The Pension Monster and How Much It’s Costing You to Keep It Fed

Why haven’t Mayor Eric Garcetti and City Council President Herb Wesson followed up on the recommendation by the LA 2020 Commission to “establish a Commission on Retirement Security to review the City’s retirement obligations in order to promote an accurate understanding of the facts” and make “concrete recommendations on how to achieve equilibrium on retirement costs by 2020?”

Why?  Because these two ambitious politicians fear alienating the campaign funding leaders of the City’s unions who do not want a public discussion of the facts surrounding the City’s ever increasing annual contributions to the City’s two massively underfunded pension plans that are forcing the City to scale back on basic services.

Over the last ten years, the City’s contribution to its two pension plans (Los Angeles City Employees Retirement System and the Los Angeles Fire and Police Pension System) has tripled to $1.1 billion, up from $350 million in 2005.  As a result, pension contributions now chew up 20% of the City’s $5.6 billion budget, up from less than 10% in 2005.

 

Are Mayor Eric Garcetti and City Council President Herb Wesson afraid of discussing with union leaders the prospect of LA’s growing unfunded liability?

 

This $750 million increase in pension contributions has forced the City to cut back on basic services such as public safety and the repair and maintenance of our streets, sidewalks, and parks.  The City has even resorted to placing an ill-conceived $1.2 billion bond measure on the November ballot to fund supportive housing for the homeless.

Unfortunately, it is only going to get worse as the City, its pension plans, and their fiscally irresponsible, Garcetti appointed Commissioners are banking on an overly optimistic rate of return of 7½% on the combined investment portfolio of $33 billion.

But the stock and bond markets are not cooperating as demonstrated by this year’s less than 1% return on CalPERS (California Public Employees’ Retirement System) $300 billion investment portfolio.

If the City’s pension funds earned this meager 1% as compared to the targeted 7½%, it would result in an investment shortfall of an estimated $2.7 billion, an amount equal to about half of the City’s annual budget.  This “loss” will increase the unfunded pension liability as of June 30, 2016 to almost $11 billion, representing a funded ratio of an unhealthy 74%.

However, if the investment rate assumption was a more reasonable 6½% as recommended by knowledgeable investors such as Berkshire Hathaway’s Warren Buffett, the unfunded pension liability would jump to over $16 billion, representing a dangerously low funded ratio of 66% and almost three times the City’s annual budget.

Over the next five years, the City’s two pension plans will rack up an additional shortfall of over $5 billion if the rate of return on their investment portfolios is 6½%, a much more likely outcome than the targeted return of 7½%.

But rather than recognizing this combined shortfall of $7.9 billion over the next five years, the City has cooked up a scheme to amortize these losses over a 20 year period, reducing the hit to the City’s budget.

Even with this scheme, the City’s pension contribution is expected to increase by more than 50% over the next five years to $1.7 billion, representing 27% of the City’s projected General Fund budget.

Garcetti and Wesson, along with Budget Committee Chair Paul Krekorian and Personnel Chair Paul Koretz, will tell us they made significant reforms to LAFPP in 2011 and LACERS in 2013 and 2015.  But these cosmetic amendments are nickels and dimes and did not address the overly optimistic investment rate assumption of 7½% and the unsustainable post-retirement medical benefits.

This pension time bomb is a weapon of mass financial destruction where we will burden the next generation of Angelenos with tens of billions of unsustainable debt. This will destroy their standard of living and their environment.

It is time for Garcetti, Wesson, and the members of the City Council to get off their fat asses, put on their big boy pants, and begin to address this problem by establishing an independent, well-funded Committee for Retirement Security.

Only then will we be able to begin the hard task of developing a solution where the City and its future will not be devoured by the pension monster.

Cross-posted at City Watch LA

About the Author: Jack Humphreville is a LA Watchdog writer for CityWatch, President of the DWP Advocacy Committee, Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and Publisher of the Recycler

Union In The News – Weekly Highlights

Raising Minimum Starting Wages to $15 per Hour Would Eliminate Seven Million Jobs
By James Sherk, July 26, 2016, Democracy Now
Prominent Members of Congress have proposed raising the minimum wage to $15 per hour, more than doubling the federal minimum wage. States with lower costs of living would see an even greater real increase. At the state level, the minimum wage would cover one-third of wage and salary workers. The new minimum-wage legislation, including payroll taxes and the employer mandate, would increase the minimum cost of hiring a full-time worker to $18.61 per hour. Businesses would respond to these higher labor costs by reducing employment of affected workers by over one-sixth, thus eliminating approximately seven million full-time-equivalent (FTE) jobs by 2021. Forcing employers to pay starting wages of $15 per hour would make many less skilled workers unemployable. (read article)

Union urges cops to refuse ‘non-mandatory’ Labor Day weekend OT
By Fran Spielman, July 25, 2016, Chicago Sun-Times

The decision to declare Sept. 2, 3, 4 and 5 “FOP Unity Days” was communicated to rank-and-file police officers in a union flier. If a majority of rank-and-file officers follow the directive issued to rank-and-file officers in a union flier, it has the potential to underscore a severe manpower shortage masked by runaway overtime that topped $116 million last year. It could also leave the city woefully short of the officers needed to tamp down violence over the long holiday weekend.“In order to show unity and to protest the continued disrespect of Chicago Police officers and the killing of law enforcement officers across our country, we are requesting FOP members to refrain from volunteering to work for any and all special secondary and other types of non-mandatory overtime employment for the entire Labor Day weekend,” the flier states. (read article)

Labor Unions Use Technology to Grow and Maintain Membership
By Howard M. Bloom, July 25, 2016, The National Law Review
Labor unions today are “tech” savvy, using mobile app and other technology to grow and maintain their memberships. According to a report in the Bloomberg Bureau of National Affairs Daily Labor Report (136 DLR C-1 July 18, 2016), a number of labor unions, including the International Association of Machinists, Communication Workers of America, and Service Employees International Union, are using app technology to inform members of union news, sign political action petitions, access video clips and pictures, read press releases, view union social media accounts, and report workplace violations, all with the goal of reaching and growing their memberships. (read article)

How Union Deals Have Derailed The California High-Speed Railway
By Connor D. Wolf, July 24, 2016, Daily Caller
California’s attempt to connect the state with a high-speed railway system has faced major setbacks thanks in part to union deals. The California High Speed Rail Authority (HSR) began construction in 2014 with the hopes of connecting close to a dozens cities. The project has faced major delays and financial difficulties. The Coalition for Fair Employment in Construction (CFEC) notes the railway is plagued with problems — including union influence. “The approval was made in 2008 and since then they have basically been struggling to get anything beyond an initial amount that was approved,” CFEC Executive Director Eric Christen told The Daily Caller News Foundation. “The problem is that there’s no source of funding. (read article)

Trump’s courtship of union members complicated by Pence
By Tim Devaney, July 24, 2016, The Hill
Republican presidential nominee Donald Trump wants to reach out to blue-collar workers, but his running mate isn’t going to make that easy. Indiana Gov. Mike Pence is a free-trade supporter who has opposed lifting the minimum wage. Neither of those positions is going to help the GOP ticket with labor unions; AFL-CIO President Richard Trumka called Pence the “second worst” vice presidential pick in history. Labor leaders like Trumka are backing presumptive Democratic nominee Hillary Clinton, but Trump believes he can win over rank-and-file union members who are turned off by the Democrat. But that outreach will be complicated by the selection of Pence, labor officials say.  (read article)

Why Black Lives Matter Is Taking On Police Unions
By Adeshina Emmanuel, July 23, 2016, AlterNet
Activists in the movement for black lives are working to lift the veil on one of the most powerful influences in law enforcement: police unions. The focus is no longer just on individual officers; it’s on the institutions that protect and shield them. Organizers protested at the offices of two of the nation’s largest police unions this week as part of a nationwide week of action under the banner #Freedomnow. Protesting organized labor may seem like a surprising move for a radical group. “We’re definitely pro-labor union,” explains Black Youth Project 100 (BYP100) organizer Clarise McCants. “But our message is that the Fraternal Order of Police (FOP) is not just like any union,” she said. “They are a fraternity—and they are the most dangerous fraternity in America.” (read article)

Former VA Labor Union President Sentenced For Pocketing Funds
By Dan Chaison, July 22, 2016, Daily Caller
William Davis, a former local chapter president for the American Federation of Government Employees, was sentenced on Wednesday for embezzling $150,000 in funds. The 56 year-old New York resident will serve 15 months in prison after pleading guilty in federal court to stealing from the union. The AFGE is the largest national labor union, representing 670,000 federal workers. Davis’ chapter, Local 1119, covers 300 employees of the Veterans Affairs Medical Center in Montrose, N.Y. (read article)

Coming Tax Hikes For Government Pensions, How Much Will You Pay?
By Chuck DeVore, July 22, 2016, Forbes
Decades of generous pension increases made to government employees by politicians are looming larger on state and local government balance sheets across America. Days ago, Ted Eliopoulos, head of the California Public Employees’ Retirement System (CalPERS), announced that he earned 0.61 percent in the prior year on a $300-billion-dollar investment fund—California’s worst year since the stock market meltdown in 2009. CalPERS expects to earn 7.5 percent annually on its investments. Last year, the nation’s largest state and local pension fund returned 2.5 percent; the year before, 1 percent. (read article)

After Obama, GOP platform moves right on labor issues
By Sean Higgins, July 20, 2016, Washington Examiner
There is not much for labor leaders to like in the Republican Party’s 2016 platform. It is one of the toughest the party has had in the last four decades in terms of calling for union power to be reined in, a direct response to President Obama, one of the most pro-union presidents in decades. The latest platform calls for such reforms as a national right-to-work law to prohibit workers from being forced to join or support a union. It also demands that the National Labor Relations Board, the main federal labor law enforcement agency, be defanged; opposes the Labor Department’s recent move to expand worker overtime requirements; and calls for the repeal of laws that benefit unions in federal contracting. The new version promises to “bring labor law into the 21st century” by getting rid of regulations that it says strangle innovation, shackle employers and employees alike and have no place in the modern economy. (read article)

California transportation workers reject sellout contract
By Isaac Fin, July 20, 2016, World Socialist Website 
In a vote earlier this month, maintenance workers employed by the California Department of Transportation (Caltrans) overwhelming rejected a sellout contract negotiated between the state government and the International Union of Operating Engineers (IUOE). The roughly 12,000 electricians, window cleaners, aqueduct construction workers and truck drivers have been working without a contract since July 1, 2015. The state and IUOE Unit 12 came to an agreement last June, which include a 10 percent pay raise over four years that would translate into a pay decrease after adjusting for inflation and changes in benefits. Union officials have not disclosed the number of workers who voted, but admitted that 67 percent of those voting rejected the contract. The vote also authorized the union to conduct a strike if ongoing negotiations reach an impasse. (read article)

Why construction unions are fighting Gov. Jerry Brown’s plan for more housing
By Liam Dillon, July 20, 2016, Los Angeles Times
A fight over construction worker pay has left Gov. Jerry Brown and a powerful labor group at a stalemate over the governor’s plan to speed up housing development for low-income Californians, leaving uncertainty over whether a final deal can be reached before the end of the legislative session in August. Brown has proposed legislation to streamline approval for housing with units for low-income residents. The State Building and Construction Trades Council, which represents ironworkers, roofers, electrical workers and other construction unions, wants Brown to force home builders to pay construction workers at rates often equivalent to union wages to qualify under the plan, something the governor is resisting. (read article)

California’s unemployment insurance system stuck in a deep hole
By Dan Walters, July 19, 2016, The Sacramento Bee
Throughout his second governorship, Jerry Brown has preached fiscal responsibility – being careful about spending, paying down debt and building up reserves. It has been, in effect, a repudiation of his two immediate predecessors, Democrat Gray Davis and Republican Arnold Schwarzenegger, who squandered revenue windfalls, ran up debt and left their successors with big deficits. Brown has been, however, reticent about a big deficit that’s plagued the state’s system of unemployment compensation and left it very vulnerable to a meltdown in the next recession he says is inevitable. Rather than keep it intact as a prudent hedge against recession, Davis and legislators succumbed to pressure from labor unions and nearly doubled unemployment benefits to a maximum of $450 a week. (read article)

Covered California rates to jump average of 13 percent in 2017
By Victoria Colliver, July 19, 2016, Press-Enterprise
After two years of moderate rate increases, Californians who get their coverage through the state health insurance marketplace will see their 2017 premiums increase by an average of 13.2 percent. That’s more than triple the average 4 percent rate increases that consumers have seen since the state’s Affordable Care Act exchange started offering coverage in 2014. The preliminary rates for Bay Area counties are even higher than the state average, with San Francisco premiums set to increase by nearly 15 percent. “We’ve known for a long time that 2017 will be a transition year,” said Peter Lee, executive director of Covered California, in a media conference call Tuesday morning to announce next year’s rates. Lee blamed two of the biggest plans — Anthem, which sells Blue Cross plans, and Blue Shield of California — for helping to drive the double-digit rate increase. (read article)

Appreciating Police Officers, Challenging Police Unions

In the wake of tragic and deadly attacks on police officers, those of us who have never wavered in our support for the members of law enforcement, but have questioned the role of police unions and have debated issues of policy surrounding law enforcement have an obligation to restate our position. Civil libertarians and fiscal conservatives have disagreements with police unions which were summed up quite well recently by guest columnist Steve Greenhut, writing in the Orange County Register. Here are some of the principal concerns:

Police unionization protects bad officers and stifles reform. Lack of transparency into investigations of police misconduct aids and abets the worst actors. Police unions often support laws designed to extract increased revenue from citizens in the form of excessive fines. The “war on drugs” and militarization of law enforcement can further increase the tension between police and the populations they serve. And, of course, police unions fight relentlessly for increases to compensation and benefits, especially straining the budgets of cities.

To have a balanced discussion on these topics, however, it is necessary to revisit why police work has become more controversial and more expensive. Here are some of the reasons:

(1)  The value of life has never been higher. A century ago, when the life expectancy for Americans was 49, tragic deaths were commonplace. Compared to Americans in 1916, Americans today on average can expect an additional three decades of productive life, and premature death is proportionately more traumatic. This means the premium that police officers deserve for their service is higher than it’s ever been, and should be.

(2)  The expectations we have for law enforcement have never been higher. Along with longer lives, Americans suffer less crime. For nearly forty years, in nearly all categories, crime has steadily diminished. While there remains enough crime to generate a daily barrage of lurid local news reports, we enjoy more safety and security than at any time in history. We are getting this service thanks to our police forces, and better service deserves better pay.

(3)  The complexity of crime has never been higher. Crime itself has become far more sophisticated and menacing, morphing into areas unimaginable even a generation ago – cybercrime, global terrorism, financial crimes, murderous gangs, international criminal networks, foreign espionage, asymmetric threats – the list is big and gets bigger every year. Countering these threats requires more capable, better compensated personnel.

(4)  The statistical risk to police officers, even in the wake of recent tragedies, may remain low, but that could change in an instant. In the event of severe civil unrest or well coordinated terrorist attacks such as we saw in Sept. 2011, hundreds or even thousands of officers could find themselves on the front lines of a cataclysm. Statistics are not necessarily predictive, and police officers live with this knowledge every day.

So how do civil libertarians and fiscal conservatives manage their debates with police unions while conveying their respect for police officers? First, by acknowledging the complexity of the issues. Police should make more money than ever before – the debate should start there, not end there. Police have to be armed to the teeth, because in a free republic, the citizens themselves are armed to the teeth. That’s the choice we made, and unless we want to disarm the citizenry, we can’t disarm the police. These are fundamentals where there should be agreement.

Beyond that, it is necessary to appeal to the patriotism and decency that animates the vast majority of members of law enforcement, and ask them: Please work with us to curb the inherent excesses of police union power. Of course we have to get bad cops off the street. Of course we have to come up with effective non-lethal uses of force. Of course we have to figure out how to fund police departments without levying excessive fines. And of course we have to face a challenging economic future together, where police are partners with the people they serve, not an economically privileged class. Is this possible? One may hope so.

There’s more. If police unions are going to be intimately involved in the politics of law enforcement and the politics of police compensation, and they are, they may as well start getting involved in other causes where their membership may find common cause with civil libertarians and fiscal conservatives. Police officers see first hand how welfare destroys families and how public schools fail our children. So why aren’t they fighting to replace welfare with workfare and why aren’t they fighting to destroy the teachers union? You can say what you will about police unions, but they did NOT turn this nation into a lawless hellhole, quite the opposite. The teachers union DID destroy public education. So help us reduce their influence.

Similarly, police officers need to decide if they really feel like enforcing the myriad environmental harassment laws that are criminalizing everything from installing a window or water heater without a building permit to watering your lawn on the wrong day. The global environmentalist movement – of which California is ground zero – has become fascism masquerading as anti-fascism. It has become neo-colonialism masquerading as concern for indigenous peoples. It was a previously noble movement that has been hijacked by cynical billionaires, monopolistic corporations, and corrupt financial special interests. In its excess today, it has become a despicable scam. Help us to crush these corrupt opportunists before our freedom and prosperity is obliterated.

These thoughts, perhaps, are challenges that civil libertarians and fiscal conservatives might offer up to the police unions of America.

 *   *   *

Ed Ring is the executive director of the California Policy Center.

