Hearing Testimony: Collective Bargaining By NE Govt Obstructs Spending Caps (CIR)

Capitol Rotunda from Above - A beautiful building...the activities inside too often are not so pretty

Monday the Nebraska Legislature’s Business and Labor  Committee convened hearings on the nine measures that propose various changes to the State’s statutes pertaining to how public employee salaries, wages, and some benefits are determined. The whole issue is being commonly referenced as “the CIR”, which is the entity that has the authority to settle disputes between public employee unions and their government employers. It’s important to note, however, that the issue not entirely limited to the CIR, however, and the nine measures vary a great deal as to how they would impact the CIR and the state statutes governing it.

If you haven’t read any of our previous articles on the subject, likely some additional explanation is required, including explanations of our position on the issue, so you may want to click HERE to see a list.

Linda and I spent a significant amount of time looking into how current Nebraska law in this area impacts the size and cost of government, and most importantly, Nebraska taxpayers. We put together a packet of information and a statement for yesterday’s hearings. We prepared the statement in a way that would allow either one of us to present the information to the Committee to be as flexible as possible as Mondays present scheduling challenges for both of us and Linda in particular. It worked out that I was the one who presented the information to the Committee.

It’s important to note that we did not present the information as representatives of Grassroots in Nebraska. We do not have a clear picture regarding where people stand on this subject who participate in GiN activities and we did not believe it would be appropriate to go to a legislative hearing with a claim that we were representing others. We’ve seen this tactic employed by other groups and we don’t believe it’s right. Further, there are few cases when it is effective to put a political stamp on such testimony or to use testimony as fodder for building a group or individuals “profile” in the public eye. There may come a time when testimony as GiN representatives would be appropriate, but this was not one of those occasions.

I was not able to present the entire statement; the primary measure which we believe deserves support, LR29CA, was the very last in the line up of nine. The slate of hearings started at 1:30pm and I testified after 8:00pm. By this point in the day, stretching beyond the time limit would not have helped our cause; we did know we were going to be stretching it with the length of the information we’d prepared. I only regret that by the time we got to the hearing date and the time of my testimony I was not as sharp as I might have otherwise been. While those who were present or watched on the stream said I did a very good job, in retrospect, I do wish I would have edited a bit and ensured that I made the last points in the statement as it goes to the heart of several problems caused by collective bargaining of government entities.

We will be publishing several more articles about what happened at the hearings, including one in which I will give my impressions of what occurred. That’s where I will explain why I believe it would have been maximally effective to make the points included at the end.

Until we get out all of the information we have discovered, it’s critical to stress that people need to extend every effort to contact the members of the Business and Labor Committee and their own Senator regarding this issue if they want anything effective to happen. I cannot overstate how important this matter is for the sake of fiscal prudence, how resistant the Business and Labor Committee members are to do anything about this matter, or how, frankly, weak-kneed our elected officials are on the whole matter.

If there is any chance of ending collective bargaining by government entities in Nebraska, considerable public pressure is going to have to be brought to bear…in other words, its up to the People on this one.

Hopefully, the information we’re sharing here will lay out as starkly as possible WHY it is so important that people take action.

I’ve uploaded the packet distributed to the members of the Committee to our Scribd account, which you can view online and/or download and print, HERE. For the purposes of publishing the letter in article form, below, I have linked directly to the information sources referenced, provided footnotes in some instances and inserted a graphic from the attachments where appropriate.

Senator Steve Lathrop

Business and Labor Committee

Nebraska Legislature

February 7, 2011

State and local public employees currently make up 17 percent of Nebraska’s workforce.  In other words, one in every almost six Nebraskans works for state or local government (Attachment 1 [1. Percentage calculation performed by dividing Government Employee (169,000) by NE total Civilian Labor Force (973,900). Total Civilian Labor force are the number of Nebraskans in the workforce, government or private, age 16 or over who are not members of the military and not institutionalized.] ). In Omaha, it’s one worker in approximately seven (Attachment 2 [2. Figure quoted calculated by dividing Government Employment (65,200) by Omaha-Council Bluffs Civilian Labor Force (446,300)] ).  In Lincoln, it’s worse.  One out of every four people employed in Lincoln works for state or local government (Attachment 3 [3. 24% figure calculated by dividing Government Employment (39,500) by Lincoln Civilian Labor Force (166,700)] ).

In a 2009 study, only nine states had a higher percentage of state and local government workers than Nebraska (Attachment 4 [4. The most expeditious way to see the graph is likely to view the presentation on Scribd, pg. 8, HERE. This graph was taken from a study conducted by the Center for Economic and Policy Research, “The Wage Penalty for State and Local Government Employees”, pg.14, Appendix Figure 4, “State and Local Employees as a Percent of All Employees, 18-64, 2009″. The data in the graph is reliable, as we were able to confirm it through other sources. However, the remainder of the data summarized in the report is questionable, particularly because it leaves off some critical data. Therefore, the conclusions drawn within the report are also questionable.] ).

