Reform Public Act 312 to help local governments cope with fiscal distress
The budget hole that Ann Arbor city government must dig out of just keeps getting deeper. City Council went into budget discussions facing a $2.4 million deficit in the coming fiscal year. That deficit now looks more like $3 million, and depending on how much the state cuts revenue sharing to cities, it could balloon to $4 million or more.
We can’t underscore enough the seriousness of the financial challenges facing local government. Cuts will be deep and painful. That’s why everything has to be on the table, including Public Act 312.
P.A. 312 is a piece of 1960s-era legislation that sought to avoid strikes by creating a binding arbitration process to settle labor disputes involving police or firefighters. The law, as it is applied today, is seriously flawed, putting municipalities at a disadvantage in labor negotiations with public safety unions and failing to protect the best interests of taxpayers.
While legislation has been introduced in the state House to repeal P.A. 312, we are not quite prepared to join the chorus of those calling for it to be abolished. But the current process is broken, and unless we see the Legislature address meaningful reform, and quickly, we would have to revisit the question of whether it’s time to do away with P.A. 312 altogether.
Public Act 312
The law is dysfunctional in a number of ways. The two that concern us most are the absurd length of time it takes to go through arbitration, and the lack of weight given to the ability -- or rather, the inability -- of local government to pay the wage and benefit demands of police and fire unions.
Last August, the city of Ann Arbor filed for binding arbitration. An arbitrator wasn’t appointed until last month, and a hearing won’t occur until October. Even then, the city can expect to wait months after that for a ruling. At a time when many municipalities are facing financial emergencies, this interminable dragging out of arbitration is untenable.
Local governments also argue that in the current fiscal climate, much more consideration needs to be given to ability to pay. Currently, that’s one of several factors the arbitrator looks at, but it gets no special weight. That puts the arbitration process out of touch with the harsh realities facing local government. The idea that the city of Ecorse, which is insolvent and under state receivership, is currently in binding arbitration with one of its unions is but one example of how P.A. 312 can be an impediment to making the kinds of timely, difficult decisions necessary to deal with a budget crisis.
Police and fire unions are rallying in support of P.A. 312, and we understand why they would feel under siege. We don’t think public safety employees should be made the whipping boys in budget debates, and we don’t support the kind of frontal assault being mounted against unions in Wisconsin. We think state and local government should treat unions as partners in negotiating the give-backs that are necessary to bring budgets into balance. Public unions, for their part, need to understand the depth of the fiscal crisis facing municipalities and be willing to make concessions.
P.A. 312 works against that, giving police and fire unions leverage in contract talks that other public unions don’t enjoy. It’s become more important than ever that Ann Arbor and other cities get a better handle on their salary and benefit costs for public safety. Police and fire services now account for 53 percent of the city’s general fund costs, up from 44 percent in 2002. If those costs can’t be brought more in line, we fear the inevitable result will be the continued reduction in the number of police officers and firefighters. That certainly is not in the public interest, and ultimately, we would think, not in the best interest of the police officers and firefighters whose ranks will continue to dwindle. The end result is fewer jobs and a less safe community.
To call for reform - or as a last resort, repeal - of P.A. 312 is not an attack on police and fire unions. It’s a necessary step to help give local governments the tools they need to bring their costs under control and to put them on the same level field where they now stand with other public employee unions. These hard budget times call for nothing less.
(This editorial was published in today's newspaper and reflects the view of the Editorial Board at AnnArbor.com.)
Comments
BenWoodruff
Thu, Mar 17, 2011 : 2:02 a.m.
You also need to recognize that the last thing the Firefighters and Police want is to go to arbitration. The city covers the cost of arbitration and attorney fees from the Police or Fire budget, the fire and police union must cover the cost from their dues and assessments on their members. Arbitration costs are split between the city and union and attorney fees are covered by the union members. Even when you win something, you lose as well.
Hunterjim
Sun, Mar 13, 2011 : 9:14 p.m.
The one big question that the City AND AnnArbor.com have never answered..I have posed this question many times in response to past articles on this same subject...is: Show me when the City has taken a position that they do not have the ability to pay. They have NEVER claimed it in any arbitration. The city for years has stonewalled during bargaining. The consessions on reduced retirement ages has always been initiated by the city as a way to reduce the size and age of the workers. If the city wants consessions thats fine but bargain in good faith, A2.com be a neutral fact finder and reporter. Report the truth where ever it lay.
Matt Damon
Sun, Mar 13, 2011 : 7:38 p.m.
Just given them the right to strike in place of binding arbitration. Isn't the argument that there are no fires and they sit around all day playing cards? I don't see the problem.
Mike
Sun, Mar 13, 2011 : 6:20 p.m.
