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| DATE | 2021-02-17 |
| FROM | Ruben Safir
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| SUBJECT | Subject: [Hangout - NYLXS] Bailing out bad left-wing power grabbing policy
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wsj.com
Opinion | Public Employee Unions Are Having a Fine Old Lockdown
Carol Platt Liebau
7-9 minutes
Connecticut Gov. Ned Lamont speaks to reporters in Westport, Conn., Aug. 7.
Photo: John Minchillo/Associated Press
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As part of his proposed $1.9 trillion relief bill, President Biden wants
to send $350 billion in unrestricted cash to state and local governments
to fill their budget holes. But while Covid-19 has depressed state tax
revenue, the prospect of federal aid has encouraged many of these
supposedly blameless states to keep piling on costs. Nowhere has that
been more evident than with the pay raises dished out in recent months
to government employees. As private businesses hold on by their
fingernails, public-sector labor unions have their hands out, demanding
the pay raises set forth in labor contracts negotiated before the
pandemic ravaged public finances.
In Connecticut, where unemployment was 8% in December after topping 10%
this summer, state workers have pocketed two rounds of raises: a 3.5%
bump in July and another worth about 2% earlier this month. Gov. Ned
Lamont had initially suggested postponing the raises—“to lead by
example”—but the labor union 1199 SEIU blitzed the airwaves with
television commercials accusing unnamed politicians of wanting to “take
away” their wages. Mr. Lamont folded.
In December, Maryland Gov. Larry Hogan let planned 2% raises continue,
claiming revenues “have improved enough for us to be able to fulfill our
commitments to state employees.” New York Gov. Andrew Cuomo used special
powers to postpone certain planned hikes for state employees. But Mr.
Cuomo has indicated he’ll use federal aid to pay those raises
retroactively, and let others continue outright. Most New York school
districts went ahead with raises this summer.
Automatic pay increases regardless of economic conditions are an
unimaginable proposition in the private economy. Many government
employees collected their full pay and benefits while not working during
the spring 2020 lockdowns. The pandemic has laid bare a fundamental
problem with public-sector collective bargaining: Taxpayers should never
be on the hook for raises that don’t reflect future economic
realities—especially when politicians have a personal interest in
pushing costs into the future.
That’s essentially what’s happened in New Jersey, where Gov. Phil Murphy
withdrew his threat to lay off state workers after his largest union
agreed to take furlough days and postpone—but not forgo—raises. Affected
employees will get three pay bumps totaling 6% beginning this summer,
though most won’t come due until after Mr. Murphy faces voters in November.
Nevada Gov. Steve Sisolak last summer learned firsthand how government
union contracts can handcuff public officials when circumstances change
radically. He tried to block some raises, only to face legal action
under the collective-bargaining law he’d campaigned on and signed. Mr.
Sisolak settled for smaller negotiated concessions.
Ultimately, the problem reflects a lack of political will. California
Gov. Gavin Newsom played hardball, demanding state workers take a 10%
pay cut to help cover the state’s $54 billion budget deficit. While that
didn’t go over well, he managed a settlement that trims costs by
requiring workers to take dozens of unpaid furlough days over the next
two years.
Other politicians could follow Mr. Newsom’s lead. Federal courts have
repeatedly upheld the rights of states to postpone or cancel public
employee raises in fiscal emergencies. In 2020 an appeals court panel
made up of Trump, Clinton and Obama appointees upheld a pay freeze in
New York’s Nassau County, writing that government “may not contract away
its power to govern in the public interest.”
Governors and state legislatures are avoiding these hard choices and
instead letting union contracts drag their states further into the red.
They do it in part because Congress has conditioned them to expect a
federal rescue regardless of their spending decisions. The 2009 stimulus
signed by President Obama lavished more than $48 billion on states to
prevent job cuts at public schools while leaving union contracts intact.
Federal Covid legislation in December sent more than $4 billion to the
Metropolitan Transportation Authority, New York’s beleaguered transit
agency. The bailout came amid plunging ridership—and after most
employees pocketed 2.25% raises in May. Under a contract negotiated in
January 2020, before the pandemic struck, MTA workers are also due a
2.5% bump this year and 2.75% in 2022.
Government pay raises are even more egregious considering the
uncertainty about when tax revenues and employment will recover. It took
Connecticut eight years to regain the far smaller number of
private-sector jobs it lost during the 2007-09 financial crisis; state
tax and fee revenues are projected to get back to pre-Covid levels no
earlier than 2023. What is certain is that swelling employee costs will
make it harder for governors to balance budgets for many years to come.
If Congress insists on sending cash aid under the auspices of preserving
public services, it should come with strict safeguards. That means
requiring a hard freeze of public-sector compensation to keep it from
being used on raises. But sending cash to state and local governments
now would endorse continued fiscal profligacy. It risks rewarding some
of the worst behavior by officials who have pledged fealty to
politically allied unions, letting them insist the consequences of their
spending preferences are the federal government’s problem.
Ms. Liebau is president the of Yankee Institute for Public Policy.
WSJ Opinion: Biden's Partisan Stimulus
0:00 / 3:14
1:49
WSJ Opinion: Biden's Partisan Stimulus
WSJ Opinion: Biden's Partisan Stimulus
Democrats define bipartisanship as Pelosi agreeing with Schumer, then
ram a budget resolution of $1.9-trillion through the Senate and House.
Images: AFP/Getty Images Composite: Mark Kelly
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved.
87990cbe856818d5eddac44c7b1cdeb8
Appeared in the February 13, 2021, print edition.
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