Between the 2000 and the 2010 federal censuses, the population of Nebraska increased by 6.7% (Note 1 [5. Apportionment data]).  During that same time period, Nebraska state government expenditures increased by 57% (Attachment 5,6 [6. Percentage change from 2000 – 2009]).  That portion of state funds paid for salaries and wages of its employees increased by 40% (Note 2 [7. 40% increase in Nebraska’s expenditures calculated using percentage change from 2000 – 2009, using data obtained from Attachments 5 and 6.]).  At the same time, Nebraskans’ median household income only increased by just over HALF that much (22%) (Attachment 7, 7a [8. Percentage change from 2000 – 2009]). This doesn’t take into account increases in benefits and pensions — just salaries and wages.

There is a greater disparity between the benefits and pensions earned by public employees and private employees. Such benefits are more likely to be provided to public employees than private, those benefits are more generous, and a larger share is likely to be paid for by the employer, including medical insurance provided for single or family coverage (Attachment 8, 9).

So what does this mean? When 1 out of 7 or 1 out of 4 people work for government, it is too big. When the growth rate in spending on compensation for those workers is nearly double the growth rate of household incomes, government is too big. When overall growth in government spending is almost nine times growth in the population in the same period, government is too big.

The result has been an increasing burden on Nebraska taxpayers, budget shortfalls or deficits, and an increased dependence on Federal funding.

In addition to Nebraska’s already high taxation (Attachment 10 [9. The most expeditious way of viewing the document is likely to go to the presentation documents, pg. 17, by click HERE,11,12), in the past two years, our two largest municipalities have imposed some very burdensome taxes on citizens and non-citizens alike, including Lincoln’s telecomm tax and fee structure that is the highest in the nation. Revenues are down because Nebraskans are feeling the effects of a lasting economic downturn, yet bills have been introduced proposing to double the gas tax and increase income and sales taxes (Note 3 [10. The bills mentioned have been introduced in the 102nd Legislature, First Session. Senator Kathy Campbell introduced LB504, which would increase fuel taxes. GiN has an article about Senator Campbell’s bill, which also mentions another slate of increases introduced by another Senator. The article can be read HERE. Within that article, there is a link to another, written earlier, about Senator Abbie Cornett’s tax increase bills. Cornett introduced LB559, LB560, and LB561. The three bills introduced would affect Nebraska’s income and sales tax rates, LB560 would subject previously exempt services to sales taxation. Senator Cornett’s bills currently do not list a rate, so the amount of her proposed tax increase is unknown.] ).

But taxation alone does not account for how we have paid for increased spending in our state; we have been taking in increasing amounts of Federal funding (Note 4. [11. According to the Nebraska State Treasurer, we received 36.77% of our budget, year end June 30, 2009, from “Federal Grants and Contracts”. That percentage is virtually guaranteed to be much higher for Fiscal Year end June 30, 2010, based on the large amounts of funding taken in, particularly via the applications by Governor Heineman for Stimulus and other supplemental programs.] ), and in the last two years, significant portions were used to shore up public employee pension funds (Note 5 [12. This references one of two applications for Stimulus funds; we included specific reference to the June 2009 application filled out by Governor Heineman, which can be viewed HERE. Further, we referenced “State’s retirement plans account for 15% of budget deficit” reported in the Lincoln Journal Star, August 15, 2010. It’s important to note this a low estimate, see below.] ) and to avoid cutting personnel from education (Note 6). In fact, approximately 21% of the current budget deficit Nebraska is facing is directly attributable to public employee salaries, health insurance, and retirement (Note 7 [13. The figure of 21% is likely much lower than the actual percentage of the deficit attributable to public employee pay and benefits. Another 21% of the deficit is school aid, funds which are used to compensate teachers and other employees. Furthermore, there is information that indicated that part of the $500 million one time Stimulus funds were used, in part to pay teachers and other public employees).

Increasing the burden on taxpayers is not a long term solution, nor is becoming increasingly dependent on federal money. The solution is to curtail out of control spending.

As the number one administrative expense of government, it’s clear personnel costs must be brought under control as one part of a comprehensive effort. This brings us full circle. But there’s more.

Our current system actually blocks efforts to curb spending. It serves as an excuse for local government officials who say their hands are tied in negotiations with public employees, but at the same time form alliances with those employees to impede efforts to control spending. Local governments and public employees have a natural aversion to capping the State’s ability to spend due to shared concerns over what they stand to lose.

To cite just one example, a 2006 ballot measure (Attachment 13) that would have capped State spending based on prior spending levels, inflation rate, and population growth was successfully defeated. The vast majority of the opposition campaign contributions came from public employee unions, and school board, local, and county government leagues and associations(Attachment 14, 15).

This type of collusion between our elected officials and the public employee unions, at the very least, creates the appearance of impropriety. It leads the citizen to question, and legitimately so, whether anyone truly represents his or her interests at any level of government. You can show us that you do by voting to advance LB664 and LR29CA to the floor.

Respectfully,

Dr. Linda W. Rohman, J.D.

Shelli Dawdy

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