RELATED POSTS

Public Safety Unions and the Financial Apocalypse, May 17, 2016

The Challenges Facing Conservatives Who Support Public Safety, March 22, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

Pension Reform Requires Mutual Empathy, not Enmity, October 20, 2015

Public Sector Union Reform Requires Mutual Empathy, June 16, 2015

Can Unionized Police Be Held Accountable for Misconduct?, June 23, 2015

Pension Reformers are not “The Enemy” of Public Safety, April 20, 2015

Conservatives, Police Unions, and the Future of Law Enforcement, January 6, 2015

Police Unions in America, December 9, 2014

Conservative Politicians and Public Safety Unions, May 13, 2014

How Much Does Professionalism Cost?, March 11, 2014

 

 

 

Union In The News – Weekly Highlights

Diablo Canyon Settlement May Hinge on Cost Allocation
By Patrick Ferguson, July 19, 2016, JD Supra
On June 21, 2016, Pacific Gas and Electric Company (“PG&E”) announced a plan to close down the state’s last remaining nuclear power plant, the 2.3 gigawatt Diablo Canyon plant near San Luis Obispo, by 2026. Diablo Canyon currently produces about 9% of the electricity California uses and supplies the electric needs of more than 3 million people. The Diablo closure plan is set forth in a Joint Proposal agreed to by PG&E, several of the main environmental groups that have long called for Diablo Canyon’s closure, and two of the major labor unions that represent Diablo Canyon’s large workforce. PG&E currently plans to submit the Joint Proposal to the California Public Utilities Commission (“CPUC”) for approval by the end of July. (read article)

Obama Admin Throws Temps to Unions
By Bill McMorris, July 18, 2016, Washington Free Beacon
The Obama administration’s top labor arbiters handed organized labor another major victory that will ease the path to unionization for temporary workers and expand the definition of joint employer. The National Labor Relations Board, which oversees workplace disputes and union elections, overturned a 2004 ruling that said that temp workers could not join collective bargaining units at their placements without the approval of their direct employer. The ruling in Miller & Anderson returns to a 2000 board precedent that allowed temp workers who demonstrated commonality with their directly employed counterparts to join bargaining units without the consent of their agency. (read article)

My Mom Was A Unionized Public School Teacher. That’s Why I’m A Reformer
By Dmitri Mehlhorn, July 18, 2016, Huffington Post
More specifically, teachers are sympathetic to the ideas behind education reform. Teachers believe that tenure is automatic, and that about 10 percent of their colleagues are ineffective. Three-quarters of all teachers and an even higher percentage of highly recognized teachers believe it needs to be easier to dismiss ineffective teachers. A close look shows that many teachers believe in parent engagement and choice. When the chips are down — in other words, when it comes to their own children — public school teachers are much more likely than other parents to send their kids to private schools. (read article)

Labor Board Ruling Could Allow Grad Students to Unionize
By Melanie Trottman & Douglas Belkin, July 17, 2016, Wall Street Journal
The National Labor Relations Board is expected to decide on his status this summer in a ruling that could pave the way for graduate students at private schools across the country to unionize. The National Labor Relations Board has flip-flopped on its categorization of the roughly 535,000 graduate students now enrolled at private colleges. For decades, it held they weren’t employees, then in 2000 declared they were. In 2004, the board reversed itself in a case involving Brown University. Since most of the current board members are Democrats appointed by President Barack Obama, observers expect the board is more likely to side with the students and the union. (read article)

Green Billionaire Joins Infamous Labor Union In Fight To Defeat Trump
By Chris White, July 16, 2016, Daily Caller
Mega-wealthy environmentalist Tom Steyer and a services union with deep pockets announced a $10 million joint effort on Friday to derail Donald Trump’s GOP presidential candidacy. Steyer’s political action committee, NextGen Climate, and the Service Employees International Union (SEIU) are teaming up this election season to defeat Trump and elect his opponent, former Secretary of State Hillary Clinton. Steyer, who made the bulk of his billions as a hedge fund manager with Farallon Capital, railed Thursday against Trump’s pick as running mate, former Indiana Gov. Mike Pence, calling the governor an enemy to the gay and lesbian community. (read article)

Obama’s Big Labor Power Grab Hurts Small Business
By Orrin Hatch, July 15, 2016, U.S. News & World Report
With the Department of Labor’s new “persuader rule,” the Obama administration has put big labor before small business, and the president’s own political agenda before the Constitution. Under this sweeping new unilateral regulation, companies that seek advice from legal counsel or outside consultants on labor-related issues must report these activities publicly. Union organizers, on the other hand, are under no obligation to disclose their relationships with labor lawyers and other experts. In effect, the rule gives unions the upper hand in negotiating labor management contracts by placing costly requirements on companies that seek outside advice during organizing drives. Because this onerous regulation tips the balance of labor relations in favor of unions, the persuader rule is a godsend for union bosses. But it’s a nightmare for America’s job providers, especially small business owners. (read article)

California Voters Double-Crossed By SEIU — For The Second Time
By Sal Rosselli, July 15, 2016, Huffington Post
Earlier this month, a judge blocked an attempt by Oakland-based Service Employees International Union-United Healthcare Workers West (SEIU-UHW) to place on the November ballot an initiative that would have limited the pay of non-profit hospital executives. It’s hard to believe, but the courts blocked the ballot initiative because it violated a secretive, collusive arrangement between SEIU-UHW and the California Hospital Association (CHA). California voters are paying the price for the spectacular collapse of this shady backroom deal. More than 600,000 Californians signed petitions to qualify the measure for the ballot in both 2014 and 2016, only to see it snatched away — once by the union officials who wrote it and now a second time as an unintended consequence of the union’s self-penned gag clause. (read article)

Pence on labor
By Brian Mahoney, July 15, 2016, Politico
The Republican Indiana governor largely tracks the GOP consensus on most labor and employment policy issues, while departing from Trump’s views on trade. Unions won’t likely cheer the choice. Last year Pence signed the repeal of an 80 year-old state law that set a common wage for most state construction projects. “Wages on public projects should be set by the marketplace and not by government bureaucracy,” Pence said. Unions and Democrats who opposed the legislation said repeal would lower construction wages.
Indiana became a right-to-work state under Pence’s Republican predecessor, Mitch Daniels. But Pence’s administration prevailed in defending the law from union lawsuits. (read article)

San Luis Coastal school district will intervene in Diablo Canyon closure
By David Sneed, July 14, 2016, San Luis Obispo Tribune
The San Luis Coastal Unified School District has joined San Luis Obispo County in having an official role in state proceedings related to Diablo Canyon nuclear power plant. The district’s Board of Trustees voted unanimously Thursday afternoon during a special closed meeting to formally intervene in all of Diablo Canyon’s proceedings before the California Public Utilities Commission, including the plant’s closure and the proposed three-year general rate case starting in 2017. “We are intervening to protect the interests of our 7,500 students, our 1,000 employees and the quality of education that we continue to provide in San Luis Coastal Unified School District,” said board member Marilyn Rodger, who read the board’s motion into the record after the closed session meeting. (read article)

Hospital Finance Measure On California Ballot May Stump Voters
By Pauline Bartolone, July 14, 2016, Kaiser Health News
California voters will be asked to weigh in this November on a hospital financing measure so politically and financially complicated that they might be tempted to avoid it altogether. The initiative, Proposition 52, would make permanent the “Hospital Quality Assurance Fee,” which the state collects from private hospitals to bring in additional federal dollars for Medi-Cal, California’s version of the federal Medicaid health care program for the poor. The federal government matches money that California puts up to fund Medi-Cal services. The dollars generated by the fee are used to fund hospital services and children’s health care under Medi-Cal, and the ballot measure would help ensure the money is not diverted by lawmakers for other uses. (read article)

CalPERS Suffers $30.8 Billion Annual Loss
By Chriss W. Street, July 13, 2016, Breitbart News
The California Public Employee Retirement System (CalPERS) is about to report the world’s largest public employee pension suffered an actuarial investment loss of $30.8 billion last year. CalPERS manages the defined pension plan investments and record keeping for 3,007 California state and local government entities. The pension plan is also responsible for paying the pension benefits to 611,078 retirees and will eventually be responsible for paying retirement benefits to another 868,713 active and 335,908 inactive government workers. Despite Governor Jerry Brown last summer demanding CalPERS immediately “lower its investment risk and volatility of returns” by reducing its “assumed” annual investment return from 7.5 percent to 6.5 percent, the CalPERS board voted 7- 3 on November 15, 2015 only to slowly reduce the investment return expectation over the next decade. (read article)

CCSF, faculty union settle labor dispute
By Michael Barba, July 13, 2016, San Francisco Examiner
City College of San Francisco and its faculty union reached a tentative agreement this week on a contract for its educators after a year and a half of contentious negotiations, the union said Wednesday. Both sides signed onto the deal Monday night while meeting with a mediator in an attempt to reach a settlement — a process that had failed before but started again last Friday at the recommendation of a factfinder. According to the American Federation of Teachers Local 2121, the tentative agreement amounts to an about 11.3 percent salary increase for faculty members over a three-year period. That increase is on top of the average 3.7 percent restored to faculty salaries for wage cuts from previous years. (read article)

Labor unions petition OSHA for standard to prevent workplace violence in health care
By Associated Press, July 13, 2016, Safety & Health Magazine
A number of labor unions are calling on OSHA to create a standard aimed at preventing workplace violence in the health care and social services industries. A petition was sent July 12 to Secretary of Labor Thomas Perez from a coalition of unions, including the AFL-CIO, American Federation of Teachers, Communications Workers of America, International Brotherhood of Teamsters, Service Employees International Union and United Steelworkers. It claims OSHA’s current efforts are “insufficient” to protect health care workers, and cites Bureau of Labor Statistics data showing that workers in health care and social assistance experienced 52 percent of workplace violence incidents in 2014. (read article)

Government Unions Benefit from the Asset Bubble that Harms Workers

Earlier this month the California Policy Center released a study that provided additional evidence that the U.S. stock indexes are overvalued by approximately 50%, along with calculations showing the impact of a major downward correction on the solvency of California’s state and local government pension systems. Stocks are now at unsustainable bubble valuations.

Not covered in this study, but equally overvalued, are bonds, which pension systems misleadingly categorize as “fixed income” investments in their portfolio disclosures. CalPERS even went so far as to trumpet their success in earning a 9.29% return on “fixed income” investments in their most recent press release – a healthy return that offset losses elsewhere and allowed them to earn a marginally positive return of 0.61% last year. But “fixed income” investments usually refers to bonds, and bonds are also at unsustainable bubble valuations.

Here’s why bonds are overvalued today: Whenever new bonds are issued at lower fixed rates of interest than the bonds that were issued before them, then those older bonds that pay higher fixed rates of interest can be sold for more money than their original price. This is because on an open market, buyers will price a resold bond at a value calculated to equalize returns. When rates go down for new bonds, the prices for existing bonds go up. The problem is that back in the 1980’s, bonds were being issued at rates as high as 16%, and today, they’re being issued at rates close to zero. After a thirty year ride, interest rate drops can no longer be used to elevate the value of bond portfolios.

At a macroeconomic level, every possible investment in the world is overvalued today, because central banks have lowered interest rates to zero in a desperate attempt to continue a decades long disease in which they have spent more than they’ve collected. Governments got to borrow money for next to nothing, and assets kept appreciating. But the binge is almost over, and unlike the savvy super-rich, pension funds can’t just take their winnings off the table.

New Bond Issues, Rates by Nation – June 2016 (red = negative)
20160719-UW-NegativeYieldsNegative coupon bonds, a desperate experiment that isn’t going to end well.

This is all tedious drivel, however, if you are a unionized public employee in California. Your retirement security is guaranteed by “contract.” It’s the result of deals cut between union “negotiators” and the politicians they make or break. As a government employee in California, if you’ve worked 30 years, the average annual retirement benefit you can expect if you retire this year is worth over $70,000. To honor that expectation, CalPERS is already mid-way through their latest reassessment, a 50% increase to their collections from participating agencies. And if there is a 50% market correction (“fixed income” and equity), expect them to double or even triple their collections from taxpayers.

If you are a private citizen trying to prepare for retirement today after, say, 45 years of work and saving, good luck. Because there is no safe investment left in the world. And while you are likely to have to cope with, for example, suspended dividend payments on stocks that are down 50%, expect your taxes to go up in every imaginable category – sales, property, income, and hidden taxes embedded in your utility bills and phone bills. It will be “for the children” and “for public safety.” And if there’s a vote required to increase the tax, it will usually pass, because most voters don’t pay property tax, or income tax, or if they do, the taxes are indirectly assessed and invisible to them.

This is the oppressive hoax that government unions have perpetrated on the working families they claim they want to protect. They have exempted their own members, government workers, from the consequences of a corrupt financial system where they are leading partners. When governments spend more than they make and have to borrow money, central banks lower interest rates to make it easier to work the payments into the budget. At the same time, lower interest rates goose the value of stocks and bonds, helping the pension funds claim they can earn 7.5% per year. And when the house of cards collapses, taxpayers bail out the banks and the government pension funds.

The next time a spokesperson for a government union speaks disparagingly about Wall Street corruption, remember this: They are partners with Wall Street. They support overspending for their own compensation and benefits, creating deficits that have to be covered by taxes and borrowing. Their pension funds demand high returns, and the bankers comply, with rates that encourage borrowing and deny ordinary people the ability to save. Now that interest rates have hit zero and are even going negative in an exercise of monetary chicanery that has no rival in history, the end is near.

Public sector union leaders need to start remembering they represent public servants, not public overlords who are exempt from the reality that you can only spend as much as you earn. As it is, these union leaders are the overpaid mercenaries of capitalism at its most corrupt.

 *   *   *

Ed Ring is the president of the California Policy Center.

Union In The News – Weekly Highlights

Transparency measure won’t be on ballot
By David Garrick, July 12, 2016, San Diego Union Tribune
A proposal to increase government transparency in the city of San Diego suffered a setback this week when the City Council decided not to place it on the November ballot. The proposal would have made city business conducted by employees on private devices, such as cell phones and personal computers, subject to disclosure under the California Public Records Act. The goal is preventing city workers, particularly elected officials and their staffs, from avoiding disclosure by conducting business privately instead of in the city’s email system. No council members expressed opposition to the new policy, but they voted 7-2 against placing it on the November ballot based on concerns that the city still must negotitiate the change with labor unions that represent the bulk of city employees. (read article)

The War over Obama’s Labor Agenda
By Justin Miller, July 12, 2016, The American Prospect
The NLRB’s latest pro-labor ruling comes just as Republicans turn up the heat on their plan to undermine the president’s labor legacy. The National Labor Relations Board is reaffirming its view that labor law must now address the brave new world of the fissured workplace—where workers are often separated from their actual employer by layers of subcontractors and staffing agencies. On Monday, the board announced a decision on the case Miller & Anderson, ruling that unions that want to represent bargaining units including direct employees as well as “permatemps,” contract workers, and other indirect workers that share a “community of interest” are no longer required to get permission from the parent company. (read article)

In Historic NLRB Ruling, Temps Win the Right To Join Unions
By Alex Ding, July 12, 2016, In These Times
A new ruling will enable temporary and permanent employees to come together to negotiate with their bosses in mixed bargaining units. The National Labor Relations Board on Monday overturned a Bush-era standard that said a union could only organize a bargaining unit of jointly employed and regular employees if both employers consented—even if those employees worked together closely. “Jointly employed” includes temps who are hired through staffing agencies. The new decision allows jointly employed temps to bargain collectively in the same unit with the solely employed workers they work alongside, ruling that bosses need not consent so long as workers share a “community of interest.” In a 3-1 decision, the Board overturned a 12-year-old ruling in Oakwood Care Center, where the Board said that a group of temporary workers could not unionize with permanent employees without the approval of their employer and the appropriate staffing agency. (read article)

Unions rejoice after federal judge strikes down Georgia labor law
By Greg Bluestein, July 12, 2016, Atlanta Georgia Constitution
A federal judge nixed part of a Georgia law criticized by the state’s labor organizations as an effort to chip away at their influence. The most contentious part of the 2013 law allowed employees to cancel their union membership at any time, rather than only after a one-year period. It was backed by Republicans as a way to bolster Georgia’s “right to work” status and burnish the state’s pro-business reputation. Opponents of the legislation, including some leading Democrats, saw it as another threat to the waning power of union groups. U.S. District Judge William O’Kelley ruled this month that the Georgia rules were “unenforceable” because they were at odds with federal labor rules. He let stand other provisions of the law, including a “statement of rights” that reinforces the right of employers to oppose the recognition of unions. (read article)

CCSF labor negotiations shift gears as new school year looms
By Michael Barba, July 12, 2016, San Francisco Examiner
The faculty union and administration at City College of San Francisco returned to a mediator Monday in an attempt to resolve their labor dispute as the first day of school approaches next month. CCSF and the American Federation of Teachers Local 2121, which represents the school’s faculty members, met three times with a panel of fact-finders in recent weeks after unsuccessful talks with a mediator ended in March. Faculty at the college have worked without a contract since it expired in June 2015 amid salary negotiations. Both sides have accused the other of unfair labor practices, which the union went on a one-day strike over in April. The strike followed an offer from the administration to boost faculty pay, but the union declined the offer saying it would have been a minimal increase from their 2007 wages. Unless the two sides come to an agreement, the fact-finders will release a nonbinding report to establish a factual basis for the negotiations. (read article)

California governor looks to extend climate-change efforts
By Ellen Knickmeyer & Juliet Williams, July 11, 2016, Albany Times Union
California Gov. Jerry Brown has launched a campaign to extend some of the most ambitious climate-change programs in the country and ensure his environmental legacy when he leaves office in two years. The centerpiece of the push is a cap-and-trade program that aims to reduce the use of fossil fuels by forcing manufacturers and other companies to meet tougher emissions limits or pay up to exceed them. The program has been one of the most-watched efforts in the world aimed at the climate-changing fuels. The four-year-old program, however, is only authorized to operate until 2020 and faces a litany of challenges, including a lawsuit questioning its legality, poor sales of credits, and lukewarm support among Democratic legislators to extend it. On Tuesday, the California Air Resources Board will release a proposed blueprint for continuing the cap-and-trade program until 2030, with a vote expected next year. (read article)

Labor unions file injunction to halt West Virginia Right to Work law
By Associated Press, July 11, 2016, PR News Channel
When West Virginia legislators passed The Workplace Freedom Act, a.k.a. Right to Work, earlier this year, labor leaders vowed to defeat it. Two days before the law was supposed to be implemented a coalition of AFL-CIO and other labor leaders made good on their promise with a last minute injunction in hopes of stopping the controversial legislation. The injunction argues that the law is unconstitutional because it takes away property without due process. The labor groups are hoping that the courts can help stop what the governor couldn’t. Despite the long odds of success with an injunction, labor supporters see hope in a similar case in Wisconsin where a lower court overruled a recent Right to Work law. (read article)

Strike Threat Again Facing UFCW, California Grocers
By Rhonda Smith, July 10, 2016, Bloomberg BNA
The increasingly crowded supermarket industry in Southern California might make negotiating a new labor contract for some 48,000 affected workers harder than it has been in recent years, analysts told Bloomberg BNA. “It’s been such a topsy-turvy, highly competitive market in San Diego, so for the unions it’s a different negotiating environment,” said Miro Copic, a marketing lecturer and branding authority at San Diego State University who monitors retail trade developments. Two developments are limiting the bargaining power wielded by the United Food and Commercial Workers and traditional grocery stores operating in Southern California. Two developments are limiting the bargaining power wielded by the United Food and Commercial Workers and traditional grocery stores operating in Southern California. The UFCW, among other unions, is losing members employed in the private sector. (read article)

House Appropriations marks up labor spending bill
By Marianne Levine, July 7, 2016, Politico
The House Appropriations subcommittee for labor this morning will mark up a spending bill for fiscal year 2017 that blocks the Labor Department’s overtime and fiduciary rules. The bill also extends provisions from last December’s omnibus that allows H-2B employers to use private wage surveys to determine the prevailing wage for their workers. In addition, the measure blocks the National Labor Relations Board from enforcing its newly broadened joint employer standard and its December 2014 rule to speed up the union election process. The bill would also bar the NLRB from issuing any regulation that would allow workers to vote electronically in union elections or from recognizing smaller bargaining units. Whether the appropriations bill will actually go anywhere is unclear. The bill, as of now, is not likely to make it to the House floor. (read article)

San Joaquin County, California strikers sent back to work with no contract
By Genevieve Leigh, July 9, 2016, World Socialist Web Site
The Service Employees International Union (SEIU) shut down a three-day unfair labor practices strike by thousands of San Joaquin County, California public employees Thursday after three days on the picket line. The nearly 4,400 workers, whose contract expired June 30, are still without a collective bargaining agreement. SEIU Local 1021 is the bargaining agent for the county workers, whose jobs include hospital techs, road maintenance, sewer maintenance, park workers, juvenile hall behavioral health services and many other important public service jobs. Last week union officials and county negotiators failed to reach an agreement on a new contract after three months of negotiations. The most contentious issue in the negotiations was the county’s proposal of a dismal 6 percent wage increase over the course of three years, a figure that would not even manage to cover the rate of inflation, currently around 2.2 percent annually in California. The union is asking for a 14 percent increase over the same period of time. (read article)

