Government-union demands hurt taxpayers

Mailee Smith

Staff Attorney and Director of Labor Policy

Mailee Smith
/ Labor
May 24, 2016

Government-union demands hurt taxpayers

Illinois government-worker unions demand pay that outstrips that of Illinois private-sector workers and propose numerous tax hikes to fund their contract demands.

Illinois is in the midst of a potentially devastating financial crisis. The state has the nation’s worst credit rating. Illinois residents pay the second-highest property taxes in the nation. And the state’s pension debt has reached $111 billion – with one-fourth of the state’s budget consumed by government-worker pensions.

In the midst of this crisis, the American Federation of State, County and Municipal Employees is making demands for a contract that includes, among other perks, raises and a 37.5-hour workweek, which will cost an additional $3 billion.

Gov. Bruce Rauner has refused to yield to these demands for an obvious reason: Taxpayers can’t afford them. But the governor’s refusal to pay up has ignited an all-out assault by AFSCME against Rauner, who the union says is responsible for the state’s economic crisis.

While the unions claim to be fighting the governor, however, they’re actually attacking taxpayers. After all, money for government-worker unions is only available by taxing other people.

AFSCME isn’t the only government-worker union foisting unreasonable demands upon taxpayers. Three examples from across the state demonstrate this financial war between unions and taxpayers, and how Illinois government-worker unions care more about lining their own pockets than about the welfare of the taxpayers funding the union contract demands.

  1. AFSCME’s unreasonable contract demands will cost taxpayers an additional $3 billion

AFSCME’s contract with the state expired June 30, 2015. Since then, the parties have engaged in 67 days of meetings and 24 formal negotiating sessions, with more than 300 different proposals. Negotiations came to a stalemate in January, when AFSCME’s lead negotiator said: “I have nothing else to say and am not interested in hearing what you have to say at this point – carry that message back to your principals.”

AFSCME’s leadership does not seem to care that its demands could have dire consequences for taxpayers in a state already on the brink of financial ruin. Rather than seeking to ease the burden on state taxpayers by accepting a four-year wage freeze, AFSCME has demanded automatic, four-year raises that would raise payroll between 11.5 and 21 percent by 2019. AFSCME rejected the governor’s proposal of a 40-hour workweek, instead demanding overtime kick in for workers after 37.5 hours. In addition, AFSCME continues to demand platinum-level health care at bronze-level prices. These demands would cost the state $3 billion in additional salary and benefits.

AFSCME’s demands are particularly unreasonable when compared with the earnings of the state’s private-sector workers. Between 2005 and 2014, AFSCME’s salaries rose five times faster than Illinois workers’ median earnings and two times faster than inflation.

Yet, if AFSCME gets its way, that financial disparity would widen, requiring even more money from taxpayers who have already footed the bill for government salary increases that vastly outpace their own.

  1. District 15’s deal with the teachers union will lock taxpayers into an unprecedented 10-year contract

Palatine-area Community Consolidated School District 15 recently voted to saddle taxpayers with a 10-year contract the taxpayers never got to review or approve.

The district has not yet revealed complete details of the contract to the public, even though the district voted in favor of the terms April 13. In fact, the school board voted in favor of the deal before the parties had finished drafting the contract.

But the available information about the contract should concern taxpayers. The contract’s 10-year duration is “unusually long,” and the contract guarantees raises that vastly outpace local taxpayers’ own income growth.

The future financial consequences of this contract could be devastating for local taxpayers. The district admitted the contract guarantees raises every year: approximately 2.5 percent raises in each of the first four years, along with 4 percent raises in each of the last six years.

By contrast, private-sector workers’ median income in the Palatine area has grown less than one percent each year between 2009 and 2014. At that rate, income “growth” has not even kept up with inflation – meaning the real value of private-sector employee earnings has actually fallen for District 15’s residents.

Under the new 10-year contract, District 15 taxpayers, who already face stagnant earnings and decreased purchasing power, will be contractually bound to provide increasing salaries even if the economy cannot sustain such increases.

  1. CTU demands increased taxes to “fix” the financial shortfall their demands created

The Chicago Teachers Union, or CTU, is embroiled in contract negotiations with Chicago Public Schools. Before the last contract was signed in 2012, CTU went on strike demanding higher wages, even though CTU members already received high salaries and generous benefits. The result of CTU’s demands was the closure of 50 schools and thousands of layoffs.

Recently, CTU turned its back on district taxpayers again by calling a one-day strike April 1, meaning students could not go to school that day. The Illinois Educational Labor Relations Board subsequently found the strike was likely illegal, and CPS can pursue a court order to prevent the union from holding another illegal strike.

But CTU’s disregard for taxpayers goes even further. In May, it proposed a more than $500 million “revenue recovery package” to “restore funding” to Chicago schools. Of course, this pricey package is all about raising taxes on Chicago’s residents and visitors in order to meet CTU’s contract demands. Proposed taxes include reinstating and increasing the employer expense tax at four times the previous level, imposing a tax on ridesharing services such as Uber, increasing the hotel accommodations tax, imposing a commercial property-tax assessment (at 25 percent of the property’s sale price), and increasing the Chicago vehicle fuel tax to 15 cents from 5 cents a gallon.

While residents are fleeing Chicago in droves – recent census data revealed that, between July 2014 and July 2015, Chicago suffered the second-worst population decline in the nation – CTU appears bent on driving out even more residents and making it more expensive for tourists to visit.

With that sort of strategy, CTU is going to run out of taxpayers to tax.

Want more? Get stories like this delivered straight to your inbox.

Thank you, we'll keep you informed!