the state and educate your children live healthy, decent lives. I am opposed to CIR reform. The CIR is not the source of the problem. CEO salaries are the source of the problem.

    • Shelli Dawdy says

      Thank you for stopping by the GiN website and taking the time to comment.

      I will agree with you that unions exist to protect workers but I will not agree that they assist in ensuring that children receive a quality education. Studies and statistics have been showing for some time that other means of educating children, including Catholic schools and homeschooling, provide a superior education for children. The common factor is that there are no unions involved in these processes. Unions DO ensure those who work for the state are protected, and as you say, and live “healthy decent lives”. They receive superior benefits and in a number of cases, higher salaries or wages than the people who are taxed to pay for it.

      CIR is only part of the source problem. Collective bargaining by public employees is really the problem here.

      “CEO salaries are the source of the problem”? I don’t even understand WHAT that has to do with anything. If you make more than $27,000 in this state, you are kicked into the highest tax rate of 6.84% incrementally.

      Here is a 2010 Nebraska Income Tax Rate Schedule.

      While I would definitely have to do some further research, from what I do know right now, there couldn’t be very many CEOs in our state. I suppose that depends upon what your definition of “CEO” is. The ones we do have are heavily taxed – Nebraska has a progressive income tax structure. We’re heavily redistributing the wealth already. It’s one of the reasons we do not have a very business friendly tax climate and why we have so many of our citizens dependent upon government, whether it be through employment or welfare.

      We have an economy that is far too reliant on government in one form or another. You’ll have to look for the next article we’re about to publish, which includes a lot of data you can verify. In part, it shows that 17% of Nebraska’s workforce is employed by State or Local government. Taking into account this factor and the reliance on a farm economy, which receives at least three layers of subsidies through the USDA, the State, and NRDs, how much private industry do we have?

      You can say that CIR is not the source of “the problem”, that CEOs are, all you like. I guess it depends upon what you see as “the problem”. For taxpayers who do not look to government for their living or sustenance, “the problem” is growing budget shortfalls, increasing taxes, inflating prices, and legitimate concerns about ultimate government bankruptcy.

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