Labor board rules against Rauner in union case

By John Byrne and Monique Garcia, July 7, 2016, Chicago Tribune
A state labor panel on Thursday rejected Republican Gov. Bruce Rauner’s attempt to skip a step in his ongoing dispute with the largest state employee union over a new contract. The Illinois Labor Relations Board voted unanimously that the case should stay with an administrative law judge rather than come straight to the board as the Rauner administration had sought. The ruling came after the judge, Sarah Kerley, explained how long it would take board members to get up to speed on the complex case involving the American Federation of State, County and Municipal Employees Council 31. If the board sides with the union, contract talks would resume. If it sides with the administration, Rauner could impose his own terms, at which point the union could go on strike. (read article)

Fed Says Brexit, Slowing Labor Market Were Factors in Decision to Leave Rates Unchanged
By Ali Meyer, July 6, 2016, July 6, 2016, Washington Free Beacon
The Federal Reserve said that uncertainty over the United Kingdom’s decision to leave the European Union, a slowed labor market, and economic uncertainty were factors in its decision to leave the federal funds rate unchanged, according to the minutes from the Federal Open Market Committee’s June meeting. “After assessing the outlook for economic activity, the labor market, and inflation, and after weighing the uncertainties associated with the outlook, members agreed to leave the target range for the federal funds rate unchanged,” the minutes read. “An additional factor in the Committee’s policy deliberations was the upcoming U.K. referendum on membership in the European Union. (read article)

Lawsuit: California Workers’ Compensation System Biased Against Women
By Associated Press, July 6, 2016, CBS Local
California’s workers’ compensation system discriminates against women by judging benefits on the basis of stereotypes and ignoring harm done to women — such as refusing permanent benefits when a woman loses a breast to cancer, according to a lawsuit filed Wednesday. The suit, filed on behalf of several women and a labor union, argues that women’s equal opportunity rights are violated by a system where the medical examiners are overwhelmingly male and the guide used to determine the level of disability from a work injury is gender-biased. The suit, which seeks class-action status, was filed in Los Angeles County Superior Court on behalf of several women, including two veteran police officers who had mastectomies. (read article)

This Latest Labor Gambit Is a Piece of Work

By David Rivkin Jr. & Jay Krupin, July 5, 2016, Wall Street Journal
The general counsel of the National Labor Relations Board, Richard F. Griffin Jr., recently launched another salvo in the board’s continuing assault on the rights of employers and employees. He aims to alter labor law by punishing employers who—following the publicly expressed wishes of their employees—withdraw recognition from unions. Currently, employers can refuse to recognize or bargain with incumbent unions if most of their employees wish to free themselves from the union’s grasp. Under the proposed new National Labor Relations Board policy, employers will be precluded from walking away from a union, and will be sanctioned by the NLRB, unless employees first vote to leave in an NLRB-conducted secret-ballot election. Such elections tend to be costly and protracted affairs, which may be part of their appeal to the NLRB now. (read article)

Judge’s Ruling Re-Opens a Major Loophole that Allows Union Busters To Remain in the Shadows
By Moshe Z. Marvit, July 5, 2016, In These Times
Earlier this year, the U.S. Department of Labor (DOL) passed the “persuader rule” that closed a major loophole, which has for decades allowed employers to hire attorneys and consultants to secretly assist them in what is politely referred to in the industry as “union avoidance.” The goal of this activity is to persuade and prevent workers from organizing unions. The new rule did not try to make the consultants’ and attorneys’ practices illegal, or regulate the types of activities that employers and consultants could engage in; it was simply intended to provide transparency to workers who are the subject of a coordinated anti-union campaign. But last week, a Texas federal district court judge issued a nationwide injunction prohibiting the DOL from implementing the rule. (read article)

Teachers Union Boos Clinton For Charter School Comments
By Connor D. Wolf, July 5, 2016, The Daily Caller
Presumed Democratic presidential nominee Hillary Clinton was booed by union delegates Tuesday for saying public and charter schools should share ideas. The National Education Association hosted the presidential hopeful during its annual representative assembly. Clinton spoke on educational policies but ran afoul with union delegates when she discussed charter schools. “When schools get it right, whether they are traditional public schools or public charter schools, let’s figure out what’s working,” Clinton said before the union delegates, according to Politico. “And share it with schools across America.” Clinton urged the delegates to rise above the fights happening within the educational system. (read article)

 

Populist Unity Can Overcome the Establishment's Supermajority

Back in 2012 we published an article entitled “The Forgotten 33%,” which included a graphic entitled “American Voter Breakdown 2012.” It depicted the U.S. electorate as comprised of 46% who pay zero net taxes, 20% who work for the government and are net tax consumers, the 1% “super rich,” and the “forgotten 33%,” who work in the private sector and earn enough to be positive net taxpayers.

The point of the article, then and now, was that people with an intrinsic preference for big government comprise a super-majority of voters in America. But something has changed since 2012…

AMERICAN VOTER BREAKDOWN 2016
20160712-UW-AtlasGeneration

The emergence of Donald Trump and Bernie Sanders as serious contenders to become president of the U.S. reflects a growing awareness among voters in all of the above categories that things can and should be better. The 33% who constitute America’s beleaguered taxpayers were angry four years ago, and this time around they’re furious. Their ire is the most easily explained: Now more than ever, they work long hours for less wages or lower profits, all while being told by the establishment press, by mainstream academia, and by left-wing politicians that they’re “privileged,” and still aren’t paying their “fair share.” If they’re white, they’re told their success is the undeserved result of their color, when in fact they’ve been the recipients of institutionalized reverse discrimination for nearly two generations. And no matter what their ethnicity, they confront soaring prices for housing, health care, and college tuition for their children.

The 33% who work and make enough to pay taxes are angry. And they should be. But what about the 46% who pay no net taxes?

The anger of the 46% takes various forms, nearly all of it justified. Many of them work, but qualify for the earned income tax credit and subsidized health care, which makes them net tax consumers. Many of them would like to work harder, but the only jobs available are part-time with unpredictable schedules which makes it impossible for them to work two jobs. Many of them would like to get a better education, but they are the products of failing schools where teacher tenure is more important than student achievement. And if they’re people of color and haven’t yet been successful, they’re perpetually told by the establishment press, by mainstream academia, and by left-wing politicians that they are victims of discrimination and their failures are not their responsibility – fueling additional anger.

And what of the 20% who work for the government? They are, for the most part, ensured decent health care and a secure retirement. But they are the targets of relentless propaganda from their unions, who have waged a multi-decade campaign to convince them they are underpaid, underappreciated, and overworked. Many of them succumb to this nonsense. Others, and more than a few, are disgruntled for the opposite reason – they resent working for a unionized government where merit means less than seniority, and innovation is a threat.

But why are taxes consuming the 33%? Why are opportunities for good jobs and education being denied the 46%? And why does government get bigger every year but deliver less?

There’s a simple answer. Government unions. Especially at the state and local level, government unions have destroyed our public schools and driven our public institutions to the brink of bankruptcy. These government unions perpetually lobby for higher taxes, bigger government – more employees with more pay and benefits, more job killing regulations, and more programs ostensibly intended to help the less fortunate – regardless of their cost or actual effectiveness. The government union agenda is to increase their power and influence – a goal that has no connection with the public interest.

Government unions control state and local politicians, who in turn control every scrap of legislation sought after by big business. They encourage and enable cronyism. Their union controlled pension funds and their union backed government bond underwriting make them the biggest players on Wall Street. They ARE the “establishment” that has gotten everyone so agitated this time around.

Donald Trump, for all his hapless gaffes and hideous vitriol, is far too intelligent to identify government unions as the root cause of most of the problems in America. Unions make or break Trump’s development projects. And even if Trump did attack the government unions, he’d risk confusing voters, who by and large still don’t make a distinction between public and private sector unions.

Bernie Sanders, despite his belated attempts to pander to the African American left by challenging police organizations, is unwilling or unable to make the distinction between police personnel, whom we are lucky to have among us, and police unions that protect bad cops and intimidate politicians. And even if Sanders did take on the police unions, he would never take on the teachers unions – despite the fact they’ve practically destroyed public education in America.

Populist anger in America today is justified, and there is a unifying target for the anger – the “establishment” as represented by government unions and their clients; monopolistic corporations, America’s overbuilt financial sector, and the extreme environmentalist lobby that provides a phony moral cover for their iniquitous schemes. If public sector unions were illegal, this entire corrupt establishment would be threatened as never before. As it is, this awakening national dissent has seismic power, diffused in all directions, turning only on itself.

 *   *   *

Ed Ring is the president of the California Policy Center.

Union In The News – Weekly Highlights

San Joaquin County workers strike
By Team Staff, July 5, 2016, ABC 10
The San Joaquin County workers union began their strike with a press conference and rally at the County Administration at noon Tuesday, July 5. Instead of reporting to work Tuesday morning, nearly 4,400 San Joaquin County workers — represented by SEIU 1021 — grabbed picket signs and shut down all County operations. They walked out on behalf of an Unfair Labor Practice strike, a method of protest that California labor law grants employees whose employer has violated the rules of collective bargaining. (read article)

Supreme Court term mixed bag for health care industry
By Lisa Shencker, July 5, 2016, Crain’s Chicago Business
Last year, healthcare leaders had their eyes trained on one big case – King v. Burwell – and they celebrated when the justices voted to uphold a key provision of the Affordable Care Act. This year wasn’t nearly so straightforward for healthcare leaders watching the Supreme Court, which wrapped up its latest term last week. At least half a dozen notable cases fragmented healthcare wonks’ attention. The outcomes of those cases left some in the industry cheering and others wringing their hands. Healthcare-related cases focused on abortion, the ACA’s contraception mandate, patents, unions, claims data and the False Claims Act, among other topics. And the mid-term death of Justice Antonin Scalia looks to have affected the outcomes of some of those cases. (read article)

Clinton’s charter school comments prompt boos at teachers union event
By Kimberly Hefling, July 5, 2016, Politico
Hillary Clinton on Tuesday said traditional public schools and charter schools should share ideas — a remark met with boos by delegates from the National Education Association’s representative assembly. To the thousands of teachers gathered at the labor union’s annual conference, Clinton said “when schools get it right, whether they are traditional public schools or public charter schools, let’s figure out what’s working … and share it with schools across America.” Some teachers in the audience booed. Clinton continued to preach cooperation. “We can do that,” she said. “We’ve got no time for all of these education wars.” (read article)

Clinton snags AFL-CIO official, former Sanders staffer, in labor outreach
By Amanda Becker, July 5, 2016, Reuters
Democratic presidential candidate Hillary Clinton has hired two people with close ties to U.S. organized labor to try to lock down support from union members as Republican candidate Donald Trump makes courting working-class voters central to his campaign. The two new staffers, Lori D’Orazio and Michele Gilliam, are to be deputy labor campaign directors, according to a campaign aide. D’Orazio is moving to the campaign from the biggest U.S. labor federation, the AFL-CIO. Gilliam is a former staffer for Senator Bernie Sanders of Vermont, who was Clinton’s fiercest primary competitor. (read article)

Trump’s anti-trade rhetoric rattles the campaign message of Clinton and unions
By David Nakamura & David Weigel, July 4, 2016, Washington Examiner
Three dozen union workers gathered outside city hall here on Thursday to rally against the global free-trade deals they believe have harmed Americans like them. Their candidate was Katie McGinty, the Democrats’ nominee for Senate in Pennsylvania. But their spiritual leader was Republican Donald Trump.“He recognized there’s some problems we need to solve,” said McGinty, who is challenging Sen. Patrick J. Toomey (R), a free-trade advocate. “One, we have to stop bad trade agreements. . . . And two, we have to take the Chinese on when they manipulate their currency and dump goods in our markets.” Just two days earlier, Trump had delivered a blistering speech at an aluminum recycling plant near Pittsburgh in which he called U.S. trade policies a ­“politician-made disaster” that has betrayed the working class. (read article)

Teachers Unions Defeat Education Reform in California — Again
By Susan Berry, June 30, 2016, Breitbart News
This week, California teachers unions defeated a bill that attempted to address the process by which teachers are retained and fired in the state. Assembly Bill 934, introduced by former teacher Assemblywoman Susan Bonilla (D-Cncord), fell short of the five votes needed for approval to pass out of committee. The measure, in its original form, would have provided school officials with more time to assess less competent teachers prior to giving them full job protections, or tenure. The legislation would have also accelerated the termination process for teachers who were referred for professional support to improve their skills, yet failed to do so. (read article)

California bullet train, Delta tunnels: Jerry Brown’s pet projects face threat from ballot measure
By Paul Rogers, June 30, 2016, Mercury News
Two of Gov. Jerry Brown’s favorite projects — building a high-speed rail system and a pair of massive tunnels under the Delta — face a serious threat if California voters pass a measure heading for the November ballot. The “No Blank Checks Initiative,” bankrolled with $4.5 million from Stockton farmer and businessman Dean Cortopassi, would require a public vote on any state project in which $2 billion or more in revenue bonds would be issued. And since both the bullet train and twin-tunnels projects would most likely require that kind of financing, voters could ultimately get a chance to decide their fate. Although it has received less attention than many of the others, Cortopassi’s measure could be the most significant in the long term and have a huge impact on the governor’s legacy. It’s also setting up a major battle involving taxpayer groups on one side and labor unions and business organizations on the other. (read article)

UPS, pilots union reach tentative deal on five-year labor contract
By Chris Otts, June 30, 2016, WDRB
After more than two years of mediation, UPS Airlines and its pilot union have reached a tentative agreement on a new five-year labor contract. UPS and the Independent Pilots Association announced the agreement in a press release Thursday. They did disclose the specifics of the contract, which needs to be ratified by a majority vote of the pilots union’s 2,600 members. “The comprehensive agreement provides for improvements across all sections of the contract,” the parties said in the release.  The union’s last contract with UPS ran through Dec. 31, 2011 and the two sides had been trying to reach a new labor agreement since. In March 2014, the talks moved to mediation before the National Mediation Board, a U.S. government agency. Sticking points included wages, healthcare, pensions and flight scheduling, among other issues. (read article)

Christen: Project Labor Agreements are bad for Santa Clara County taxpayers
By Eric Christen, June 29, 2016, Mercury News
The Santa Clara County Board of Supervisors once again has voted to require all construction contractors, workers and apprentices to effectively be union in order to work on county financed projects. They did this by mandating that a Project Labor Agreement (PLA) be “agreed” to with trade unions as a condition of building county funded projects. The supervisors approved a PLA policy for contracts $10 million and above five years ago but in June voted to lower that threshold to $2 million. Apparently, too many projects are still getting built by nonunion labor, so big labor special-interests demanded the supervisors just give them a monopoly on everything. (read article)

Historic Agreement Paves Way for Alliance Between Labor and Environmentalists
By Tom Dalzell, June 29, 2016, Huffington Post 
For too long, the interests of labor and environmental groups have cleaved through the Democratic Party. The transition to clean energy has stressed this relationship further: as carbon-based sources of power come under fire, the union jobs that go along with them (workers at power plants) are being replaced by low-wage, non-union positions (think solar panel installers, who frequently make minimum wage). This trend has contributed to the hollowing out of the middle class, and has been watched with unease by those concerned with income inequality. That’s why last week’s agreement to phase out the Diablo Canyon Nuclear Power Plant – and take care of the workers there – is historic. It provides a new model for labor and environmentalists – one that provides green power without tossing aside middle-class jobs. (read article)

Labor Watch: ‘Release Time’ Forces Taxpayers to Pay for Union Work: In effect, you’re paying union dues when you pay your taxes
By CRC Staff, June 29, 2016, Capital Research Center
A case argued recently before the U.S. Supreme Court threw a spotlight on one of the worst abuses committed by government-employee unions and their allies: the practice of union officials charging taxpayers for time they spend on union business. Justice Antonin Scalia was expected to provide the crucial fifth vote for plaintiffs in the case. After Scalia’s death in February, the vote was tied at 4 to 4, which leaves the lower court’s pro-union/anti-worker ruling in effect. Unions had prepared for the expected loss by putting money aside. Now that money can be used to get pro-union politicians elected in 2016 and beyond. In These Times, a socialist/union publication, reported that “the ‘rainy day’ savings that many unions made in anticipation of an adverse decision can now be used as a ‘Scalia Dividend’ to be invested in new campaigns.” (read article)

California judge blocks move to cap hospital executive pay
By Barrett Newkirk, June 29, 2016, The Desert Sun
A state judge has blocked a labor union’s effort for a ballot initiative asking California voters to cap hospital executive pay at $450,000. Sacramento Superior Court Judge David Brown sided with the California Hospital Association when he ruled June 23 that SEIU United Healthcare Workers West’s support for the measure violated an agreement between the union and hospital association. The SEIU in May submitted nearly 650,000 signatures to the California Secretary of State’s Office with the hope of getting the question before voters in November. If approved, the measure would have forbid California hospitals from paying top executives more than $450,000, the same annual salary as the president of the United States. (read article)

Teachers Union and Hedge Funds War Over Pension Billions
By Brody Mullin, June 28, 2016, The Wall Street Journal
Daniel Loeb, Paul Singer and dozens of other hedge-fund managers have poured millions of dollars into promoting charter schools in New York City and into groups that want to revamp pension plans for government workers, including teachers. The leader of the American Federation of Teachers, Randi Weingarten, sees some of the proposals, in particular the pension issue, as an attack on teachers. She also has influence over more than $1 trillion in public-teacher pension plans, many of which traditionally invest in hedge funds. It is a recipe for a battle for the ages. Ms. Weingarten started by targeting hedge-fund managers she deemed a threat to teachers and urged unions to yank money from their funds. Then she moved to Wall Street as a whole. Her union federation is funding a lobbying campaign to eliminate the “carried-interest” tax rate on investment income earned by many money managers. (read article)

Supreme Court denies rehearing to major union case
By Sean Higgins, June 28, 2016, Washington Examiner
The Supreme Court on Tuesday denied the plaintiffs in the case Friedrichs v. California Teachers Association a rehearing, ending the possibly that the court will re-examine whether public sector unions should have the right to force payment from workers who do not wish to be members. The case had once been one of the most high-profile of the Supreme Court’s current term, with many legal observers thinking it could fundamentally rewrite labor law, weakening unions in the process. Instead, the court announced in April it was deadlocked, 4-4, in the case. That meant a lower court ruling upholding current law allowing unions to demand the fees would stand. (read article)

Labor unions file lawsuit challenging ‘right-to-work’ law
By Associative Press, June 28, 2016, Herald-Dispatch
Labor unions from around the state have filed petitions in Kanawha Circuit Court challenging West Virginia’s new “right-to-work” law as an illegal taking of union property and resources. The lawsuit, filed Monday by 11 unions, contends that the Workplace Freedom Act is intended to discourage union membership by “enabling nonmembers of unions to get union services for free,” reported the Charleston Gazette-Mail reports. The law was vetoed by Gov. Earl Ray Tomblin. However, it was enacted into law by override votes in the House of Delegates. The legislation allows employees in union shops to opt out of paying union dues. One intent of the law, according to the lawsuit, is to discourage employees from joining unions. (read article)

 

How Public Officials Can Reduce the Burden of Unionized Firefighters

What started in Stanton, California as an anomaly is spreading quickly across North Orange County – the push to create local sales taxes in order to pay off the rising pay and benefits of public employees.

Stanton voters passed a one-percent sales tax in 2014, giving residents in one of OC’s poorest cities the county’s highest sales tax. But in the last several days, the enthusiasm for this most regressive of taxes has spread to Westminster, Fountain Valley and La Palma, and always for the same reason: public employee compensation.

Stanton councilmember David Shawver is elated, perhaps because he’s no longer alone. “The 2014 sales-tax increase saved the city of Stanton’s life,” Shawver told the Orange County Register last week. “The tax will be a really big thing for Westminster. They will see a regeneration of their community.”

