News Story

Chances for Local Government Union Pay Reform Good in House; Questionable in GOP Senate

In 2009, the city of Ann Arbor faced an $8 million deficit over two years. Then an arbitrator ruled that the city would have to pay police retroactive pay raises dating back to 2006, costing the city another $1.5 million. Today, Ann Arbor’s Chief Financial Officer Tom Crawford says the city faces another $5 million deficit over the next two years, and that the estimate includes no wage increases for city employees.

However, the city is facing binding arbitration yet again with the same police union.

Among the features that upset its critics most, the law governing binding arbitration with local police and fire unions does not allow arbitrators to first consider the ability of a local government to afford the pay raises that are being demanded by unions. Local officials say this creates a situation where union salaries can only go up, even if the local government can’t afford it.

“There is never a ‘win’ where concessions are made in arbitration,” said Samantha Harkins, legislative associate for the Michigan Municipal League, a lobbying organization for municipalities across the state. “It’s never a cost-going-down situation.”

Public Act 312, the law that requires binding arbitration for police and firefighter unions when they cannot agree to a contract with their municipalities, has been considered a problem for years by municipal officials and many in the GOP. Today, with Republicans in firm control of the entire Legislature and the governor’s office, there is a serious effort brewing in the Michigan House to eliminate PA 312 altogether.

But the major obstacle may come from within the Republican Party’s own ranks. Last week, speaking to the MIRS newsletter (, GOP Senate Majority Leader Randy Richardville said a repeal of PA 312 was not on his agenda.

"Right to Work, prevailing wage and 312 get at what some people believe are core rights,” Richardville said.

“It's going out of our way to create problems vs. solving them,” he said of efforts to make substantial changes to PA 312. “There are enough real problems without getting philosophical. My focus is on jobs and the economy." 

According to MIRS, Richardville declared that the Senate “isn't planning to take up [PA 312] legislation anytime soon if it's sent over [from the House].” He also told MIRS that a repeal of PA 312 did not make the list of priorities in the GOP Senate caucus even though “some” of the Senate Republicans were in favor of it.

The GOP holds a 26-12 advantage over Democrats in the upper chamber. Assuming a tie-breaking vote from Republican Lt. Gov Brian Calley could be cast in favor of a bill repealing or revamping PA 312, this means that only 19 of the 26 GOP votes would be needed to move any reform along.

Richardville spokesman Matt Marsden didn’t return a message to Michigan Capitol Confidential seeking a comment, and Richardville didn’t return an e-mail asking for a comment.

Meanwhile in the House, state Rep. Joe Haveman, R-Holland, introduced House Bill 4205, which is aimed at repealing PA 312. Haveman spokesman Dale Hull said he thinks there is a “very good” chance the bill will pass in the House of Representatives. It received a hearing last week in the House Government Operations committee.

Hull said PA 312 as it currently exists leaves the state with only three options: raise taxes, lay off police and fire employees or repeal the law.

Hull believes Gov.  Rick Snyder supports addressing the troubles of PA 312.

“We know that the governor feels this is unsustainable as well,” Hull said.

And Hull says he thinks Richardville will come around, too.

“Randy is the Senate Majority Leader,” Hull said. “But there are a lot of senators who support this. We feel confident that at the end of the day, Randy will be able to see our point of view. Randy is a very reasonable, well thought-out individual.”

Generally, police and fire make up the majority of the expenses in a municipal budget. For example, Ann Arbor spent $41 million on public safety in 2009-10. That was 55 percent of its spending in the general fund, which covers city operating expenses.

James Hohman, a fiscal policy analyst with the Mackinac Center for Public Policy, said that since 2002, wages for police workers have gone up 5 percent and wages for fire department workers have gone up 8 percent, after adjusting for inflation.

“Binding arbitration protects the wages and benefits of Michigan’s police and fire employees and effectively limits a local government’s ability to control their expenses,” Hohman said. “The only certain way that local governments can spend less on these services is by offering early retirement or through layoffs.”

Contact information for all lawmakers is available at


See also:

Critics Say Arbitration Bill 'Hollow' Without Amendment

Senate Bill Pending in House Could Cause Local Government Costs to Climb

House passes binding arbitration for jail guards

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.