A news service for the people of Michigan from the Mackinac Center for Public Policy

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Do We Let Unions Bankrupt Governments?

What the fight over Public Act 4 is all about

Numerous papers and wire services are reporting that groups opposed to Public Act 4 have filed petitions containing about 225,000 signatures to have the law repealed, more than enough to see PA 4 placed on the fall election ballot. Like Wisconsin and Ohio, Michigan will now have its own high-stakes election over the power of government unions.

Compared to the executives of neighboring states, Michigan Gov. Rick Snyder opted for a more nuanced approach to reshaping labor relations. Indiana enacted a right-to-work law, abolishing forced union support. Ohio and Wisconsin overhauled their government union laws, with mixed results politically. Gov. Snyder, apparently hoping to avoid the disruptive protests and bitter debates that characterized Ohio and Wisconsin, chose a more modest approach. Public Act 4 gave emergency financial managers the authority to set aside union contracts. Gov. Snyder has also signed legislation that limits government employee health benefits, and taken teacher evaluations and layoff procedures out of the realm of collective bargaining.

But the basic process of bargaining itself, the method used to establish a union in a workplace, and the obligation that local governments have to bargain with unions, remains in place. Government employees can still be forced to pay dues to a union that they may not support and that may not be serving their best interests.

Government unions remain as a permanent, taxpayer-funded lobby for big government. And with the fight to retain PA 4 looming, it is not clear that Gov. Snyder's nuanced approach has allowed him to avoid the acrimony.

The unions claim that PA 4 is an affront to democratic self government, but their protests ring false. Emergency financial managers have existed, and they have had broad powers, since the original Local Government Fiscal Responsibility Act was signed in 1990. Emergency managers have long been accused of usurping power from local elected officials. And for more than 20 years, government unions have tolerated this state of affairs. What moved the unions to action wasn't the taking of authority from local officials — emergency managers have always stepped in for them when bargaining anyway — but the removal of power from unions.

Emergency managers exist for one reason: to prevent cities from going into bankruptcy. The decision to appoint an emergency manager takes several steps and local officials have numerous chances to straighten out their books on their own. As long as a local government or school board is even close to solvent, the chance of an emergency manager being appointed is close to nil.

What PA 4's opponents are saying is that collective bargaining agreements are sacrosanct. Even if a city, county or school district is on the verge of bankruptcy, and an unaffordable union contract is pushing things to the breaking point, their position is that nobody should have the authority to set that contract aside. Let the union contract remain in force though the heavens fall.

Do government unions have the power to force cities, counties and school districts into bankruptcy? That is the question that Michigan voters will have to decide.

Meet James Hohman, Assistant Director of Fiscal Policy at the Mackinac Center. James discusses his latest project, an analysis of Proposal 1, the proposal on personal property tax reform that will appear on the August 5th ballot. Read more about Proposal 1 here: http://www.mackinac.org/20246


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