In those cities, as in Stanton, the same dire warnings are broadcast from City Hall: The end is near. We’ve cut every other city service imaginable, and if you don’t pay more in sales taxes now, you’ll lose vital public-safety services – the police and firefighters who represent the thin line between civilization and Darwinian struggle.

When asked about this problem, many city officials respond that for all their apparent authority, they’re really impotent. They’re trapped by the rising pay and benefits of government workers, especially those who are unionized, and especially those in unions of police and firefighters.

A Stanton official told me there’s no way to change the cost of sheriff’s deputies and firefighters. The county sets the rate – averaging around $236,000 per year for firefighters and $189,000 for deputies. Stanton just pays.

“There’s absolutely nothing we can do about that,” the official said.

That’s absolutely wrong. The City of Stanton and its neighbors have an amazing opportunity in the midst of their crisis. And the U.S. military provides part of the answer.

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U.S. Navy Firefighters in action
(Source: U.S. Navy)

For years, the U.S. has run on the assumption that a relatively small number of career professionals can mass-produce the world’s most powerful soldiers, sailors, Marines and airmen. In 16 weeks or less, for example, the Army outfits, trains and deploys men and women around the world. It arms them with life-saving and death-dealing equipment and techniques. It counts on them to carry out their missions in the most dangerous conditions imaginable. Bravery, loyalty and resilience are standard.

In exchange for this exceptional demand, we nevertheless pay our service people very little – about $1500 per month. After four years, most enlistees are discharged and pursue other careers. The military expects that only a few will stay on to rise through the ranks of officers and noncommissioned officers who oversee the recruitment, training, support and management of new trainees. Their leadership is invaluable, but the military may at its discretion decide to reduce benefits – even retroactively – or terminate employment.

The Department of Defense isn’t perfect. The scandal over veterans’ health care, the bloat, the crony-capitalist contracts and the politicians’ ham-fisted use of force are real. But if we can train 18-year-olds to handle lethal force and million-dollar equipment in a combat zone, we can train young people to put out fires – or, as is more likely in Orange County, to respond to medical emergencies.

We could pay these firefighters well, better than their military counterparts. And at the end of four years, we could thank them for their service and let them pursue their bliss – to sign on as firefighters in wealthier cities still wedded to the old model. Or they could move on to work or college. It would be cheaper to spend more – to pay for their health care and offer tuition support for several years, for instance – than to turn them into careerists.

Instead, for decades, we’ve chosen to hire high school graduates who win the firefighting lottery. Thousands apply for just a few openings anywhere. The reason for the long lines: The winners will work a few days per week in exchange for about $236,000 per year, early retirement and annual pensions of about 90 percent of their highest annual pay.

You’d have to be a millionaire to clock that kind of income in retirement. But our cities and counties hand it out as standard procedure.

Our elected officials can rarely see a way out.

That’s why Stanton – and Westminster, La Habra, Fountain Valley, Garden Grove, Placentia and hundreds of other California cities – are so deeply troubled. For decades, police and firefighters have backed (with their time and money) political candidates who deliver on the promise to sign off on higher pay and benefits. The sweetheart deals have driven countless Orange County cities toward insolvency.

Stanton can survive if it innovates. And, sure, it may seem a long-shot to expect that the city councilmembers elected to represent government employees will have the courage to represent the people instead. But there’s an old saying about necessity as the mother of invention – or as they say in bureaucratic circles, urgency functioning as the distaff progenitor of creativity.

 *   *   *

Will Swaim is the VP of Communications at the California Policy Center.

Fresno Cop Deals Blow To SEIU… And Everyone Shakes Hands

I met Eulalio Gomez in Bakersfield earlier this year. The correctional officer from Fresno was part of an MLK Day gathering of public sector union reformers, and I was there to document.

Each California employee present had spent time and resources challenging their unions in one form or another. They came to compare war wounds and most had battle fatigue. Bolstered by the support of their peers, they went back into their respective corners of the state to continue their battles.

Six months later, Gomez is among the first to run a victory lap. An election spearheaded by Gomez has caused Fresno County’s largest union to lose members to the new, 900-member Fresno County Public Safety Association, which just won the right to represent workers formerly of the Service Employees International Union. 

Gomez, the association president, says his group is just focused on members.

“Wages and benefits only,” he says.

“We fought to obtain our independence and self-governance. In a free market, consumers are free to buy a service they like. No one should be forced to pay for a service they no longer want. I determined that they had poor customer service and were not accountable to members.”

According to a website statement from SEIU Local 521 president, Riley Talford, the SEIU is “disappointed (but) ready to stand together as a united coalition of workers to build a better future for all Fresno County employees.”

As a Californian from back in the day, those thoughtful words indicate mud-slinging is so passe.

I caught up with Eulalio, and we had a chat.

 

 

Eulalio Gomez – President of the Fresno County Public Safety Association

 

 

HSC: “What happened?”

EG: “We had a decertification election from SEIU in Fresno. Two elections occurred in eight months, and we won both of them. We are a union that represents members, without social agendas. We don’t want to fund ‘black lives matters’ and immigration reform events.”

HSC: “How do you as a Mexican-American explain to critics that you’re not racist in not supporting social justice agendas?”

EG: “It’s simple: I’m not racist. The fundamental issue is that is has nothing to do with the employees of the County of Fresno. If folks want to be part of it, that’s not a problem for me. But they should fund it out of their own pocket like everyone does extracurricular activities. Our group is largely sheriff correctional officers and the movement has caused a degrading of perception to members of the public against uniformed personnel; it has caused acrimony at law enforcement officials, creating anarchy and often inciting violent acts against the law enforcement community.”

HSC: “How do you explain ‘bad apples’ don’t represent everyone?”

EG: “We do acknowledge there are some issues with our brothers and sisters on the streets, but that does not represent law enforcement as a whole. People should be judged by their individual actions not by the uniforms they wear. So it’s almost like people believe if you’re in a uniform, you’re bad.”

HSC: “To the kid on the street, who says he’s being judged for his color, how do you respond?”

EG: “I believe you’re judged by your actions and not by the color of your skin… We should all follow the same rules.”

HSC: “In Bakersfield, you told me you’re doing this for your children.”

EG: “Yes because I’m doing this to make our community safer… we address local issues only. At the end of the day, all the money generated from the Fresno County Public Safety Association will stay right here locally. It won’t be going to D.C.”

HSC: “What would you like to tell Californians?”

EG: “If you are a public sector employee disenfranchised with your representation, take control of your future and change it and get involved. Either remove it or change it.”

HSC: “How long have you been fighting to create your own union?”

EG: “Five years.”

HSC: “What did you tell your children about your fight?”

EG: “I showed them the flyers that were being dispersed at my job calling me a ‘bad apple,’ ‘liar,’ and I explained to them why. I explained they are willing to use all avenues to stop the loss of dues. They understood the politics. I affiliate as an independent: I don’t want to be labeled, and I don’t want to be forced to support an issue based on my affiliation. We all have our own minds and can determine what’s best for ourselves and our family.”

HSC: “Are people starting to call you the Erin Brokovich of ‘Choose Your Union?’”

EG: “No. That title goes to a DMV clerk named Mariam Noujaim. She’s from Egypt, and I just love her tenacity and her personality and ‘break the door down’ attitude. I respect her for challenging her union on transparency and competition. She works hard and she doesn’t care if the doors are not open, she goes through the door.”

HSC: “Isn’t that the American way?”

EG: “Indeed.”

About the Author: Heidi Siegmund Cuda is a former Investigative Producer for Fox 11 News in Los Angeles and the Creator and Host of the Economic Series, “Saving the California Dream.” She is currently producing and hosting the series, “Ripoff Report Investigates.”

Union In The News – Weekly Highlights

Does California shutdown mean the end of nuclear power? Not so fast.
By Jessica Mendoza, June 28, 2016, Christian Science Monitor
When California’s largest electric utility announced last week that it would close the state’s last operational nuclear power plant, supporters were quick to call the moment a potential game changer for America’s energy future. And the move, in which state regulators nudged Pacific Gas & Electric Co. toward a plan to close its Diablo Canyon reactor, comes as other states have also been closing nuclear plants or planning to do so. Solar and wind power are surging, and PG&E said the Diablo Canyon power will be replaced by renewables. Some new reactors are being built. Some governors even in other politically liberal states are trying to save old reactors rather than scrap them. And though cheap natural gas may have called the economics of nuclear plants into question, environmentalists are divided over whether a nuclear phaseout would be wise. (read article)

‘Labor Unions Now Play a Particularly Boutique Role in the Economy’
By Elizabeth Nolan Brown, June 28, 2016, Reason (blog)
As president of the Service Employees International Union (SEIU) from 1996-2010, Andy Stern was called “the nation’s most politically influential union president.” Now Stern believes that labor unions are increasingly irrelevant. “Labor unions now play a particularly boutique role in the economy,” he told The Atlantic. “I believe that this is not our father’s or our grandfather’s economy, that the 21st century will not be employer-managed,” Stern said. “It’s going to be self-managed, because the growth in alternative work relationships—contingent, freelance, gig, whatever you want to call it—is clearly going to increase. Stern left traditional labor organizing because he “could not figure out anymore how a shrinking labor movement, a changing economy, a changing structure of work” could lead to economic security for Americans. (read article)

Justices reject request to rehear union case that tied 4-4
By Associated Press, June 28, 2016, The Denver Post
The Supreme Court has turned down a long-shot request to hold new arguments in a major labor union case that ended in a 4-4 tie. The justices on Tuesday denied without comment a petition from a group of California teachers urging the court to reconsider the case once a new justice is confirmed. The court almost never rehears cases. It would have taken five justices to agree to a rehearing. The tie vote in March was a victory for unions in a case they once seemed all but certain to lose before Justice Antonin Scalia died in February. (read article)

Labor unions file lawsuit challenging ‘right-to-work’ law
By Associated Press, June 28, 2016, Huntington Herald Dispatch
Labor unions from around the state have filed petitions in Kanawha Circuit Court challenging West Virginia’s new “right-to-work” law as an illegal taking of union property and resources. The lawsuit, filed Monday by 11 unions, contends that the Workplace Freedom Act is intended to discourage union membership by “enabling nonmembers of unions to get union services for free,” reported the Charleston Gazette-Mail reports. The petition cites other issues with the right-to-work law, including a definitions section that seems to limit the law to public employee unions. Some predict that the case will likely go to the U.S. Supreme Court, including Josh Sword, secretary of the West Virginia AFL-CIO, one of the plaintiffs. (read article)

Assemblywoman Bonilla, a former teacher, takes on the powerful union
By George Skelton, June 27, 2016, Los Angeles Times
School reformers keep suffering setbacks in California — first in court, now in the Legislature. In Sacramento, the California Teachers Assn. — arguably the most powerful labor union in the state — is practically unbeatable because of its ability to spend millions supporting or opposing a legislative candidate. It’s an intimidating force. Reformers — those trying to make it easier to fire bad teachers and retain good ones — were jubilant when a Los Angeles County Superior Court judge in 2014 threw out tenure and other job protections.  But in April, a state appeals court agreed with the CTA and threw out the lower court ruling. Meanwhile, in the Legislature, a former high school English teacher introduced a bill that included many of the provisions sought by Students Matter and the Vergara plaintiffs. Last week, however, the measure was substantially watered down by the author, Assemblywoman Susan Bonilla (D-Concord), under pressure from the teachers union. She had no choice if any of her proposal was to survive. In its original form, the measure would have reduced the importance of teacher seniority in layoffs. (read article)

The Case for Unions to Support a Universal Basic Income
By Bourree Lam, June 27, 2016, The Atlantic
Andy Stern has been part of the U.S. labor movement for decades. He was formerly the president of the Service Employees International Union, which represents nearly 2 million American workers. During his tenure at the SEIU, he was hailed as “the nation’s most politically influential union president,” which made his resignation in 2010 something of a surprise. Stern’s new book, Raising the Floor, details his views on the changing nature of work in America and explains why Stern has come around to supporting a universal basic income—an idea that has gained a lot of traction in the past year when it comes to media coverage, policy debates, and efforts to study its efficacy. (read article)

MBTA union may agree to wage cuts for new worker
By Nicole Dungca, June 27, 2016, The Boston Globe
The leader of the Massachusetts Bay Transportation Authority’s largest union said Monday the labor group would be willing to agree to pay cuts for new workers this coming year and lower raises in the future, as part of a deal that would stop the T from privatizing a number of jobs. As the MBTA grapples with an $80 million deficit for the 2017 fiscal year, the agency is pursuing privatization and voluntary retirement and separation packages, while considering possible future layoffs. But Carmen’s Union officials say they’re willing to agree to lower future raises and other concessions —which would add up to about $24 million over the next four years — to make sure many jobs aren’t outsourced. (read article)

Big labor breaks its promise to California taxpayers
By Michael Saltsman, June 26, 2016, OC Register
The people of California were told that a $15 minimum wage was not just a boost for employees – it was good for taxpayers, too. It’s a promise that the “Fight for $15” has carried across the country. David Rolf, one of the architects of the campaign, said explicitly in his book of the same name that a $15 minimum wage “would substantially reduce dependence on government welfare programs.” With the ink barely dry on California’s groundbreaking law, the credibility of this talking point is already crumbling. The popular labor argument goes something like this: Employers who fail to pay higher starting wages force their employees to rely on public assistance. Last year, San Diego State University economists examined 35 years of data and found that minimum wage increases cause no net reduction in participation in (or spending on) social welfare programs. (read article)

Rail unions fail to extend NJ Transit strike deadline
By Larry Higgs, June 24, 2016, NJ.com
Unions representing NJ Transit locomotive engineers and conductors as for Friday evening failed to extend a strike deadline to mid-July, putting commuters under the threat of losing rail service by June 30. The National Mediation Board, which supervises railroad labor negotiations, asked the agency and two rail unions on Tuesday to extend their no strike/no lockout pledge until July 16. NJ Transit had earlier agreed to the deadline. “The unions representing locomotive engineers and conductors have ignored NJ Transit’s agreement to extend their ‘cooling off period’ until July 16,” said Nancy Snyder, an NJ Transit spokeswoman. If there is no agreement and a strike or lock-out occurs, Congress could impose its own settlement under Federal Railway Labor law. Such a settlement would be proposed as a bill. (read article)

Supreme Court Delivers Bad News For Union Hoping To Bag Illegals
By Connor D. Wolf, June 23, Daily Caller
The U.S. Supreme Court ruled against an executive order granting citizenship to millions of illegal immigrants Thursday in what is likely a major blow to union membership. Labor unions have been suffering a sharp decline in membership for decades. President Barack Obama signed a 2014 executive order opening the door to millions of new potential union members. The Supreme Court promptly closed that door by ruling that the president overstepped his authority. Union bosses claim their fight is about helping immigrants get the rights they deserve. Unions have already started to pave the road to get the millions of illegal immigrants into their ranks. They have set up training, workshop and recruitment programs all specifically aimed at the illegal immigrants that may be eligible for amnesty under the executive order. The Service Employees International Union (SEIU) leadership also condemned the ruling. (read article)

Sacramento judge moves to cancel a November ballot initiative limiting salaries of hospital CEOs
By John Meyers, June 23, 2016, Los Angeles Times
An effort to cap the salaries of hospital executives may be blocked from California’s Nov. 8 ballot, after a Sacramento judge wrote Thursday that its labor union backers broke a political peace treaty with hospitals. If upheld, Sacramento Superior Court Judge David Brown’s ruling would force Service Employees International Union-United Healthcare Workers West to withdraw an initiative that would limit executive compensation at nonprofit hospitals to $450,000 a year. SEIU-UHW turned in almost 650,000 voter signatures on the measure last month , and it’s likely to qualify for the ballot next week. “Unfortunately, the voters of California may be denied their ability to decide whether someone running a charity can make $5 million or $10 million a year,” said SEIU-UHW spokesman Steve Trossman. (read article)

CPS to file labor charge against union over April 1 job action
By Lauren FitzPatrick, June 22, 2016, Chicago Sun-Times
Chicago Public Schools on Wednesday announced its intention to file an unfair labor charge against the Chicago Teachers Union over its treatment of teachers who did not participate in the union’s one-day job action on April 1. On that day, union members gathered downtown and marched in the streets in protest, calling on CPS, state lawmakers, Gov. Bruce Rauner and Mayor Rahm Emanuel to find long-term funding solutions for public schools. CPS considered that an “illegal one-day strike,” and accuses the union of “forcibly expelling members who exercised their right to refuse to participate.” (read article)

Autoworker Union Accuses Volkswagen Of Violating 2014 Contract 
By Connor D. Wolf, June 21, 2016, Daily Caller
The United Auto Workers (UAW) accused Volkswagen Tuesday of ignoring a commitment it made to organized labor in 2014. UAW and Volkswagen have been in a bitter labor dispute for the last couple of years. Volkswagen was originally open to the idea of its workforce organizing, but opposed the union for trying to split its employees between union and nonunion. The automaker has instead advocated for a full vote of the more than 1,400 plant workers. UAW Secretary-Treasurer Gary Casteel released a document allegedly showing the automaker ignored a pledge it made in 2014. Volkswagen spokesman Scott Wilson countered the claim by noting the written statement was not a contract. Rather, it was a policy to allow a formal meeting between the automaker and union leadership. (read article)

 

Teachers Union Chases "Teach for America" Out of San Francisco

It should be an article of faith by now that in California, whatever the teachers union wants, the teachers union gets. It is nonetheless surprising that their reach might extend all the way to a recent decision by the San Francisco Unified School District board to reject fifteen talented teachers who were part of “Teach for America.”

The Teach for America program, similar to the Peace Corps, attracts some of the top college graduates in the United States to spend two years teaching students in underprivileged communities. Not only are these highly motivated and underpaid teachers committing themselves to work in schools with chronic teacher shortages, but they typically teach the subjects for which the profession has the hardest time finding teachers – in science, math, special education, and bilingual classrooms.

Never mind all that. Go away. Never mind that San Francisco Unified needs to fill 500 teaching jobs by August in the midst of a statewide teachers shortage. The union can’t accept “cheap labor” that might undermine their lock on the teaching profession.

If you review the candidate questionnaires filled out by San Francisco Unified’s president, Matt Haney, or its vice president, Shamann Walton, it isn’t too hard to figure out who pulls their strings. Haney’s in-depth answers failed to include teacher accountability as one of his priorities. He also does not support having charter schools as “a central part of our strategy to deliver high quality education.” But Haney does favor project labor agreements and increasing teacher salaries. As for Walton, the questionnaire we could find for her, delivered to the Laborers Local 261, documents her positions on such academic priorities as the right to an abortion, affirmative action, marriage equality, rent control and sanctuary cities. Needless to say, all of her positions on these non academic matters conform to those of the California Teachers Association.

If you review salaries and benefits for San Francisco Unified School District employees, you quickly realize why classroom teachers are arguably underpaid. There isn’t any money left after the bureaucrats get their share. Any ambitious public education professional quickly realizes two things: (1) Do whatever the union tells you to do, and (2) get an administrative job in an office, where you’ll make 50% more, won’t have to teach kids during the day or grade papers at night, and still only work 180 days a year. In the case of San Francisco Unified’s 2014 payroll, you have to scroll through the salary records for 251 bureaucrats before you get to the first employee with the title “Regular Classroom Teacher.” Go figure.

