Here is a wrapup of union and pension news of significance for the past week.
Judge sides with R.I. on retiree health benefits
U.S. District Court Judge William E. Smith has upheld the state’s trimming of health-care benefits for state employees who retire early.
Governor Carcieri on Thursday proclaimed the decision “a victory for all taxpayers” that affirms state officials’ legal authority to better align employee benefits with what the government can afford.
“It was a huge cost-saver to the state,” said Carcieri spokeswoman Amy Kempe. A savings estimate was not immediately available.
But Kenneth DeLorenzo, executive director of the employees labor union, Rhode Island Council 94 of the American Federation of State, County and Municipal Employees, denounced the decision as a historic repudiation of the state’s obligations to its employees.
Council 94 had sued to block implementation of the law on state-subsidized health-care benefits — a law that Judge Smith described as an attempt by the state amid a fiscal crisis in 2008 “to tighten its belt” by reducing the amount it spends on those benefits.
In a decision entered Tuesday, Smith rejected claims by the union that the reduction in benefits violated employee rights under the contract clauses of the Rhode Island and U.S. Constitutions. Contrary to the union claims, he said, no enforceable contract exists for retiree health benefits under the state’s past practice regarding retirees, the negotiated collective-bargaining agreement between Council 94 and the state, state statute and common law.
Score a rare victory for common sense.
Unions Seek More Power In California
Los Angeles’ financial woes are emblematic of a widening crisis in California’s 5,000 units of local government as they deal with flattening or even declining property and sales tax revenues, reduced and/or delayed payments from a deficit-wracked state budget, and burgeoning costs. And if their pinch continues, which seems highly likely, some probably will wind up in bankruptcy court.
One city, Vallejo, is already there, having foolishly squandered windfalls of property and sales taxes on unsustainable contracts for its police and firefighters. And the prospect that more public entity bankruptcies could follow is unsettling to public employee unions, who fear their salary contracts and/or pension benefits could be abrogated.
Last year, the unions’ allies in the Legislature’s Democratic majority pushed legislation that would indirectly give unions a veto power on local government bankruptcies, or at least the power to extract concessions from local officials.
It would do so by requiring insolvent local governments to get permission from the otherwise obscure, nine-member California Debt and Investment Advisory Committee – a committee dominated by union-friendly Democrats – before seeking bankruptcy protection.
We need to get rid of unions, not give them still more power. They have already wrecked many cities and want still more. Please email your state representatives and the Governor and tell them no on Assembly Bill 155. See the article for more details on the bill.
Executive Order 13502 Yet Another Obama Favor For Unions
Barely 15 percent of all construction-industry workers in the United States are union members, while the remaining 85 percent are nonunion, according to the U.S. Department of Labor’s Bureau of Labor Statistics. So why has President Obama signed Executive Order 13502 directing federal agencies taking bids for government construction projects to accept only those from contractors who agree in advance to a project labor agreement that requires a union work force? Obama’s new order applies to all federal construction projects with price tags of $25 million or more, and it means all such contracts will only be awarded to companies with unionized work forces.
By eliminating the vast majority of potential bidders on federal construction projects, Obama guarantees two things. First, the projects will cost taxpayers more because union labor is always more expensive. And with mandated PLAs, the cost premium for union contractors will be even greater because fewer bidders always means less competition and higher prices. Second, by guaranteeing unions a bigger stream of federal contracts, Obama is making sure that Big Labor, already among the Democrats’ biggest sources of campaign cash, will have even more money to hand out for the 2010 and 2012 elections. You scratch our back with taxpayers dollars gleaned through PLA-based federal construction jobs, and we’ll scratch your back with campaign contributions. That’s the way it works in Obama’s business-as-usual Washington. It’s also known in some quarters as “the Chicago Way.”
“The Obama administration’s policy is a slap in the face to the vast majority of construction workers who have chosen not to unionize,” said Mark Mix, president of the National Right to Work Legal Defense Foundation.”Qualified nonunion contractors whose workers have opted against unionization will be locked out from large-scale construction projects. The true purpose of so-called project labor agreements is simple: To impose unwanted union boss control on workers from the top down.”
Executive Order 13502 is absolutely asinine. Now more than ever, cash strapped states need more for their money. This executive order ensures states will get the absolute minimum for their money. Unfortunately we have come to expect nothing but asininity from President Obama.
Going for broke in L.A.?
Former mayor Richard Riordan has been roiling the civic waters by arguing that the surest — and perhaps the only — way out of Los Angeles’ fiscal crisis is a declaration of municipal bankruptcy, which he believes ought to come sooner rather than later.
In a conversation with The Times over the weekend, Riordan argued that bankruptcy may be the only way to attack the structural problem gnawing the heart out of the city budget: unsustainable public employee pension costs. Currently, Riordan says, the city is struggling to meet its pension obligations, and that’s assuming it will receive 8% annually on the money invested on retirees’ behalf. In fact, the average return over the past decade has been just 4%. Over the next few years, L.A. may be looking at $1.5 billion in pension obligations it can’t meet. “We need some adults to come alive in the city and to talk through how to meet that liability,” he said. “If that doesn’t happen, we shouldn’t rule out bankruptcy.”
Mayor Antonio Villaraigosa’s chief of staff, Jeff Carr, says categorically that “this mayor has made it clear that we are not going to declare bankruptcy.” Moreover, while federal law lets bankruptcy judges reduce negotiated pension and health benefits in the private sector, it forbids changes in public employees’ agreements.
Wherever you come down on the bankruptcy question, it’s clear that anything approaching a genuine resolution of the civic financial troubles will have to involve a thorough overhaul of the pension system. Traditionally, public employment offered generous benefits because wages and salaries were lower than in the private sector for comparable work. More recently, public sector salaries have increased — in part because the governmental workforce is the most significantly unionized in the American economy — at the same time compensation in most of the private sector has been falling. When you narrow the focus of this national trend to labor-friendly L.A., the picture that emerges is fairly stunning.
L.A. is headed for bankruptcy because of union contracts and pension promises that cannot be met. This is what happens when mayors like Antonio Villaraigosa buy union votes to get elected.
Unions being unions will suck the life out of every city, and bitch, whine, and moan about being underpaid every step of the way.
The way to deal with unions, and the only way to deal with unions is to exterminate them before this happens. For many cities it is far too late. Nonetheless, the best action is to declare bankruptcy sooner rather than later, before more taxpayer money is thrown down a union rathole of untenable promises.
Union Scare Tactics In Nevada – Firefighter Ad Attacks City of North Las Vegas
The North Las Vegas Firefighter’s Union took out a full page ad in Wednesday’s paper show the public what concessions they’ve offered to help with the city budget.
The battle between the union and the city is loud and clear. In the ad, the union says they offered to take more than $3 million in wage and benefit cuts to help the city.
They use words like “stubborn” and “refusal” to describe the actions of some members of the city council.
“They walked away from fiscal responsibility. They walked away from staffing this engine. They walked away from response times and we felt the citizens needed to know what was going on,” said Jeff Hurley with the union.
Councilman Richard Cherchio calls the ad nothing more than a scare tactic, saying the whole story isn’t being told to the public.
“This is the type of fear factor and media hype that gets results, or have gotten results in the past. It’s not going to get results this time with me,” he said.
He says the union is offering only to defer cost of living adjustments, not forfeit them.The ad is coming out on the same day 16 firefighters were given pink slips, many of them from one station.
See how insane this is? Taxpayer dollars go to unions for scaremongering to get voters to approve more tax hikes for overpaid union members. North Las Vegas should fire them all, and outsource the whole shebang to the lowest bidder.
Mike “Mish” Shedlock