This opinion is actually another case of revisionist history. PA 312 went into effect in October 1969, at the end of the 60s and the beginning of the 70s. It was passed partially in response to a particularly nasty contract negotiation or lack there of by the city of Detroit, with Detroit Police Officers and Firefighters. The public safety officers were prohibited by state statute to strike, unlike private sector employees. The result was public safety officers who were grossly under compensated compared to private sector employees. It is interesting that the City of Ann Arbor and other municipalities should complain about the length of time it takes to get in front of an arbitrator. My recollection of the past is that it was the cities slowing the process so they could earn interest on the money that was in investments. Rarely would an arbitrator rule for interest to the public safety officers who waited years in many cases to be compensated. Now that the markets are not performing as they did in the 80s and 90s, the cities are griping about the amount of time it takes.
lester88
Sun, Mar 13, 2011 : 5:03 p.m.
I agree with Dennis. Until there is tort reform, healthcare costs will continue to rise from lawsuit happy, ambulance chasing attorneys. Most politicians are attorneys so I doubt you will see this type of reform anytime soon. I was in a minor accident and the other person complained of back and neck pain so the accident was listed as an injury crash on state forms. My phone rang off the hook from lawyers trying to get me to sue and get compensation when I wasn't even injured. Let's focus on why costs are increasing, not who has the benefits. I oppose the repeal of PA 312 if it equates to firefighters and police officers being allowed to go on strike.
ToddGack
Sun, Mar 13, 2011 : 4:13 p.m.
Tony needs to look at that police officers and the City of Ann Arbor and when they have gone to Arbitration. Besides the last contract from 2006, when was the last time both parties went to Arbitration? One must look at the previous time which was the 1983 Arbitration award. So the city and the police officers were able to negotiate contracts from 1983 to 2006 and Public Act 312 gives the union leverage? That doesn't make sense that the union is able to have more leverage otherwise they would have gone to arbitration more than once in 23 years. Just cause a city or municipality wants to say that Public Act 312 is unfair, it is up to the city to put forth a case against the union. Ann Arbor City won the last Arbitration matter and did obtain their health care package that they were seeking. So how does one say it is unfair?
Dennis
Sun, Mar 13, 2011 : 4 p.m.
1bit...you are correct to a point. Not only the cost of healthcare but the unfunded pensions are the real culprits. "Rome burns while Nero fiddles". We need to stop the largest "Public Unions", the American Medical Association, and the BAR Associations. That is who is driving up the cost of healthcare along with hospitals and insurance companies. Blue Cross is supposed to be non-profit yet they continue to profit and pass the profit on to their executives.
1bit
Sun, Mar 13, 2011 : 6:49 p.m.
Not sure what the AMA and BAR associations have to do with anything here. The cost of healthcare is rising because we are getting sicker and we are coming up with costly ways of treating illnesses. I agree with your frustration at BCBS...
DonBee
Sun, Mar 13, 2011 : 3:51 p.m.
PA 312 needs revision, so do many things. But dogma trumps compromise in this state these days.
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 7:41 p.m.
@DonBee: Agree. Good points, all @Tony: Only if the other bargaining units give up their right to strike. Arbitration with ability to pay was the quid pro quo for making illegal strikes by fire personnel and by police. Right now, if those other units think they are being maltreated by their contracts, they can strike. Good Night and Good Luck
Tony Dearing
Sun, Mar 13, 2011 : 5:30 p.m.
It also would help if the arbitrator would give weight to how the benefit packages and wages of public safety employees compare to what a municipality is paying its other employees.
DonBee
Sun, Mar 13, 2011 : 5:03 p.m.
Let's start with potentially a defined "cooling off period", right now the old contract runs. The party that is slow to arbitration has to deal with the other side's proposal until the arbitration is done. Then let's look at actuary tables used for determining future costs of retirement benefits and health care. Finally a statewide database by job category of what the pay rates and benefits are, so the research on what the job pays comes from one source. These changes (additions) would clarify the picture and give people a larger incentive to not let it go to this stage.
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 4:18 p.m.
Specifically, how does it need to be changed? Good Night and Good Luck
lester88
Sun, Mar 13, 2011 : 2:51 p.m.
Fact: The majority of public safety contracts are settled without going to arbitration. Fact: P.A. 312 is a quid pro quo for public safety not going on strike. Fact: The City of A2 has files for 312 arbitration under the Fraser/Hieftje regime. Ques: Why would they do this if it is so one sided? Ques: Why the barrage of negative press from AA.com against city workers?
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 2:23 p.m.
"Public Act 312 should be repealed because the unions will never bargain in good faith based on past history." Bad Faith bargaining is illegal. How many public unions in the state of Michigan have been taken to court for bad faith bargaining? How many have been found to have done so? If you can't answer the question (likely) you don't know what you're talking about (typical). Good Night and Good Luck
David Briegel
Sun, Mar 13, 2011 : 2:12 p.m.
1bit, which is why we need single payer! bragg, our citizens have been and continue to be fleeced by Wall St and K St with nary a complaint. The solution in most instances is to quit cutting taxes, especially for those who have benefitted so greatly from our system. We never had these problems when there were much higher effective tax rates at the upper end of the scale. Have the wealthy ever NOT benefitted from our system? Todd and Mark are the first posters and they clarify the issue much better than this opinion piece!
1bit
Sun, Mar 13, 2011 : 6:46 p.m.