The teachers unions have created pretty much every mess that exists in California’s public schools today. They successfully push for legislation that requires the addition of extensive bureaucratic staff, then bemoan the lack of funds to hire classroom teachers. They complain that classroom teachers are underpaid, but oppose tying compensation to performance. The union blames “Wall Street” for the financial challenges facing pensions, while simultaneously pushing for pension benefits that can only be justified if you believe the corrupt Wall Street debt bubble will never burst. The union accuses charter schools of “privatization for profit,” ignoring the fact that most charters are nonprofits, sustained by donors of diverse ideologies who are united only by a passionate desire to rescue America’s youth from a failed system.

In an editorial published on June 22 entitled “San Francisco was wrong to chase out Teach for America,” even the liberal San Francisco Chronicle was unequivocal. “So who would object to this program?,” they wrote, “Teacher unions, quite vociferously.”

Herein lies the hope for those who still believe that achieving quality education is a nonpartisan concern. Because conscientious people can disagree on issues of abortion, affirmative action, marriage equality, rent control and sanctuary cities, but still vociferously agree that the California Teachers Association is an out-of-control behemoth with a record of placing the interests of bad teachers ahead of the interests of school children.

Someday liberals, along with reticent conservative allies, will join with more outspoken reformers in admitting that nearly every problem in our public schools are merely symptoms, and that the rotten illness at the core is the teachers union. When that day comes, there will be hope for our children, and the future of California.

 *   *   *

Ed Ring is the president of the California Policy Center.

Property Taxes to Increase by 13 Percent in Coming Year

In Chicago, escalating property taxes are headline news.  With the average property tax bill due to go up by 13 percent – and more increases in subsequent years virtually guaranteed – home ownership in the Windy City is in deep peril. No one seems happy except the moving companies.

This drastic tax increase is the result of bad decisions by corrupt officials who have caved to city employee pension demands that are unsustainable without massive borrowing. And that borrowing will be paid for by massive property tax hikes. But if homeowners are considering fleeing exorbitant taxation, they may have to travel a good distance. Illinois residents, even without the Chicago pension tax, are already paying the highest effective property tax rate in the nation at 2.67 percent, according to a recent study by CoreLogic, an Irvine, California-based provider of data to the financial and real estate industries.

Nationally, the study shows the median property tax rate is 1.31 percent of value.

In addition to Illinois, states with median property tax rates of greater than two percent include New York, New Hampshire, New Jersey, Texas (which some may find surprising considering its reputation as a low tax state), Connecticut and Pennsylvania. On the low end is Hawaii at 0.31 percent.

California, at 1.12 percent, ranks 30th compared to other states. Tax seeking politicians and their special interest allies will likely consider this a failure. After all, thanks to them, California has the highest state sales tax, highest marginal income tax rates and, due to carbon charges, the highest gas levies in the nation. “Why shouldn’t we be number one in every tax category?” they are, no doubt, asking themselves.

California property tax rates are reasonable for one reason and one reason only – Proposition 13. Arguably the most famous of all initiatives in the history of the United States, Prop. 13 was the brainchild of the late Howard Jarvis. He led the effort to put the tax limiting measure on the ballot where it was approved by nearly two-thirds of California voters in 1978. By limiting annual property tax hikes to two percent per year, it made tax bills moderate and predictable.

Still, California property taxes are not low. Because of high property values, the median priced home now costs nearly $519,000 according to the California Association of Realtors. Thus, while our effective tax rate ranks 30th of the 50 states, when measuring property tax revenues per capita, we rank 14th. This belies government complaints that California is starved for property tax revenues.

Proposition 13 protections should not be taken for granted. Consider the cities of Stockton, Vallejo and San Bernardino which were driven into bankruptcy by officials who, like Chicago’s aldermen and mayor, agreed to inflated and unsustainable pension benefits for government workers. The difference is that Proposition 13’s tax limiting provisions prevent California cities and counties from arbitrarily increasing property taxes. At least for now.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

Union In The News – Weekly Highlights

In Step with California’s Evolving Energy Policy, PG&E, Labor and Environmental Groups Announce Proposal to Increase Energy Efficiency
By Pacific Gas and Electric Company, June 21, 2016, Business Wire
Reflecting California’s changing energy landscape, PG&E today announced a Joint Proposal with labor and leading environmental organizations that would increase investment in energy efficiency, renewables and storage beyond current state mandates while phasing out PG&E’s production of nuclear power in California by 2025. The Joint Proposal would replace power produced by two nuclear reactors at the Diablo Canyon Power Plant (DCPP) with a cost-effective, greenhouse gas free portfolio of energy efficiency, renewables and energy storage. (read article)

Perfect storm rains money on California legislative races
By Laurel Rosenhall, June 20, 2016, CALmatters
Some of the outsized money spent on California legislative races this year came pouring through the mail slot of voter Michael Johnson’s home, arriving in the form of two or three glossy ads a day in advance of the June primary. Most of the ads weren’t from candidates. They were from interest groups that have business before the Legislature, running their own campaigns to elect a favored Assembly contender. “Literally this felt like an election not between these candidates but between these special interests,” said Johnson, a former health insurance director who lives in Hollywood. Interest groups have more at stake this year than usual, and they are spending accordingly. (read article)

Justices rap Labor Dept. over change in overtime pay rules
By Editing Team, June 20, 2016, Albany Times Union
The Supreme Court ruled Monday that the Labor Department must do a better job of explaining why it is changing a longstanding policy on whether certain workers deserve overtime pay. The justices asked a lower court to take another look at whether federal law allows the agency to require overtime for people working as service advisers at auto dealerships. The 6-2 ruling came in a case involving Encino Motorcars, a California auto dealership that claims its service advisers are similar to car salesmen or mechanics who are exempt from overtime requirements under the Fair Labor Standards Act. A federal district court sided with the dealer. But the federal appeals court in San Francisco deferred to a 2011 Labor Department rule stating that service advisers are not exempt from overtime. (read article)

Grocery workers union votes to strike during labor talks
By Jeffrey Thomas DeSocio, June 20, 2016, FOX 11 Los Angeles
Unionized grocery workers across Southern California will cast ballots Monday in a strike-authorization vote as labor negotiations drag. Thousands of members of the United Food and Commercial Workers Local 770 will cast ballots throughout the day. If the workers vote in favor, it does not necessarily mean a strike will be held, only that the union’s leaders have the backing of members to call for a walkout if a deal can’t be reached. Voting is expected to begin at 8 a.m. and continue to 8 p.m. The union represents workers for Ralphs and Albertsons — including Vons, Pavilions and Safeway. Ralphs officials said the company is hopeful of achieving a labor deal. (read article)

California Democratic Party Supports Legalizing Marijuana
By Chris Jennewein, June 20, 2016, Times of San Diego
The California Democratic Party‘s executive board voted Sunday to support a measure expected to be on the November ballot that would legalize marijuana and hemp. The board voted to support measures on the November ballot that would repeal the death penalty and replace it with life imprisonment without the possibility of parole for convicted murders and increase the required vote to two-thirds for the Legislature to amend a law related to federal Medi-Cal matching funds. The board also voted to support a $9 billion bond measure for elementary, middle school, high school, charter school, vocational education and community college facilities on the November ballot. (read article)

Labor union declares newspaper downsizing due to ‘right wing plot’
By Rick Moran, June 19, 2016, American Thinker
The Communications Workers of America (CWA) is one of the most far left labor unions in the country, having supported the idea of “community radio stations” and a “living wage.” Now, a petition on the union’s website accuses a large media company of taking part in a “far right conspiracy” because the newspapers owned by the company are downsizing. The Communications Workers of America is fighting efforts to cut staff at the Denver Post and other newspapers by accusing Alden Global Capital, which controls Digital First Media, of a “far-right” conspiracy that involves jettisoning unfriendly reporters. (read article)

Major Labor Group to Endorse Clinton as Sanders Holdouts Dwindle
By Alex Seitz-Wald, June 16, 2016, NBC News
The AFL-CIO is set to endorse Hillary Clinton Thursday, but a handful of unions within the massive labor federation are holding out support for the presumptive Democratic nominee and instead backing Bernie Sanders – with some even vowing to stick with her challenger until the bitter end. The executive committee of the AFL-CIO, which represents more than 12 million active and retired workers, will vote on a presidential announcement during a meeting at its headquarters in Washington, D.C. Sanders has refuses to concede the race, but Clinton is expected to easily secure the necessary support from the federation’s 56 affiliate unions to win the endorsement — including from several that had previously backed Sanders. (read article)

The fight isn’t over for farm worker overtime
By David Bacon, June 17, 2016, Peoples World
For the state’s first hundred-plus years, certain unspoken rules governed California politics. In a state where agriculture produced more wealth than any industry, the first rule was that growers held enormous power. Tax dollars built giant water projects that turned the Central and Imperial Valleys into some of the nation’s most productive farmland. Land ownership was concentrated in huge corporate plantation-like farms. Agribusiness kept farm labor cheap, at wages far below those of people in the state’s growing urban centers. When workers sought to change their economic condition, grower power in rural areas was near absolute-strikes were broken and unions were kept out. (read article)

California Legislature approves $171 billion state budget
By Chris Megerian, June 15, 2016, Los Angeles Times
With concerns about the potential for another recession casting a shadow over this year’s budget negotiations, California lawmakers approved a new $170.9-billion spending plan on Wednesday that increases some funding for social services but stashes more away in a rainy-day fund. Although lawmakers are finishing their work on this year’s budget, some of the most consequential decisions for the state’s financial future may not be made until the November election. Voters will likely be asked whether to extend higher taxes on the wealthy, increase the levy on cigarettes or borrow billions of dollars to build and renovate schools. (read article)

California’s Bullet Train Was Born Doomed And Will Never Be Completed
By Chuck DeVore, June 15, 2016, Forbes
In November 2008 California voters approved borrowing $10 billion to build a high-speed rail system from San Francisco to Los Angeles. In the official ballot pamphlet, proponents claimed that the rail project would be funded with a combination of federal dollars and private investment “WITHOUT RAISING TAXES.” Now, almost eight years later, not a penny of private money has been secured, federal funds are increasingly scarce, and California tax money is drying up as well, meaning that the project will never be completed. California’s high-speed rail project is a textbook case of crony corporatism—where powerful interests convince lawmakers to bestow valuable favors at taxpayer expense. The ballot initiative had been scheduled for the 2004 election, but was delayed twice by liberal lawmakers over fears that California voters, concerned for the state’s often precarious finances, would reject the project as a costly luxury. (read article)

Slow job growth, Brexit vote make Federal Reserve cautious about hiking interest rate
By Jim Puzzanghera and Don Lee, June 15, 2016, Los Angeles Times
Federal Reserve policymakers on Wednesday held a key interest rate steady to take more time to determine if a surprising slowdown in job growth last month was an anomaly or a warning sign of trouble ahead for the U.S. economy. Fed Chairwoman Janet L. Yellen also said officials were worried about the potential economic effect of next week’s vote by Britain on whether to remain in the European Union. A decision to exit the EU – dubbed Brexit – could rattle financial markets. Still, Yellen tried to convey continued optimism about the U.S. economy, saying a rate hike could come as soon as next month if job growth rebounds. (read article)

US Department of Labor Asking Federal Court to Order New Election of Leadership at WMATA’s Major Union
By Scott MacFarlane, June 14, 2016, NBC Washington
The U.S. Department of Labor is asking a federal court to order a new election of union leadership at WMATA’s major union, the Local 689 Amalgamated Transit Union. The agency is questioning the legitimacy of the process used to elect union leaders in December 2015, which re-elected union president Jackie Jeter. The Department of Labor alleges Local 689 failed to allow other candidates a proper opportunity to run for her job. The Department of Labor, in court filings Tuesday, said Local 689 membership sought and voted to hold a re-election for leadership positions in January 2016, but were denied the opportunity to do so. The federal government is asking the court to order a re-vote for union leaders, personally supervised by the U.S. labor secretary. (read article)

 

How Gov't Unions and Crony Capitalists Exploit Global Warming Concerns

If anyone is looking for evidence that government unions use their immense influence to support the growth of an authoritarian state, look no further than their unequivocal support for global warming “mitigation,” and all attendant agencies and laws to support that goal.

In 2006 California’s union-controlled legislature passed AB32, the “Global Warming Solutions Act,” a measure that was touted as a trailblazing breakthrough in the dire challenge to avoid catastrophic climate change. The premise behind AB32 is that CO2 is a dangerous pollutant, and that eliminating CO2 emissions is necessary to prevent the planet’s climate from overheating, with all the apocalyptic consequences; rising oceans inundating coastal regions, epic droughts cascading through the world’s fragile forests and killing them, extreme storms, acidic oceans, collapsing agriculture – the end of life as we know it.

Maybe that’s true – and maybe not – but how it’s being managed is a corrupt, misanthropic, epic scam.

If anyone is looking for evidence that government unions and crony capitalists work together – contrary to the conventional wisdom that presents the appearance that they are in conflict – again look no further than their shared support for global warming mitigation, expressed in the legislative mandate to reduce CO2 emissions. AB 32 implements this by forcing industrial entities to purchase permits to emit progressively smaller quantities of CO2, via an auction process that is expected to raise $20 billion per year to finance renewable energy investments.

Think about how government unions will benefit from all this money:

  • Transit workers will claim a share because they will be getting cars off the road.
  • Firefighters will claim more fires are because of global warming and demand more funds – when in reality most severe wildfires are the result of decades of forest mismanagement and unwarranted wildfire suppression.
  • Cities will qualify for proceeds when they zone extremely high density housing.
  • Code enforcement officers will declare that the percentage of their jobs oriented towards conservation and energy/water efficiency qualifies them for a share of the proceeds.
  • Teachers will declare that the percentage of their curricula oriented towards climate education qualifies them for a share of the proceeds.
  • More generally, municipalities will collect more property tax as restrictive zoning elevates the cost of housing.

Think about how crony corporations and corrupt financial special interests benefit from this money:

  • Wall Street traders will set up new subsidiaries to traffic in carbon emission auctions and take a cut.
  • “Green” entrepreneurs will manufacture devices calculated to save energy and water – despite the fact that the shortages are contrived.
  • Producers of energy and water will sell at higher prices since competitive development of these resources is restricted.
  • Utilities whose profits are “decoupled” from the quantity of energy and water they deliver will increase revenue and hence their profit margins which are pegged to revenue, without having to increase services.
  • Manufacturers of noncompetitive products with no natural demand – high speed rail is a perfect example – are enriched via hundreds of billions of investment for their supposedly greener and cleaner solutions.
  • More generally, artificial scarcity causes asset bubbles which benefits wealthy investors and pension funds, but impoverishes ordinary workers.

Even if CO2 is a threat to life on earth, there is an alternative that merits discussion:

Instead of investing in “green” energy infrastructure and embedded surveillance systems to micro-manage energy consumption, California should be investing in natural gas and 5th generation nuclear power stations, desalination plants along the coast, liquid natural gas terminals, efficiency upgrades to existing high-voltage transmission lines, run-off harvesting and aquifer storage systems, upgraded aqueducts, comprehensive waste-water treatment and aquifer recharge, offshore drilling for oil and gas, widened roads and freeways, more airport runways, and buses for mass transit. These steps will result in energy, water and transportation costing everyone in California less. This will benefit businesses and consumers, and make California a magnet for investors and entrepreneurs all over the world.

And even if CO2 is a threat to life on earth, vigorous debate on that topic should be encouraged, not outlawed.

If you are an informed skeptic – something the axis of government unions and powerful financial special interests are trying to outlaw – it becomes tiresome to recite the litany of legitimate reasons that debate regarding the actual impact of anthropogenic CO2 is of critical importance. The primacy of solar cycles, the multi-decadal oscillations of ocean currents, the dubious role of water vapor as a positive feedback mechanism, the improbability of positive climate feedback in general, the uncertain role (and diversity) of aerosols, the poorly understood impact of land use changes, the failure of the ice caps to melt on schedule, the failure of climate models to account for an actual cooling of the troposphere, the fact that just the annual fluctuations in natural sources of CO2 emissions eclipse estimated human CO2 emissions by an order of magnitude. And let’s not forget – California only is responsible for 1.7% of global anthropogenic CO2 emissions. Does any of this matter to the California Air Resources Board?

Apparently not. Nor does it matter to California’s legislature, which recently stopped just short of passing Senate Bill 1161, the Orwellian California Climate Science Truth and Accountability Act of 2016. SB 1161 would have authorized prosecutors to sue fossil fuel companies, think tanks and others that have “deceived or misled the public on the risks of climate change.”

What California’s legislature ran up against, of course, was the U.S. Constitution. Perhaps they believe time is on their side. After all, even the Scalia court ruled in 2007 that CO2 is pollution, in one of the most frightening inversions of reality in U.S. history. Imagine what a court packed with Clinton appointees will come up with.

The failure to deploy clean fossil fuel solutions in the developing world, much less here in California, condemns billions of humans to further decades of poverty, misery, and unchecked population growth. Cheap energy equals prosperity equals population stabilization. Until a few years ago that hopeful process was inexorable. But in recent years, somewhere on the shores of Africa, cost-effective industrial development ran into global warming’s global mafia and was stopped in its tracks.

The consolidation of power inherent in government suppression of energy development and micromanagement of energy consumption is not only a recipe for a corporate union police state in America. It is a recipe for systemic oppression of emerging societies across the world. At the very least, the debate must continue.

 *   *   *

Ed Ring is the president of the California Policy Center.

As Right-to-Work Expands, So Do Union Membership Rolls

Editor’s note: This is an edited version of an article first published in the Washington Examiner on May 4, 2016 under the title, “Right-to-work strengthens workers.”

In March, the United Auto Workers reported that its membership grew 1.3 percent in 2015. This may come as a surprise to some because a substantial number of UAW members work in right-to-work states like Michigan. But the report highlights something worker-freedom supporters — and even some UAW officials — already knew: Right-to-work can be good for unions.

A recent report from the U.S. Bureau of Labor Statistics showed that in 2015, unions in what were then 25 right-to-work states gained more members than in states without the law. Membership increased by 125,000 in right-to-work states and only 91,000 in non-right-to-work-states and Washington D.C.

 

Statistics show that union membership grew more in right-to-work states than in other states.

Statistics show that union membership grew more in right-to-work states than in other states.

 

These gains come despite the fact that non-right-to-work states have over 7 million more workers than right-to-work states, according to the BLS report. The Illinois Policy Institute reports that this may be part of a long-term trend and not a one- or two-year fluke. Between 2005 and 2015, union membership grew in right-to-work states by about 1.3 percent, but fell around 9 percent in non-right-to-work states.

Six of the 10 states with the biggest increases in union membership were right-to-work. Overall, union membership increased in 16 of the nation’s 25 right-to-work states in 2015. In contrast, nine of the 16 states with shrinking membership still permit unions to collect involuntary dues or fees.

Even in states that have most recently enacted right-to-work, figures from the BLS sharply contrast with activists’ earlier warnings that unions would be devastated. For example, Michigan’s right-to-work law went into effect in early 2013 — and unions gained members that year. Membership did decline in 2014, but in 2015 unions in the state added 36,000 members. In nearby Indiana, union membership did fall last year, but there are still 37,000 more union members there than when right-to-work took effect in 2012.

So how does one explain this, especially considering that today’s unions are opposed to right-to-work laws? First, it’s important to remember that right-to-work laws do nothing to diminish a union’s ability to organize a workplace or a worker’s ability to become a union member and pay dues. If employees feel that they can achieve better wages, benefits and working conditions through a union, no right-to-work law will stand in the way of them signing up for one.

