Aug. 06--Gov. Bruce Rauner wants local governments empowered to decide what topics will, or won't, be subject to collective bargaining with their employees. To see why that admittedly dramatic proposal could help Chicago and its school system stave off financial disaster, return with us to ... 1981.
How long ago was that? Well, Prince Charles married Diana, Princess of Wales. The U.S. encountered its first five known cases of AIDS. And Ronald Reagan entered the White House. Oh -- 1981 also was the year that Chicago Public Schools agreed to pay not only the employer's share of pension contributions, but 77 percent of its employees' shares too. What could possibly go wrong with that?
Because labor negotiations start with the old contract as the bargaining basis for the new, CPS' "pension pick-up" has endured for 34 years -- even as the district's finances imploded. Suggest that CPS should pay its share of pension costs and that teachers should pay theirs, as Mayor Rahm Emanuel and schools CEO Forrest Claypool have ventured, and you're accused of "attacking teachers," as the Chicago Teachers Union asserted Wednesday.
Chicago, the Chicago Public Schools and many other local governments and school districts in Illinois face a precarious financial situation. But they're supposed to find their way out without revising the costly provisions of local government contracts that have survived generations of public officials. Gov. Bruce Rauner says, correctly, that copying these provisions from contract to contract creates a one-way ratchet by which decisions made decades ago cannot, in effect, be altered. Unions refuse.
These high and often obsolete cost structures prevail as enormous pressure builds on taxpayers. Illinois property taxes are already among the nation's very highest -- a marvelously efficient means of driving current and future jobs to other states.
The prime reason Rauner has pushed legislators to approve a two-year property tax freeze isn't short-term relief for taxpayers. It's part of his bigger plan to cut overhead costs so Illinois governments can survive. The lasting fix, he said Wednesday, is to "get local control of costs." Otherwise, local governments would follow a two-year freeze with ... accelerating property tax increases.
One way to lower overhead would be to rein in public sector retirement benefits that hugely exceed what most people in the private sector receive. But the state Supreme Court strongly indicates that any such reduction violates the Illinois Constitution. So state and local politicians who encounter budget shortfalls or CPS-style meltdowns scurry to their old reliable: What tax can we raise and how high?
Meanwhile old overhead costs lurch along, unchallenged. If local officials had the flexibility to define what's eligible for collective bargaining, they could keep the scopes of local contracts as they are -- or limit negotiable costs. The governor said Wednesday that Chicago officials "have already come to us and asked for state help to get the pension contribution discussion out of collective bargaining. ... If Chicago needs the ability to have certain things taken out of collective bargaining, they should have the ability to do that."
Those local officials realize that, if they can't touch retirement benefits, they have few ways to control the vast government cost structures that have been constructed here over decades. As bond ratings plummet and debt payments rise, the pressure to lower personnel costs will intensify. The options: slash public jobs, trash public services, raise taxes to job-killing levels ... or find ways to eliminate the unnecessary costs of government so services (and jobs) can be preserved.
With that in mind, the key to Rauner's proposal is that, unlike Wisconsin Gov. Scott Walker's statewide collective bargaining initiative, Illinois would empower the discretion of county, municipal and school governments. Local officials would weigh the competing interests of union leaders and taxpayers -- and, if they cave too much to either camp, face the political costs of their decisions:
"The schools belong to local citizens, local voters and taxpayers, local residents -- and the local governments do too ..." Rauner said Wednesday. "They should decide. They should control these issues. ... We've got to empower local voters to get a handle on our property taxes, which is our No. 1 most uncompetitive, problematic tax."
Ever-higher taxes, unbalanced state budgets and inflexible lawmakers won't fix Illinois. They got Illinois where it is. Permitting local governments to, as Rauner proposes, reset the breadth of their collective bargaining is one change that would help this state's governments address outmoded, wrong-headed and unsustainable costs. It would help them -- help all of us -- out of crisis.
