Wisconsin Reality: There's No Money

Before there was Wisconsin Governor Scott Walker and nationally televised demonstrations from the state house in Madison, Wis., there was Middletown, Ohio, City Councilman Josh Laubach.

Two months before Walker set off days of raucous protests by proposing that most of Wisconsin’s public unions be stripped of their collective bargaining powers, Laubach was making the same recommendation with much less fanfare in his town of 51,000 located midway between Dayton and Cincinnati.

“Basically I came to the realization that we are at a point in Middletown where we are spending more dollars than we can afford, especially on police and fire services,” said Laubach, a 29-year-old educator who just completed his first year as an elected official.

“I pointed out the economic realities of the situation. Middletown is spending a greater and greater percentage of its general fund, while at the same time getting fewer and fewer services,” he added. “This is not about us being anti-union. It’s a simple matter of economics. I swore an oath to uphold the U.S. Constitution and beyond that to spend the money of the constituents I represent as wisely as possible.”

In Wisconsin, a long brewing national debate has apparently reached a boiling point. Governor Walker, elected in November amid a wave of wins by fiscally conservative Republican candidates, is asking his legislature to pass a plan that would eliminate collective bargaining on a range of terms including sick leave, overtime hours, pensions and health plans, but keep it for wages.

Wisconsin is facing a $137 million deficit in its current budget and a projected $3.6 billion gap over the next two years. Walker wants to help plug that gap by requiring state employees to contribute more to their health-care plans and pensions.

Specifically, under Walker’s plan unions still could represent workers in wage negotiations, but they can’t seek pay increases above those pegged to the Consumer Price Index unless the hikes are approved in a public referendum. Unions also could not force employees to pay dues and would have to hold annual votes to stay organized.

Approval of the bill would essentially make Wisconsin one of just a handful of so-called ‘Right to Work’ states, ironic given that in 1959 Wisconsin was the first state to enact collective bargaining laws for its public employees.

In exchange for bearing more costs to their health-care and pension plans, and losing some bargaining leverage, Walker has promised Wisconsin public employees no furloughs or layoffs.

The bill affects unionized public workers from across the spectrum of employment -- from teachers and garbage collectors to recreation department camp counselors -- but excludes police, firemen and state troopers.

Michael LeRoy, a professor of labor and employment relations at the University of Illinois, said this battle has been building for the better part of a decade as state and municipal governments have seen expenses rise -- especially in the area of employee pensions and health-care coverage -- while tax revenues have declined.

LeRoy said the fiscal crises facing any number of state and local governments make all aspects of government spending fair game for review in an effort to ease the burden on struggling taxpayers. But he questioned why collective bargaining is being singled out.

“I think it’s reasonable to ask questions about any type of state spending. That said, I would also say collective bargaining provides a mechanism to negotiate adjustments. Yes, I think it’s fair game to put it on the table. But it’s not fair to attack collective bargaining as a whole. Bargain tough at the tables and see how that goes,” said LeRoy.

Collective bargaining is the practice of allowing a representative of a group of workers negotiate the terms of employment with employers on behalf of those workers.

Supporters of the laws -- namely union leaders and their members -- say collective bargaining has fostered the growth of a prosperous middle class in many developed countries and at the same time has reduced the number of public-employee strikes.

Opponents have long argued that the process has been politicized and that contracts for public employee have gotten too generous.

Wisconsin State Rep. Tyler August, a Republican, made the latter point in an interview earlier this week with FOX Business: “This bill aligns the contributions state employees make to their benefit packages closer to that of those in the private sector,” he said.

Dennis Dresang, professor emeritus of public affairs at the University Wisconsin-Madison, said there are strong political overtones to the current debate. Many conservative Republicans, he argued, have “never been comfortable with collective bargaining, period.”

The fiscal woes of many state and local governments have opened the door for opponents of the practice to step in and offer proposals similar to that of Governor Walker’s in Wisconsin.

Dresang said he’s skeptical that eliminating collective bargaining will set state and municipal governments back on solid financial footing. Moreover, the move could backfire on politicians, especially state and local legislators whose constituencies are comprised of large numbers of public employees.

But Laubach stressed the tangible affects of public employee contracts bound by collective bargaining agreements on economically strapped local governments.  “We don’t have the freedom to control our expenses,” he said.

Laubach offered a resolution in December “seeking more flexibility” in negotiating municipal contracts in Middletown. But the proposal got little support and has since been tabled indefinitely.

“The public employee unions were not pleased,” he conceded. “But I have a job to do. I was elected to make the best budgetary decisions I can, and it’s my fear that the path we’re on will ultimately be harmful to the police and fire departments as well the citizens of Middletown.”

Laubach said he’s not surprised the issue has exploded onto the national landscape.

“Every school board and every municipal and every state government is dealing with the same restrictions,” he said. “This isn’t an us-versus-them debate. It’s a matter of not having enough money.”