It may be that right-to-work actually makes unions stronger, because unions can no longer force all workers to financially support them. To win new members and keep current ones, unions in right-to-work states need to be more attentive and responsive to what workers care about most. In some ways, these unions face similar incentives to meet workers’ needs as any other business in the service industry does.

The UAW Secretary-Treasurer, Gary Casteel, found that Right-to-Work assisted his union recruitment efforts.

 

Some union officers even say right-to-work helps their recruitment efforts. Gary Casteel, now the UAW secretary-treasurer, said in 2014, when he was in charge of organizing Southern auto plants, “This is something I’ve never understood, that people think right-to-work hurts unions.”

“To me,” he continued, “it helps them. You don’t have to belong if you don’t want to. So if I go to an organizing drive, I can tell these workers, ‘If you don’t like this arrangement, you don’t have to belong.’ Versus, ‘If we get 50 percent of you, then all of you have to belong, whether you like to or not.’ I don’t even like the way that sounds, because it’s a voluntary system, and if you don’t think the system’s earning its keep, then you don’t have to pay.”

UAW President Dennis Williams has echoed these sentiments, telling the Detroit News, “I’ve always believed that if you do your job representing people, that people will be there to support you.”

Whether it’s by making the argument to organize new companies easier, as Casteel suggests, or simply because right-to-work states have faster job growth that leads to more opportunities for union jobs, unions are doing better in these states.

All these examples suggest that right-to-work can strengthen unions. It appears to do so by restoring unions’ incentive to earn dues the old fashioned way: by demonstrating their value to potential members, just as any other voluntary membership organization must do.

About The Author: F. Vincent Vernuccio is director of labor policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Michigan. Nathan Lehman, a 2014 research intern with the Center, contributed to this article. This issue originally appeared in the August 2014 issue of Labor Watch and is republished here with permission.

Union In The News – Weekly Highlights

$450K Cap Proposed on Hospital CEO Salaries in California
By Michelle Leming, June 14, 2016, NPQ
One of America’s largest labor unions is taking a third attempt at capping hospital CEO salaries. The latest proposal by Service Employees International Union (SEIU)-United Healthcare Workers West would give authority to the California attorney general’s office to oversee a salary ceiling equal to the compensation of the President of the United States, or $450,000 a year. However, unlike the U.S. president’s total package, which also includes housing, a personal chef, transportation, and so on, the proposed compensation cap for California hospital CEO’s is all-inclusive. According to a letter from the Legislative Analyst’s Office (LAO) to California’s Attorney General Kamala Harris, the regulation would apply to the state’s private for-profit and nonprofit hospitals, as well as district hospitals. The AG’s office would have the authority to pull nonprofit status and/or enforce civil penalties up to $200,000 on hospitals found to be out of compliance. (read article)

California maintenance union pact costliest since at least 2005

By Jon Ortiz, June 14, 2016, Sacramento Bee
A tentative labor contract for California’s state craft and maintenance workers hikes costs to taxpayers more than any deal bargained by the union in at least 11 years, according to a new report by the non-partisan Legislative Analyst’s Office. The pact with International Union of Operating Engineers Bargaining Unit 12, adds a total $473 million over four years to the state’s pay and benefits costs, the analyst’s office estimates. The figure includes increased pension, health care and other costs for the roughly 11,000 employees in Bargaining Unit 12 from July 1, 2016 to July 1, 2019. In sum, the analyst wrote, “this agreement would increase annual state costs more than any of the Unit 12 agreements ratified since at least 2005 (when the Government Code was changed to require our review of labor agreements).” (read article)

U.S. Labor Secretary alleges Metro union elections were a fraud, demands new vote
By Faiz Siddiqui, June 14, 2016, The Washington Post
U.S. Secretary of Labor Thomas E. Perez is demanding the union representing Metro workers conduct new officer elections, alleging candidates were improperly steered away and the integrity of the December vote was compromised, according to documents filed in federal court Monday. Amalgamated Transit Union Local 689, which represents more than 12,000 Metro workers, is named as the defendant in the civil suit, which raises questions about the validity of the union elections conducted Dec. 2. In the suit, Perez alleges that the union did not uniformly apply its qualification requirements to all candidates, says members who were ineligible to vote were permitted to do so, and that ballots of eligible members were not counted. The suit also alleges that the union violated its own bylaws by failing to give members proper notice of the elections; notifications were not mailed to their home addresses at least 15 days in advance of the vote, the suit says. (read article)

Labor Department Seeks to Protect Regulation From Red State Onslaught
By Sam Sacks, June 14, 2016, Truth-Out
The Obama administration is asking a federal judge to throw out a challenge brought by ten states against a new labor regulation that will force union busters out of the shadows. Finalized in April by the Department of Labor, the “Persuader Rule” is under assault in federal court, where several Republican-led states, are seeking an injunction against it. According to a brief filed last week, the department argued that the state interveners claims should be rejected, and the regulation preserved. “The public interest would be undermined if the Court were to enjoin a rule that seeks to bring greater transparency to attempts to influence employees’ decisions about whether to organize and bargain collectively,” the filing reads. The persuader rule clarified a portion of the 1959 Labor-Management Reporting and Disclosure Act (LMRDA), which required businesses to inform the public whenever they sought the help of an outside firm to squash an organizing drive. (read article)

Labor agreement divides Kern oil fields
By John Cox, June 11, 2016, The Bakersfield Californian
A senior executive with one of Kern County’s largest oil producers sat on stage in front of hundreds of his peers, chatting with a prominent congressman, when someone from the audience put him on the spot. Why, he was asked at last fall’s West Kern Petroleum Summit, did his employer, California Resources Corp., sign an exclusive labor agreement with union organizations? CRC Executive Vice President Bob Barnes fidgeted nervously and stumbled over his words as he explained the pact was intended to secure not only a quality workforce but also the “political power” labor unions bring to the table. Although the agreement was unremarkable in some ways — it wasn’t unheard of in Kern’s oil industry, where union members have long worked alongside non-union laborers — Barnes’ visible discomfort that day was an indication of how controversial the agreement had become. Managers at some local oil service companies have complained privately that the arrangement rolled out last year unfairly discriminates against non-union contractors and workers. (read article)

Labor Supporters Want Sanders to Stay in Race, for Now
By Chris Opfer & Michael Rose, June 10, 2016, Bloomberg BNA
Hillary Clinton may have wrapped up the Democratic presidential nomination and secured an endorsement from the current commander-in-chief, but Sen. Bernie Sanders’s supporters in the labor community aren’t ready for him to give up his White House bid just yet. The run of Sanders (I-Vt.) for the Democratic nomination has divided labor groups and helped push Clinton on issues critical to unions, such as trade policy, minimum wage and banking and investment reform. Some of Sanders’s labor supporters told Bloomberg BNA they’d like to see him ride that momentum to the Democratic convention to help shape the party’s platform. (read article)

MBTA union not happy with changes to attendance policy
By Adamn Vacarro, June 9, 2016, Boston.com
The MBTA’s largest labor union is challenging changes to the agency’s attendance policy that the T says have helped cut down on absenteeism and overtime spending this year. The Boston Carmen’s Union, Local 589, which represents more than 4,000 T employees, filed a grievance with the T’s labor relations office in December, before the new rules took hold in January. The union put the grievance on hold to negotiate with management over the issues, but decided to advance it late last week. The grievance pointed to several changes the union took issue with. Under the new policy, employees must use FMLA concurrently with their paid leave. So if an employee is granted unpaid leave under the federal act, they must use their paid vacation and sick days while on leave. In the past, employees qualified for FMLA could use it separately from their paid time off, keeping sick and vacation days in the bank. (read article)

U.S. appeals court upholds ‘quickie’ union election rules
By Daniel Wiessner, June 10, 2016, Reuters
A U.S. appeals court on Friday dismissed a bid by construction trade groups to block controversial Obama administration rules designed to speed up union elections, saying the National Labor Relations Board had broad authority to implement them. The Texas-based 5th U.S. Circuit Court of Appeals rejected claims by Associated Builders and Contractors Inc and a Texas chapter that the so-called “quickie” election rules violated employers’ free speech rights and would lead to union harassment of workers. “The board … conducted an exhaustive and lengthy review of the issues, evidence and testimony, responded to contrary arguments, and offered factual and legal support for its final conclusions,” Circuit Judge Edith Brown Clement wrote. The rules, which took effect in April 2015, have shortened the period between a union filing a petition to represent workers and an election, from the previous median of 38 days to as little as two weeks. Under the rules, employers cannot bring legal challenges to the way union campaigns are conducted until after an election and are required to share workers’ names and contact details with unions once they file election petitions. (read article)

Labor contract talks between state government and its largest union progressing, officials say
By Jan Murphy, June 9, 2016, Pennlive.com
Progress continues to be made in contract talks with the largest state government employee union, one of 14 labor unions representing commonwealth workers with pacts expiring at the end of the month, union and commonwealth officials say. Neither Gov. Tom Wolf’s administration or American Federation of State, County and Municipal Employees Council 13 officials would disclose details about the talks or elaborate much beyond that general characterization of their status. However, AFSCME 13’s executive director Dave Fillman expressed optimism that a deal can be reached by June 30. Moreover, he said the union isn’t alone in wanting to see that happen. “The commonwealth is anxious also to get it done,” Fillman said. (read article)

Stuck Between Clinton And Trump: Rust Belt Union Voters Face A Tough Choice

By Don Gonyea, June 9, 2016, NPR
The battle between Hillary Clinton and Donald Trump for the White House is likely to center on the Rust Belt — the industrial Midwest where trade is a big issue for many voters and where the presumptive Republican nominee is predicting he will be able to cut into the Democratic Party’s traditional dominance among members of labor unions. A key part of Trump’s pitch on the campaign trail focuses on the trade deals that he says have hurt the U.S., and with the general election contest now taking center stage, that part of his message is resonating with a lot of union workers — even longtime Democrats. At the regular monthly meeting of Local 1123, union officials were talking about the need to mobilize on behalf of candidates who support labor’s agenda on trade, the right to organize and pushing for an increase in the minimum wage nationally. (read article)

Uber Disrupts Organized Labor and a Union may get More Dues Paying Members
By F. Vincent Vernuccio, June 8, 2016, Huffington Post
While disrupting the car-for-hire industry with its ride-sharing app, Uber created a new level of job flexibility and choice for the people who drive for them, allowing drivers to set their own hours and essentially be their own bosses. And now, Uber is doing something similar to the standard union model. In early May, Uber announced it had reached a deal with the International Association of Machinists District 15 to form the Independent Drivers Guild for New York City’s 35,000 Uber drivers. What makes the Guild interesting is, although organized by a large labor union, it won’t look much like a typical union. (read article)

 

Californians Overwhelmingly Support New Local Bonds and Taxes

Two weeks ago, using information supplied by the California Taxpayers Association, we called attention to “$6.2 Billion in New Borrowing on June 7th Primary Ballot.” As noted, “Next week voters will be asked to approve 46 local bond measures totaling $6.18 billion in new debt, along with 52 local tax proposals. If history is any indication, more than 80% of them will pass.”

So how did they do?

The following table shows the results so far. With bonds, the trend is clear – they nearly all still pass. That’s partly because school bonds only require a 55% majority to pass, whereas with most tax increases, passage still requires a two-thirds vote. And while the rate of passage is lower for tax increases, the latest election shows two out of three passing.

Local Tax and Bond Ballot Propositions – June 7th 2016
Status of passage as of June 14th, 2016
20160614-UW-RingCalTaxVoteChart1

The data after one week, as shown, indicates that if the “too close to call” decisions end up splitting at the same ratios as the already decided propositions, 66% of the tax proposals will pass, and a whopping 93% of the bond proposals will pass.

Why?

To answer this question, here are some comments from Jon Coupal, head of the Howard Jarvis Taxpayers Association, one of the largest and most effective taxpayer organizations in the U.S. He listed a few key reasons:

(1) The true tax impact is not evident from the ballot label.

(2) There is a lot of voter of misunderstanding about how much money we already spend on education. Very few Californians realize we spend, at a minimum, 40% of our general fund budget on education.

(3) Local taxpayers don’t have nearly the resources or the sophistication to run big campaigns against the teachers unions and the construction industry.

(4) Many times, these proposals are placed on the ballot in a way to ensure there is no opposition argument – for example, they are added when there are only 72 hours left to get an opposing argument submitted. Procedural rules are manipulated to suppress opposition.

When asked how this could change, Coupal did not seem optimistic, but had a few suggestions. He noted that his organization and other reform groups are supporting bills to require greater transparency on taxes and bonds. In particular, he stressed the need for more public disclosure of the financial impact. Coupal also mentioned the need for more public education, stating that “voters don’t understand that when people say it’s for the kids, it’s actually for the unions.

With what data is available, it’s interesting to review some of the tax proposals that did not pass. The following table shows the proposed tax increases that voters turned down on June 7th:

Failed Local Propositions to Increase Taxes – June 7th 2016

20160614-UW-RingFailedTaxes

Without dissecting the specific campaign dynamics, voter demographics, and other particular conditions in each case, there isn’t a clear indication why some local tax proposals failed, while two-thirds of them passed. One of the most expensive of all proposed parcel taxes, failed Measure C-16 in San Luis Obispo County’s Cayucos Fire Protection District, would have increased the annual assessment per house for fire protection services from $100 to $500. On the other hand, thrifty voters in Siskiyou County rejected a parcel tax that would have only cost each household $5 per year.

Similarly, when it comes to failed proposals to increase sales taxes, there is no common theme in the data. The failed proposals ranged from an increase of an eighth of one percent to a full percent, which mirrored the range of the measures that passed. The explanations from proponents were various, including public safety, general services, road and transit upgrades, and library services. Interestingly, two of the failed tax increases, in Napa and Solano counties, only required a majority vote.

Ultimately, despite California’s sporadically rebellious populace when it comes to new state taxes – Propositions 1A through 1E on the state ballot in 2009 were all rejected by voters – their track record on local taxes and bonds remains consistently pro-tax. Voters need to realize that local tax increases do not begin to cover already scheduled increases to pension fund contributions, to fund pension benefits that are – even for non public safety – two to three times more generous than Social Security. Voters need to realize that school bond measures are usually to fund work that used to be paid for out of operating budgets, before the pension and compensation commitments got out of control.

And behind these hidden agendas impelling new tax increases, behind every broken budget and faltering service, voters need to understand that government unions are the cause.

*   *   *

Ed Ring is the president of the California Policy Center.

Labor Backed Prop. 30 Extension Represents CA Taxpayer-Funded Bailout

Perhaps the best decision California voters can make at the polls this November is to vote “NO” on the initiative extending the Prop. 30 temporary tax increases that expire in 2018.

Why?  The short answer is that extending the Prop. 30 tax extensions effectively bails out California State Democrat politicians for their inability to take any steps to curb spending and prepare for the expiration of the Prop. 30 tax increases.

On the contrary, the California Democrat Legislature has taken it upon itself to break all the significant promises it made to sell Prop. 30 to voters in 2012, and now most Democrat politicians want voters to approve another 12-year extension to cover huge program expansions and out of control government spending.

Not to mention, the initiative comes with a price tax of nearly $10 billion in increased taxes ($1.5 billion from the ¼ cent sales tax increase, and $6 to $8 billion in income taxes through three new tax brackets).

Governor Jerry Brown (D) has done the right thing so far by refusing to endorse the initiative that would extend the Prop. 30 tax extensions, saying that the tax increases were intended to be “temporary.”  But I have not heard any other Democrat politician come out against the Prop. 30 extensions, far from it, nearly all California State Democrat politicians want the measure to pass, according to inside sources.

In 2012, the whole argument in support of Prop. 30 was based on a “don’t close the Washington monument” strategy by proponents who said that the “temporary” measure was needed to prevent deep budget cuts to schools and public safety.

 

Gov. Jerry Brown openly stated at a Sacramento News Conference, “I said that’s a temporary tax,” when asked if he would push to extend Prop.30.

 

But once the Prop. 30 tax revenues came flooding in California Democrat Legislators have done nothing but spend and expand permanent government programs without regard for the stated “temporary” nature of the tax increases.

A few sets of numbers tell the whole story.  Prop. 98 education spending has jumped from $47.3 billion in 2011-12 to $71.9 billion in 2016-17—a 52% increase in education spending on only five years despite very nominal public school enrollment growth.

In 2011-12, total State of California spending was $129 billion, with $86 billion of that money being General Fund spending.

By 2016-17 total State of California spending had climbed to $173 billion—an increase of 34% since 2011-12—while California General Fund spending increased to $122.1 billion in 2016-17—an increase of 42%, according to the Governor’s proposed May Revise (Note: assumes final 2016-17 budget will spend roughly what the Governor has proposed).

California General Fund reserves have increased from $543 million in 2011-12 to a proposed $6.7 billion in 2016-17 under the Governor’s May Revise.

The Governor’s May Revise attributes the steep spending increases in recent years to a massive expansion of the welfare state, particularly Medi-Cal, and outlines $19.5 billion in increased state spending that has been spent since 2012 to dramatically expand the welfare state.

California State spending has skyrocketed since 2012 by more than 40-50% on education, public safety and other state programs, and now the California Democrat Legislature believes we need to make the tax increase permanent to pay for all the new spending.

Don’t believe this “false narrative,” California has a “spending problem,” not a “revenue problem.”

To recap, in 2011-12 the State Legislature only had $87 billion in General Fund resources available to spend, by 2016-17 that figure had jumped to $125 billion—that’s an increase of $38 billion annually or a 44% increase in money available to spend in just five years.

The Prop. 30 tax extensions only brought in about $8 billion annually—leaving about $30 billion in annual money available in 2016-17, compared to 2011-12, that the California Democrat-controlled Legislature should have managed more responsibly to prepare for the expiration of the Prop. 30 tax increases.

Voting to extend the tax increases only serves to reward California Democrat politicians for “broken promises” and a refusal to properly manage the taxpayer dollars which have flooded into Sacramento since 2012.

About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change.

