AFSCME to Illinois: Raise taxes to pay government workers more

Mailee Smith

Senior Director of Labor Policy and Staff Attorney

Mailee Smith
September 16, 2016

AFSCME to Illinois: Raise taxes to pay government workers more

AFSCME wants the state to hike taxes on Illinois residents to fund the union’s demands for salary and benefit increases.

It is undisputed that Illinois is on the brink of financial disaster. The state currently has over $8 billion in unpaid bills. Illinois has the nation’s worst credit rating. And the state’s pension debt has reached $111 billion – with one-fourth of the state’s budget consumed by government-worker pensions.

And in the midst of this crisis, the American Federation of State, County and Municipal Employees is adamant the state spend $3 billion more in pay raises and benefit increases for AFSCME workers.

How can cash-strapped Illinois pay for $3 billion in extra salary and benefit demands? AFSCME leadership has an answer: Raise taxes.

In her Sept. 2 decision on the status of contract negotiations between the state and AFSCME, the administrative law judge, or ALJ, laid out the parties’ claims and actions throughout the negotiations. The judge cites AFSCME’s statements dismissing Illinois’ financial plight as the union rejected contract provisions the governor proposed, such as a temporary wage freeze.

AFSCME insisted the state can’t refuse union demands so long as the possibility of increasing taxes exists.

From the beginning of negotiations, the state’s negotiators emphasized the precarious financial position of the state. In fact, as early as December 2014 – before Gov. Bruce Rauner took office – the state told AFSCME there was a $6.4 billion bill backlog and a structural shortfall for fiscal year 2015 of approximately $1.6 billion – causing seven state agencies to project running out of funds by June 30, 2015.

The state pointed to health care and pension pressures as a basis for the assertion that “the parties were working in a budget situation unlike one they had ever seen before.” AFSCME, through Executive Director Roberta Lynch, said the state should extend the 2011-2015 temporary income-tax hike, tax the “wealthy” and support a progressive tax structure that imposes heavier taxes on those who “can afford to pay more.”

The ALJ noted, “As bargaining [between AFSCME and the state] progressed, the State’s fiscal situation worsened.”

And yet AFSCME continued to ignore the state’s concerns about finances, indicating there was “no way” the state’s fiscal crisis would be solved at the bargaining table, and the governor should go to the General Assembly to “raise revenues.” In other words, because contract provisions addressing the state’s fiscal crisis would not completely fix the problem, AFSCME would not compromise its demands for salary and benefit increases to help save costs.

In one of its first contract proposals to the state, the union wanted the state’s “cooperation” in advancing “revenue generating measures” – i.e., more taxes to pay for AFSCME’s demands. Those measures included 1) expanding the state sales tax base to include consumer services to “stabilize revenue generation and put sales tax policy more in line with the modern economy,” and 2) a Fair Tax constitutional amendment that would place a greater tax burden on the “affluent.”

AFSCME also argued during the hearing that the state “cannot legitimately contend that [it] is broke” because there are tax avenues available – specifically, renewing the temporary income-tax hike.

This push to raise taxes – in order to cover AFSCME’s unreasonable contract demands – shows the union’s contempt for taxpayers and obliviousness to economic realities. First, Illinoisans are already overtaxed. A 2016 study showed Illinois has the highest median property-tax rate in the nation. Since 1990, residential property taxes have grown 3.3 times faster than median household incomes in the state. Property taxes are going up, while Illinoisans’ incomes remain virtually stagnant.

Lynch also turns a blind eye to the fact that jobs and people are leaving Illinois. Just this week, the Illinois Department of Employment Security announced that the workforce shrank by 22,000 people in August. And more people are leaving Illinois than are leaving any other state in the region. In fact, Illinois is losing one person to out-migration every five minutes. Fewer jobs and increasing out-migration mean an even bigger tax burden on those who remain working or living in the state.

And of course, Lynch ignores the fact that Illinois state workers are already the nation’s highest paid state workers when adjusted for cost of living. Yet, AFSCME leadership wants to raise taxes to cover contract provisions beyond anything typically offered in the private sector.

AFSCME isn’t recommending taxes be raised to cover important government services. It wants taxes raised to fund the union’s increasing salary and benefit demands.

Ironically, Lynch stated during negotiations that she thinks it is “wrong to only think of people as taxpayers.” But of course, she wants those taxpayers to cover the cost of AFSCME’s demands.

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