Union In The News – Weekly Highlights

Rift Between Unions, Democratic Party Is Not Just Awkward As Campaign Season Nears
By Dan Haar, June 6, 2016, Hartford Courant
Sometime in the next couple of days, Sen. Danté Bartolomeo will sit in a closed room with leaders of the AFL-CIO. The Meriden Democrat will ask the labor coalition to endorse her for re-election and send union troops to her district this fall, just like two years ago, and two years before that. Bartolomeo joined the vast majority of Democrats who voted in favor of the recently adopted state budget for the coming fiscal year. The vote on the $19.8 billion budget is not the only factor in the unions’ grades for each legislator. But it was the final exam, and just about everyone failed as far as the unions are concerned. For the unions, that presents a brutal dilemma that will climax Friday morning, when delegates to the state AFL-CIO convention in Hartford will decide on candidates, one at a time. A two-thirds vote brings coveted endorsement, with access to phone banks, door-to-door ground support and union-financed mailers. If they support their Democratic allies as usual, then what do they stand for? (read article)

Unions’ fight against affordable housing
By Michael Saltsman, June 5, 2016, The OC Register
Gov. Jerry Brown recently proposed reforming the state’s California Environmental Quality Act by allowing new housing projects with at least 20 percent on-site affordable housing to bypass the law’s cumbersome environmental impact process and be approved “as of right.” In short, projects meeting the affordable housing threshold would be approved without review by local government entities and without being subject to citizen appeal. One would think that California’s labor unions would be quick to hail Gov. Brown’s reform. After all, construction means employment for many unions, and labor advocates used unaffordable housing prices as an argument for raising the minimum wage in cities like San Francisco. As is often the case, however, some unions chose political self-interest over the general welfare of their members and came out against Gov. Brown’s reform. (read article)

Special interests pour record $24 million into California lawmakers’ races
By The Associated Press, June 5, 2016, Press Enterprise
Special interest groups are pouring a record $24 million into California legislative races ahead of Tuesday’s primary election as they seek to influence the makeup of the Legislature. With Republicans often on the margins of California politics, some traditional GOP donors are throwing their money behind business-friendly Democrats. Instead of giving directly to candidates, groups representing oil companies, education interests, developers, and businesses are increasingly likely to make independent expenditures. Now traditional Democratic allies like labor unions, consumer attorneys and environmental advocates are dumping in their own money to counter the conservative swing. (read article)

What can labor learn from the Verizon strike?
By Lee Sustar & Alan Mass, June 3, 2016, Socialistworker.org 
IT’S A strike outcome that’s all too rare these days: A corporate powerhouse forced to drop sweeping union-busting demands by a solid strike of tens of thousands of workers with widespread public support. The question now is whether organized labor will follow the Verizon workers’ example and once again make the strike a weapon against the employers’ relentless attacks. The tentative agreement–between 39,000 members of the Communications Workers of America (CWA) and the International Brotherhood of Electrical Workers (IBEW) on one side and Verizon on the other—ended a 45-day strike, with the union successfully holding the line against many of the company’s harshest demands. The unions beat back the company’s demand to be able to send workers away from their home cities to work anywhere in the Verizon system for weeks at a time. (read article)

Climate Is Poised To Be A Divisive Issue For This Group Of Voters
By Samantha Page, June 3, 2016, Think Progress
After decades of political messaging about how clean energy would be an economic disaster, many people are skittish about changing the status quo — even if the status quo holds dire consequences for our economy, our health, and our way of life. But as the effects of climate change touch more and more people, some labor groups are making environmental issues a priority. CWA and other unions that are joining the chorus of voices calling for action on climate change represent an important shift for labor, which has historically been somewhat leery of environmental regulation. The Climate and Community Protection Act passed the Democrat-led Assembly this week and is now at the Republican-controlled State Senate. NY Renew, a coalition which brought together labor, climate, and social justice groups, helped pass the measure. The bill sets a goal of 50 percent renewable electricity generation by 2030 and focuses on clean energy job creation, particularly in disadvantaged communities. (read article)

Assembly kills bill to give California farmworkers overtime pay
By John Myers, June 2, 2016, Los Angeles Times

Legislation to give farmworkers in California additional overtime pay beginning in 2019 was rejected Thursday by the state Assembly. “Historically, farmworkers have been left out of equal protection under the law,” said Assemblywoman Lorena Gonzalez (D-San Diego). The final vote — which featured a number of Democrats either voting against the bill or abstaining — came after a long and emotional floor debate, watched closely by the agricultural industry and members of the United Farm Workers labor union. AB 2757 would have required overtime pay for agricultural employees, phased over three years. While those workers currently receive overtime pay after ten hours, the bill would have brought that down to an eight hour threshold over the three years. The bill would also have allowed for suspension of the overtime rules by the governor if California’s new minimum wage increase is also suspended due to an economic slowdown. (read article)

Labor Groups Are Taking On Walmart And McDonald’s. But Who Will Fund Their Fight?
By Dave Jamieson, June 2, 2016, Huffington Post
The company is also famously anti-union. The UFCW has never succeeded in unionizing any of Walmart’s U.S. workforce. So the union turned to organizing workers in a less traditional way. Even if it couldn’t unionize Walmart workers, the thinking went, the union still had an interest in pressuring Walmart to hike wages, since Walmart sets the tone for the entire brick-and-mortar retail sector. Rather than try to secure a standard union contract, OUR Walmart would pressure the company publicly into raising pay and offering employees better hours and benefits. The model is sometimes called a worker center or “alt labor” — as in, an alternative to traditional unionism. (read article)

Trump Continues To Win Support From Union Members — Labor Leadership Isn’t Happy
By Connor D. Wolf, June 2, 2016, Daily Caller
Union leaders are expressing concern over how much Republican presidential candidate Donald Trump appeals to unionized workers, according to reports Wednesday. National union leaders have adamantly opposed Trump over what they feel are extremist and bigoted views. The business mogul’s views on trade and immigration, alongside his decisive tone, has gained him significant support among workers. Union leaders are now concerned that they have lost their members to the outspoken candidate. National unions have overwhelming endorsed former Secretary of State Hillary Clinton for president. Wall Street Journal/NBC News polling data, however, shows Clinton and Trump both have 44 percent support among union households. AFL-CIO Political Director Mike Podhorzer notes union workers became less supportive once they learned where Trump stood on workplace issues. (read article)

MTS Strike Over; Union Workers Ratify Labor Contract
By Maggie Avanats, June 2, 2016, Coronado Patch
A week-long strike of more than 300 Metropolitan Transit System workers has ended. First Transit, the Cincinnati, Ohio-based company contracted to operate MTS Access services and 18 of 95 fixed-route MTS buses, announced Thursday that it has reached an agreement with Teamsters Local 542, the union representing the employees. “All union workers are scheduled to return to work on Friday, June 3, and full service will resume to all San Diego Metropolitan Transportation System para-transit and fixed-routes that First Transit operates,” said Jay Brock, spokesman for First Transit. Union members including bus drivers, service technicians and reservation-takers voted to ratify the contract Thursday. (read article)

Sanders accuses DNC of keeping labor union representation off platform committee
By Daniel Strauss,  June 1, 2016, Politico
Sen. Bernie Sanders lobbed another shot at the Democratic National Committee on Wednesday, charging that chairwoman Debbie Wasserman Schultz is keeping labor union members off the DNC’s platform drafting committee.”What we heard from the DNC was they did not want representatives of labor unions on the platform drafting committee. That’s correct. To the best of my knowledge,” Sanders said in Spreckels, California, during a news conference on fracking.The drafting committee, however, does have labor representation. Paul Booth of the American Federation of State, County and Municipal Employees union was on the list of names Hillary Clinton’s campaign submitted and the DNC approved. (read article)

Labor Department Issues Costly Overtime Rule
By Carl Horowitz, June 1, 2016, National Legal & Policy Center
The Obama administration sees it as the middle class getting a raise. The details suggest it’s a demotion. On May 18, the Department of Labor published a final rule hiking the annual income ceiling for overtime pay eligibility of salaried employees from $23,660 to $47,476. Set to go into effect December 1, the regulation would benefit an estimated 4.2 million workers. However, it also may produce unintended consequences such as: loss of scheduling flexibility; pay cuts; benefit cuts; fewer work hours per week; higher employer compliance costs; and needless litigation. A group of lawmakers, led by Sen. Tim Scott, R-S.C., and Rep. Tim Walberg, R-Mich., have responded with bills to nullify the rule and make it difficult for the DOL to offer a substitute. (read article)

New opposition to Chargers initiative
By David Garrick, June 1, 2016, San Diego Union Tribune
A group representing non-union construction companies and workers declared its opposition on Wednesday to a Chargers-sponsored citizens’ initiative for a downtown stadium and convention center annex. The group, the Coalition for Fair Employment in Construction, said its opposition was sparked by the team’s recent announcement it would partner with organized labor in a “project labor agreement” banning non-union construction workers on the $1.8 billion project. During a Kearny Mesa news conference, the group said such pacts, which have become increasingly common on large projects with lengthy construction time lines, are “kickback schemes” that often increase project costs and unfairly deny non-union workers an opportunity to earn a living. (read article)

San Diego inks new deal with firefighters
By David Garrick, May 31, 2016, San Diego Union Tribune
San Diego has reached a tentative labor deal with city firefighters that reduces costs for overtime and unused vacation in exchange for enhanced benefits and the first general salary hikes for firefighters in a decade. The city’s 850 firefighters were the only labor group that hadn’t agreed to a new pact since Mayor Kevin Faulconer was elected in 2014. The four-year deal and separate agreements reached earlier this month with three other city unions must be approved by the City Council in June. The council approved pacts with two other unions last year. The firefighters wouldn’t get the salary hikes until summer 2018 because of voter-approved Proposition B, which also replaced pensions for newly hired firefighters — and all other city employees except police officers — with 401 (k) retirement plans. The pay raises would be 3.3 percent in both fiscal year 2019 and 2020. (read article)

Verizon, Unions Agree to Pay Raises, New Jobs to End Strike
By Reuters, May 31, 2016, NBC News
A tentative deal between Verizon and leaders of striking unions includes 1,400 new jobs and pay raises topping 10 percent, the company and unions representing about 40,000 workers said on Monday, hoping to end a walkout that has lasted nearly seven weeks. One analyst called the deal “very rich” for workers at Verizon, the No. 1 U.S. wireless provider, which reached the tentative pact with the Communications Workers of America (CWA) on Friday.The CWA said Verizon agreed to provide a 10.9 percent raise over four years while Verizon put the increase at 10.5 percent. (read article)

Populist Candidates Still Ignore Government Unions

Nearly every objection that supporters of presidential candidates Trump and Sanders raise to the establishment are intimately associated with government unions. But neither the people’s voice, or that voice as it is reflected back to them by their populist heroes, articulates this fact.

(1) Do you want to reform Wall Street?

You’ll have to go through the government unions. Their union controlled pension funds are the biggest players on Wall Street. The union controlled cities that issue hundreds of billions in municipal bonds every year are a close second. Government unions benefit from the financialization of the American economy, even as it has wiped out the middle class. Low interest loans elevate prices for homes, which stimulates borrowing and consumer spending, which enriches corporations and the pension funds who invest in their stocks. High home prices raise property tax revenues. Low interest loans mean families can borrow more for college tuition – so unionized professors can continue to make six figure salaries for teaching a few hours a week, a few months a year.

(2) Do you want to restore reasonableness to America’s environmental regulations?

You’ll have to go through the government unions. In California, state and local jobs, from bus drivers to code inspectors, are being redefined to incorporate “global warming mitigation.” This is so they can share in the plunder associated with “carbon emission offset auction proceeds,” billions, soon to be tens of billions, in annual taxes by any other name, hidden in your utility bills and in the cost of manufactured goods – all ran quietly through a Delaware corporation. And why widen a freeway, when you can create thousands of government union jobs in mass transit?

(3) Do you want to reform campaign finance laws?

Forget about it. The government unions are by far the biggest single political spenders. Thanks to their legislated opacity – less disclosure is required for government unions than for private unions, believe it or not – we can only guess, but government unions collect and spend at least a billion dollars per year, just in California. Depending on how you define it, you can argue that ALL of that money is spent on politics. A billion per year – put to very effective use. And by the way, unions have benefit from the supposedly infamous “Citizens United” ruling just as much as corporations and wealthy individuals.

(4) Do you feel that big business exploits consumers?

Do you resent crony capitalists monopolizing entire industries and artificially raising the costs of goods in a market where they’ve used government rules to eliminate emerging competitors? In California, you can blame the government unions. Businesses doing business anywhere in California know that if they adhere to the union’s political agenda, they will get favorable legislation passed, and if they don’t, they will be targeted. Government unions are the brokers and enablers of corporate abuse.

(5) Do you support immigration reform?

Specifically, do you think it is reasonable to limit most immigration to skilled individuals, at a pace that will not challenge the ability of our society to culturally and economically assimilate the newcomers? Do you feel there should at least be a meaningful discussion on this issue? Forget about it. Because you’d have to go through the government unions, who want unlimited immigration; especially those most destitute and unlikely to assimilate. The more dependency there is in America, the more unionized government jobs are created. Police, prison guards, social workers – and an entire crony corporate infrastructure to support them. All paid for by the middle class.

(6) Do you want to rebuild America’s roads and bridges?

Are you even one of those heretics who believes, gasp, that we should develop our energy resources, build more power plants, store more storm runoff, and recycle 100% of our sewage, so that we can have energy and water abundance? Dream on. Government unions want scarcity, because with artificial scarcity there will be more government jobs enforcing what is effectively rationing. And never forget, if we were to spend tax revenue on infrastructure, there would be less money to cover pay and benefit packages for unionized government workers that average, in California, TWICE what the average private sector worker earns.

(7) Do you want to see the next generation properly educated?

Fat chance. Unionized public schools protect incompetent teachers instead of putting children first. And they promote curricula designed to alienate young people from American culture instead of encouraging them to feel proud and privileged to be American. If you want to have any chance to fix America’s public schools, you have to take down the teachers union.

(8) Do you fear America’s federal, state and local governments drifting towards authoritarianism?

You’d better, because not only is that the common thread underlying this entire litany of government dysfunction, but technology is making it easier than ever to enforce authoritarian laws. Where you drive. How far you drive. When you use electricity. How much water you consume. What products you buy. Who you know. And of course, every detail of your interactions with the internet or cable television. It’s all monitored. And who protects the corrupt enforcers, the bad apples? The unions. And who has an inherent interest in bigger, more intrusive government, no matter if it’s good or bad for the public at large? The unions.

If Bernie Sanders or Donald Trump had the courage and the vision to tell that truth, they might ignite a populist uprising that would be utterly bipartisan. But that revolution will have to wait for another day.

 *   *   *

Ed Ring is the president of the California Policy Center.

RELATED POSTS

Government Unions and the Financialization of America, May 24, 2016

Public Safety Unions and the Financial Apocalypse, May 17, 2016

Unionize the Personal Assistants to the One-tenth-of-one-percenters, May 3, 2016

California’s Economically Illiterate Legislature, April 5, 2016

Practical Reforms to “Right-Size” Government Unions, March 29, 2016

The Challenges Facing Conservatives Who Support Public Safety, March 22, 2016

Public Unions ARE the Political “Establishment”, February 23, 2016

The Future of Unions in the Post-Scalia Era, February 16, 2016

In Search of a Legitimate Labor Movement, January 19, 2016

The Alliance Between Wall Street and Public Unions, December 1, 2015

How Government Unions Are Destroying America, September 22, 2015

When Will Unions Fight to Lower the Cost of Living?, October 27, 2015

Moral Values That Underlie Opposition to Government Unions, October 13, 2015

The Abundance Choice, December 23, 2014

An Economic Win-Win For California – Lower the Cost of Living, December 3, 2014

The Challenge Libertarians Face to Win American Hearts, October 14, 2014

Reinventing America’s Unions for the 21st Century, September 2, 2014

California’s Green Bantustans, May 21, 2014

A “Left-Right Alliance” Against Public Sector Unions?. May 20, 2014

The Unholy Trinity of Public Sector Unions, Environmentalists, and Wall Street, May 6, 2014

Construction Unions Should Fight for Infrastructure that Helps the Economy, April 1, 2014

Forming a Bipartisan Consensus for Public Sector Union Reform, January 28, 2014

A Policy Agenda for Union Reformers Stuck Inside Unions, November 5, 2013

Why the Democratic Party Cannot Embrace Public Sector Union Reform, October 15, 2013

Exponential Technological Advances and the Role of Unions, July 23, 2013

The Prosperity Agenda, April 2, 2013

Calling for Public Sector Union Reform is Not Anti-Union, January 29, 2013

The Ideology of Public Sector Unions vs. Private Sector Unions, February 20, 2012

America’s Atlas Generation – The Forgotten 33%, January 9, 2012

Prop. 13 is California Taxpayers Only “Saving Grace”

Proposition 13 is certain to continue to be a hot topic in 2016 and beyond as “reformers” continue to work on mobilizing a statewide effort to enact a “split-roll” that raises billions of dollars in increased property taxes from California businesses.

I have worked in and around Prop. 13 in one form or another for my entire career and have collected more data and research on its impacts that anybody else I have ever come in contact with.

I have since ended that research for the “reform” side, because I came to appreciate Prop. 13 for what it truly is–the last line of defense that California taxpayers have against elected officials who refuse to control “unsustainable” and “unaffordable” spending at both the state and local levels of government. 

For those new to Prop. 13, it is a California ballot measure passed in 1978 that places a 1% limit on local property tax rates, unless a “change in ownership occurs,” and limits assessment increases to 2% per year.

At the state level, Prop. 13 requires that any measure which would raise revenues to be enacted by a 2/3 vote of the Legislature.  At the local level, Prop. 13 requires taxes raised by local governments for a designated or special purpose to be approved by 2/3 of voters and a majority for general tax increases.

 

Stanford University Economist, Roger Noll, stated that “ever increasing, burdensome taxes and fees is the single largest concern facing California businesses.”

 

Sure, Prop. 13 is not perfect, far from it.   But the reality is that there is perhaps no public policy in California that is more effective at safeguarding taxpayers against the inability of California politicians, particularly those of the Democratic stripe, from overspending and then sticking taxpayers with the bill.

With the State of California $400 billion in the red, and most local governments in the same situation, you don’t hear anyone arguing with the fact that California government has a huge spending and debt problem.

Moody’s Investor Services agrees with this assessment, having prepared a report that finds California to be the least prepared state to weather a financial storm due to its fiscal policies and inability to reform its tax system.

Without Prop. 13, California elected officials would have “carte blanc” to push the state’s $1 trillion and growing pension problem onto state and local taxpayers, serving to further exacerbate the problem.  A whole host of other state and local taxes and fees would inevitably become viable proposals overnight in the absence of Prop. 13’s protections.

The ongoing explosion in fees and tax exactions on businesses at the local level is perhaps the best indicator of what would happen if Prop. 13 did not exist—turning an already steady and increasing flow of new local taxes and fees into the equivalent of an unchecked dam-break flood of new taxes and fees on California taxpayers.

Stanford University economist Roger Noll says that the problem of ever increasing, burdensome local taxes and fees is the single most legitimate concern that California businesses express about the state’s system of state and local finance.

Opponents of Prop. 13 cite tax equity and fairness as reasons to “reform” Proposition 13 by switching away from a “change in ownership” trigger for market reassessment to a “periodic reassessment of commercial property at market value.”

Furthermore, reformers say Prop. 13 is not “fair” because it heavily taxes new investment and rewards  “long-time” landowners—resulting in heavily disparate property tax amounts.

They say that the only fair way is to bring all businesses who receive a “tax break” under Prop. 13 up to market value and then send billions of dollars in increased property tax revenues to Sacramento to spend as they please.

My primary issue with this line of reasoning is that Sacramento has already proven that it cannot manage the existing tax dollars it gets from the state’s property tax responsibly so why on earth would we send them a flood of new tax dollars?

Second, the entire state and local tax system is riddled with similar inequities so why are reformers choosing to single out Prop. 13 for “reform”?  California’s major taxes are all characterized by extremely high rates and a very limited or loophole-ridden base.

The result is that those who pay the tax pay full boat, and those who can take advantage of loopholes get a break.  The reality of the situation is that all tax “reformers” in California want to increase tax revenues by leaving the rates the same, closing the loopholes, and sending billions of dollars in increased revenues to Sacramento to poorly manage.

True tax “reform” would be to close the loopholes and lower the base to make the change revenue neutral—but there is not a single tax “reformer” in California that I know of who is pushing for revenue neutral tax reform.

This is the method that nearly all significant successful attempts at tax reform utilized including President Reagan’s 1986 tax overhaul—widely lauded as one of the most successful tax reform efforts of all-time.

Reagan’s 1986 tax reform was “revenue neutral” but hailed by politicians of all stripes for simplifying the tax code, broadening the base and reducing the rates—a win win for everyone, not just those who want more tax dollars.

About the Author: David Kersten is an expert in public policy research and analysis, particularly budget, tax, labor, and fiscal issues. He currently serves as the president of the Kersten Institute for Governance and Public Policy – a moderate non-partisan policy think tank and public policy consulting organization. The institute specializes in providing knowledge, evidence, and training to public agencies, elected officials, policy advocates, organization, and citizens who desire to enact public policy change.

Union In The News – Weekly Highlights

Santa Clara County’s campaign finance records provide glimpse of Silicon Valley’s political landscape
By Saurabh Datar, May 31, 2016, Peninsula Press
Santa Clara County is one of just 17 counties in California that provide campaign finance records online in a form that is easy to analyze. Those records provide a glimpse of the political landscape of Silicon Valley. The county first began requiring electronic filing of campaign contributions in mid-2014. But the data has limits. Before 2014, some groups filed electronically and others filed on paper, making it difficult to estimate how much was given before the electronic filing requirement. Yet the available slice of campaign records — from the partial data from 2010 through 2014 and the complete records since — reveals spending patterns of two powerful groups in the Valley: businesses and unions. (read article)

Unions must follow through on ballot initiatives to reform healthcare finances
By Ron Shinkman, May 31, 2016, Fierce Health Finance
The healthcare industry has been the single most vigorous creator of jobs in the country in recent years. And healthcare has created a range of jobs, from hourly janitorial gigs to middle-class nursing positions to upper-middle class physicians and executives, to CEOs paid millions of dollars a year. Many of the non-managerial jobs not only pay well, but are unionized. While unions have been slowly worn down and out in the automotive, aerospace and other sectors, they have become quite healthy, if not robust, in healthcare. But the Service Employees International Union, which represents hundreds of thousands of hospital workers in various chapters throughout the country, seems to be losing its way by creating political intrigue in which it mostly fails to follow through. A couple of years ago, the SEIU in California pushed a ballot measure that would have not only limited payments but capped executive pay at hospitals as well. In this instances, the SEIU backed off the ballot measure in lieu of cutting a deal. (read article)

Locking in lawmakers: Interest groups get positions in writing
By Laurel Rosenhall, May 30, 2016, San Francisco Chronicle
The eight-page document reads like a contract, asking candidates seeking a seat in the Legislature to pledge support for workers organizing unions. It lists priority issues — including health care, immigration and retirement benefits — and asks if the candidate will be a “supporter,” “champion” or “partner” as the union pursues its agenda in Sacramento. The answers are a secret paper trail left by politicians who have sought backing this year from the Service Employees International Union, one of the state’s most powerful labor groups. The union won’t share the completed documents with the public. But it will pull out candidates’ responses later when they cast votes as lawmakers. “We do bring the questionnaire back out and remind them that when they were running, they told our members X, Y and Z,” said Alma Hernandez, the union’s political director. “So there is an expectation that they vote” that way. By locking potential legislators into a position before they’re even elected, questionnaires may also influence policymaking in a way that excludes the public and raises ethical questions. Out of view from voters, they can create private covenants between soon-to-be public officials and the groups that will lobby them. (read article)

The fight for $8.50
By Richard Berman, May 30, 2016, Washington Times
Last week, labor union-backed activists protested McDonald’s shareholder meeting in Oak Brook, Illinois. Their demands were familiar: $15 and a union. The protests are part of a combined effort by the labor movement to find relevance by trying to unionize the growing service sector. Despite years of friendly media coverage, and hundreds of millions of dollars spent (mostly from the forced dues of employees on fixed incomes), the protests have not succeeded in increasing unionization. The value proposition that unions offer potential members is that they’d be able to negotiate better employee pay than employees could achieve on their own. But is this view correct or just politically correct? Perhaps the starkest example of how crony unions sell out their members for increased dues is the behind-the-scenes deal they cut with Los Angeles city legislators to exempt unions from the city’s recently passed $15 minimum wage. This labor loophole is a naked attempt to sell out members to increase unionization by making it more financially attractive to employers. Unionized employees are hit with a double whammy: They have to pay union dues, and they make less than their private sector counterparts. (read article)

Credit cycle turns against small business
By Dan McSwain, May 29, 2016, San Diego Union Tribune
It’s never been easy to raise capital for a small business. The degree of difficulty usually runs in cycles, with periods of tight credit and risk aversion giving way eventually to easing and optimism, followed by recession and another round of capital scarcity. Yet this cycle is different. Despite record sales and profits in 2015 for companies great and small, bank credit appears to be contracting for small-business owners. This certainly isn’t stopping entrepreneurs. They are responding in classic fashion: When the bank says “no,” they hit up friends, family and even pawn shops to support their ambitions. Federal Reserve data show that U.S. banks, after mostly loosening lending standards for commercial and industrial loans to small firms from 2008 through early 2013, have been tightening for the last three years, with the trend accelerating in late 2015. Such movement in standards has shifted opportunities for expansion to larger competitors. From the first quarter of 2010 through the third quarter of 2015, the share of loans going to California’s small businesses shrank from 23 percent to 15.4 percent, state officials report. (read article)

Union Bosses Trade Blows Over Philly Soda Tax
By Guy Bentley, May 28, 2016, Daily Caller
The labor movement is bitterly divided over Philadelphia Mayor Jim Kenney’s plan for a soda tax, with union leaders trading blows in the local press. Kenney proposed the three cents per ounce tax to fund pre-k education. The policy soon sparked national controversy, with Hillary Clinton wading in to support the levy. “It starts early with working with families, working with kids, building up community resources — I’m very supportive of the mayor’s proposal to tax soda to get universal preschool for kids,” Clinton said at an event in the Philadelphia in May 2015. “I mean, we need universal preschool. And if that’s a way to do it, that’s how we should do it.” Clinton’s socialist rival Sen. Bernie Sanders hit the Democratic front-runner, accusing her of attacking the poor. “Frankly, I am very surprised that Secretary Clinton would support this regressive tax after pledging not to raise taxes on anyone making less than $250,000,” Sanders said. (read article)

Teachers and aides approve union at International High School
By Marta Jewson, May 27, 2016, The Lens
International High School of New Orleans employees voted 26-18 in favor of unionizing at a labor board election today. “It’s a great day for teachers in the city of New Orleans,” UTNO President Larry Carter said. Union supporters wore small buttons, while opponents wore T-shirts that read “Vote ISHNO” with letters ‘no’ in a box and on the back: “If you CAN READ, thank a teacher. If you cannot, thank a teacher’s union.” Only one collective bargaining agreement for public teachers has been negotiated in New Orleans since Hurricane Katrina all but destroyed the union, after the state took over a majority of schools and chartered them to dozens of nonprofits. The union asked International High’s nonprofit board to voluntarily recognize United Teachers of New Orleans as their bargaining agent. The board never formally responded, leading the union to request a National Labor Relations Board supervised election. At a labor board hearing two weeks ago, the school’s attorney, Brooke Duncan, argued the charter was a public school created by state law and therefore not subject to the labor board’s authority. (read article)

Can Trump make inroads with union voters?
By Jennifer G. Hickey, May 27, 2016, Fox News
A seemingly growing rift between union members and other factions of the Democratic Party could present an opening this year for Donald Trump – the NAFTA-hating, border wall-building Republican populist – to peel off labor voters traditionally loyal to the other side. “There has been this disconnect between private-sector, white workers and the new Democratic coalition,” pollster Scott Rasmussen said, adding that unions are scrambling this year to “stop the hemorrhaging.” The latest evidence of a fraying Democrat-labor alliance came earlier this month, when billionaire environmentalist Tom Steyer unveiled For Our Future PAC, a $50 million partnership with the AFL-CIO and public-sector unions designed to mobilize Democratic voters in key battleground states. The announcement exposed a sense of betrayal felt among some trade unionists which could redound to Trump’s benefit. (read article)

Auto Workers Union Calls Members To ‘Unify’ Behind Hillary Clinton
By Connor D. Wolf, May 26, 2016, Daily Caller
The largest national union of automobile workers announced its endorsement of Democratic presidential candidate Hillary Clinton Thursday. The United Auto Workers leadership narrowed its choice down May 19 to Clinton and her rival Sen. Bernie Sanders, after ruling out Republican presidential candidate Donald Trump. The union still gave praise to Sanders for framing important issues, but decided Clinton is the best choice. “The primary process is at a point where it is time to unify and choose between two very good UAW friends,” UAW President Dennis Williams said in a statement. “Our UAW regions have gone through an extensive process of surveying our members. Each regional director took the time to listen to their membership and give input into the campaign season.” Williams said Clinton is the candidate most likely to address the needs of union members and working families. (read articles)

UW faculty and staff labor union behind ‘no confidence’ movement sees opportunity for growth
By Pat Schneider, May 26, 2016, Madison.com
Public labor unions may not have much power in Wisconsin these days, but a local at the University of Wisconsin-Madison has been trying to flex its muscles recently. United Faculty and Academic Staff (UFAS) circulated the resolution of no confidence in UW System leaders that was overwhelmingly endorsed by the campus faculty senate earlier this month, setting off a series of union-led actions across the state. Chad Alan Goldberg, the UW-Madison sociology professor who drafted the resolution and helped marshal forces in support, is president of UFAS, Local 223 of the American Federation of Teachers-Wisconsin. (read article)

Labor law comes under scrutiny in US courts
By Milton J. Valencia, May 25, 2016, The Boston Globe
There was nothing subtle about the labor battle between an electric workers union and a Louisiana utility. Workers fired high-powered rifles at company transformers. They drained oil from company machinery. They blew up a transformer. And the Supreme Court ruled that their actions didn’t violate federal law because they were part of union activity. That early 1970s ruling — known as the Enmons decision — helped set parameters for acceptable union activity — a question now at the heart of a federal inquiry into union actions in Philadelphia, Buffalo, and, most recently, Boston. In the Boston case, three Teamsters members were sentenced last year to federal prison for threatening to “shut down” events run by businesses that hired nonunion workers. (read article)

Long Beach harbor commissioners approve labor agreement
By Andrew Edwards, May 24, 2016, Press Telegram
A new labor agreement will give union members living in Los Angeles and Orange counties a significant advantage when it comes to being hired to work on Port of Long Beach contracts. Long Beach’s Board of Harbor Commissioners, which sets policy for the Long Beach port, voted Monday night to approve a new project labor agreement covering some $717 million worth of capital projects expected to be accomplished over five years. Port officials announced the commission’s vote Tuesday morning. The deal allows nonunion contractors to rely upon five “core employees” for port jobs, but firms would otherwise have to hire workers from union halls affiliated with the Los Angeles/Orange Counties Building and Construction Trades Council. In exchange for union members getting the inside track on hiring, the workers belonging to the participating unions agree not to go on strike or otherwise hinder projects covered by the agreement. (read article)

UW professors consider forming faculty labor union
By Rod Palmquist, May 24, 2016, Daily UW
This past winter, a popular article circulated on social media platforms with the headline, “Adjunct professor hoping some student leaves behind warm pair of gloves.” In the article, originally published by satirical newspaper “The Onion,” a 41-year-old faculty member hoped one of their students would forget a pair of Gortex gloves after class, since they couldn’t afford to pay for a pair themselves on an adjunct lecturer’s salary. Although intended as amusing social commentary, the spoof hits a little too close to home for many non-tenured faculty at the UW.  For Carrie Matthews, a full time lecturer in the English department, living on her nine month salary from the UW is increasingly difficult. (read article)

Labor Unions Searching for Strategies to Join the Gig Economy
By Daniel Wiessner & Dan Levine, May 24, 2016, Insurance Journal
The International Association of Machinists and Aerospace Workers trumpeted an agreement reached earlier this month to represent New York Uber drivers, saying it “gives organized labor an opportunity to shape the new economy in a way that supports and values workers and their families.” But not everyone in the U.S. labor movement is cheering. The deal falls short of actual union representation, and it has revealed sharp divisions among labor advocates about how to address a central reality of the so-called gig economy: The classification of workers as independent contractors rather than employees. (read article)

How to bring back labor without relying on unions
By Paula Dwyler, May 24, 2016, Chicago Tribune
National anxiety over the decline in middle-class living standards is driving this year’s presidential contest like no other issue. Donald Trump promises a return of manufacturing jobs as the solution, but he misleads voters into thinking those jobs are coming back, when they aren’t; his trade-deal bombast will only make things worse. Polls show his message resonates well with blue-collar voters who believe unions had a lot to do with creating the America he promises to make great again. Both Democratic candidates, meanwhile, say they would take steps to bolster unions without acknowledging their negative effects and weaknesses. “I believe when unions are strong, America is strong,” Hillary Clinton told the Service Employees International Union convention on Monday, adding that “unions helped build the strongest middle class right here” in the U.S. (read article)

$6.2 Billion in New Borrowing on June 7th Primary Ballot

They are overshadowed by one of the most tumultuous Presidential primary campaigns in decades, but California’s June 7th primary ballot has local tax and bond proposals in numbers that, in aggregate, ought to be generating vigorous public debate. Next week voters will be asked to approve 46 local bond measures totaling $6.18 billion in new debt, along with 52 local tax proposals. If history is any indication, more than 80% of them will pass.

Tax activists and politicians who brand themselves as “tax fighters” often point to alarming levels of state government debt, along with state taxes that are among the highest in the nation – but when they do, they are calling attention to a surprisingly small fraction of the big picture. Because most of California’s taxes and borrowing are assessed and spent at the local level. A California Policy Center study from 2013 entitled “How Big Are California’s State and Local Governments Combined?,” using 2011 data, calculated direct state government spending at $54.0 billion. The same study calculated total local government spending at $311.1 billion, nearly six times as much. The numbers have changed over the past five years, but the proportions have remained the same.

Total-CA-Budgets_Table-2r5

California government borrowing follows the same pattern, as shown on the next table. Even if you don’t include the unfunded liabilities for pensions and retirement health coverage – amounts vary by several multiples depending on what return-on-investment assumptions are made – as can be seen, five years ago, the total state government bond debt was $132.6 billion, whereas the total local government bond debt was nearly twice as much at $250.3 billion.

Total-CA-Budgets_Table-1r4

School bond debt just keeps piling up at the local level. Because it only requires a 55% majority for approval, compared to two-thirds for most other forms of proposed government borrowing, it is the most likely to appear on the ballot, and the most likely to pass. As a 2015 California Policy Center study entitled “For the Kids – Comprehensive Review of California School Bonds” uncovered, on average, local voters have approved $10 billion in local school bond borrowing every year from 2001 through 2014. Is all of this necessary?

This year is on track to beat the average. Because these bond and tax proposals are usually concentrated on the November ballot, where they are more likely to be approved by general election voters. It is surprising to find $6.2 billion in proposed new borrowing on the ballot this June.

If you want to learn the details regarding the new taxes and bonds being voted on next week, refer to the document prepared every election by CalTax, “2016 Local Elections.” For example, you will see there are three new taxes proposed on marijuana, 20 new parcel tax proposals, 14 sales tax  proposals, one hotel tax proposal, 4 utility tax proposals, 9 “miscellaneous” tax proposals, and one business tax proposal. Nearly all of these taxes are either extensions of “temporary” taxes that would otherwise be set to repeal, or tax increases, or completely new taxes. In only one case, in the Southern California city of Glendale, is a tax proposal on the ballot to repeal an existing utility tax.

The problem with repeals, or no votes of any type, is that the tax proposal just comes up again on the next election cycle. Eventually, almost all of them pass. In November 2014, as reported in the UnionWatch post “Final Results: 81% of Local Bonds Passed, 68% of Local Taxes Passed,” here’s what happened in that election: “Of the 118 local bonds, 96 were passed, and 22 were defeated. Of the 171 local tax proposals, 117 were passed, and 54 were defeated.”

If at first you don’t succeed, try, try again.

There is an alternative to more taxes and more borrowing. To avoid new taxes, revise pension benefits for existing workers so that – just from now on – the retirement benefits accrue at the lower pre-1999 rates, which are financially sustainable without new taxes. Instead of new borrowing, return control of schools to principals and parents, instead of the teachers unions, a simple step that will yield positive educational outcomes that all the new school buildings in the world cannot hope to replicate.

 *   *   *

Ed Ring is the president of the California Policy Center.

Legislative Surveys & Questionnaires Influence Policy-Making and Labor Agendas

The eight-page document reads like a contract, asking candidates seeking a seat in the Legislature to pledge support for workers organizing unions. It lists priority issues – including health care, immigration and retirement benefits – and asks if the candidate will be a “supporter,” “champion” or “partner” as the union pursues its agenda in Sacramento.

The answers are a secret paper trail left by politicians who have sought backing this year from the Service Employees International Union, one of the state’s most powerful labor groups. The union won’t share the completed documents with the public. But it will pull out candidate’s responses later when they cast votes as lawmakers.

“We do bring the questionnaire back out and remind them that when they were running, they told our members x, y and z,” said Alma Hernandez, SEIU’s political director.

“So there is an expectation that they vote [that way].”

 

Alma Hernández is the Political Director for SEIU California, an organization dedicated to electing candidates and passing policies that benefit SEIU’s 700,000 members and their families in California.

 

Questionnaires from interest groups are a staple of electoral politics. They’re used by unions and business interests and others across the political spectrum, from gun-rights and anti-abortion groups on the right to environmental and gay-rights groups on the left.

The surveys can help sift a field of contestants as decisions are made about how to spend  big campaign money. SEIU poured $14.3 million into California campaigns in 2014, according to the National Institute on Money in State Politics, and only a handful of Democrats were elected without the union’s support.

By locking potential legislators into a position before they’re even elected, questionnaires may also influence policy-making in a way that excludes the public and raises ethical questions. Out of view from voters, they can create private covenants between soon-to-be public officials and the groups that will lobby them.

“It’s the smoke-filled backroom of politics,” said Sen. Steve Glazer (D-Orinda).

He won his seat last year after making opposition to questionnaires a cornerstone of a previous, unsuccessful run. Glazer declined to answer the questionnaires, instead posting them on his web site so the public could see what interest groups wanted.

Many questionnaires are more open-ended than SEIU’s and do not ask for promises. Still, Glazer said, the process makes it harder for lawmakers to fairly evaluate all sides of the complex matters they act on in office.

“It can significantly contribute to having a closed mind on matters where one really doesn’t know all the nuances of the issue,” he said.

Republican Joseph Rubay, who is challenging Glazer this year, said some concerns are overblown.

“I’ve filled them out, and I’ve noticed what he’s noticed: They tend to try to take you down a path,” Rubay said. “But overall I think it’s my job to let people know my positions. I should be able to answer a questionnaire with ease, which I’ve done.”

The California Teachers Association questionnaire offered Rubay a learning experience. Though many Republicans favor English-only education, Rubay said, he came to appreciate a dual-immersion approach for teaching languages while going through the powerful union’s endorsement process.

The union has not endorsed anyone in the race. CTA spokeswoman Claudia Briggs said questionnaires are just one element in such decisions.

Cross-posted at CALmatters.

About the Author: Laurel Rosenhall covers California politics for CALmatters, with a focus on power and personalities in the statehouse. Her weekly news analyses explain political dynamics in the Capitol and examine how money, advocacy and relationships shape the decisions that affect Californians. She joined CALmatters after more than a dozen years as a reporter for the Sacramento Bee, where she covered the influence of lobbyists on state government.