It's eventually going to be no payer if we don't figure it out!
braggslaw
Sun, Mar 13, 2011 : 5:43 p.m.
No doubt many people needed to goto jail from the last sub-prime fiasco. But I am concerned with local issue and local govt. We can't afford public employees as they are presently compensated. Huge undefined and unfunded liablity. Pointing to what Wall Street ""fleeced" won't fix the local problems. The problem is what it is, we have only a few financial knobs to turn.
stunhsif
Sun, Mar 13, 2011 : 2:10 p.m.
Thanks Tony. An excellent fact driven editorial that really puts it all in black and white. Public Act 312 should be repealed because the unions will never bargain in good faith based on past history. The "itsy bitsy" givebacks thus far are a slap in the face for the taxpayers. Dump the pensions moving forward and go to employee funded 401k's like the private sector ( the taxpayers) has , and take the Cadillac health benefits and downsize to a Cheverolet like the rest of us have. Good Day No Luck Needed
lester88
Sun, Mar 13, 2011 : 7:56 p.m.
"excellent fact driven" The only facts I see are those the city administration claims to be facts. Switching to a 401k will not reap benefits until all those enrolled are dead and gone, say 50 or so years from now. Clearly you don't have an understanding of the pension system.
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 2:27 p.m.
@johnnya2, At some point, led by teapartyists, we turned a corner from aspiring that everyone in this nation ought to be well paid, etc . . . to thinking that everyone except ourselves are overpaid and overcompensated. And the sad thing is that it appears that it is "Do unto other" so-called Christians who are leading that charge. Good Night and Good Luck
johnnya2
Sun, Mar 13, 2011 : 2:22 p.m.
1. This is NOT a private sector job. They do not have the right to strike. In fact, there is no "private" police force where they can sell their profession at 2. So you position is that people in the US should get a WORSE health care plan than before? Wow, sounds like the fastest way to becoming a third world country 3. Go ahead repeal it. I hope they like striking police officers. 4. I have a pension and work in the private sector. I also have a 401 k . So just because you do not have the ability to negotiate a pension with your employer does not mean others should not be allowed to if they are better at it.
David Cahill
Sun, Mar 13, 2011 : 2:08 p.m.
The essential deal that led to Act 312 was that unionized public employees gave up the right to strike in return for binding arbitration. Does AnnArbor.com want to give these employees back the right to strike?
Tony Dearing
Sun, Mar 13, 2011 : 5:26 p.m.
David, I do want to reiterate that this editorial does not call for the repeal of 312. We would like to see some elements of it reformed. A speedier arbitration process and greater consideration of ability to pay would be good steps toward that end.
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 1:58 p.m.
"The opinions will fall along one bright line. Those who benefit from the law and those who do not." As is typical, a broad brush opinion with no facts whatsoever to support. I think the editorial is wrongheaded and I don't fall under the provisions of PA 312, never have, and never will. PA 312 removed the right to strike for firefighters and police. The threat of strike is, in the end, the only leverage unions have. In return, it requires public entities to open the books and to justify their position based on ability to pay. Seems fair enough. Damn, it's a bad world when working stiffs have some power. Good Night and Good Luck
Edward R Murrow's Ghost
Mon, Mar 14, 2011 : 2:05 a.m.
Gee. Sounds like my childhood. What happened to you that you, by your own admission, don't know what it means to be a working stiff? It is you, after all, who said they don't know what the term means. Good Night and Good Luck
braggslaw
Sun, Mar 13, 2011 : 11:39 p.m.
Let me try Growing up in an 800 square foot house? Fighting every day on my walk home from school? Paying for all of degrees? Working and going to. School full time? Living on a porch for three years ? Check
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 10:30 p.m.
It is something one learns from one's life experience. It is nothing one can learn on a blog, but one can admit one's ignorance as you have done. Good Night and Good Luck
braggslaw
Sun, Mar 13, 2011 : 10:26 p.m.
Please enlighten me...
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 7:43 p.m.
"I really don't know what a 'working stiff'is?" That has been all too apparent for quite some time. Good Night and Good Luck
braggslaw
Sun, Mar 13, 2011 : 5:39 p.m.
I really don't know what a "working stiff"is? Is it the kid who slid by in high school? Is it somebody who decided not to goto college? Is it somebody who decided that being a public employee was a good career? Everbybody has grievances and everybody thinks they should make more. There is no more objective measure than what somebody is willing to pay you.
lester88
Sun, Mar 13, 2011 : 5:07 p.m.
Score another for the Ghost. Ghost 12 AA.com 0
Tony Dearing
Sun, Mar 13, 2011 : 1:58 p.m.
Public Act 312 also plays a prominent role in Ryan Stanton's very detailed look at the disparities in benefit packages across the city's different employee groups. You'll find that story here: <a href="http://annarbor.com/news/records-show-glaring-disparities-between-different-ann-arbor-labor-groups-benefit-packages/">http://annarbor.com/news/records-show-glaring-disparities-between-different-ann-arbor-labor-groups-benefit-packages/</a>
lester88
Sun, Mar 13, 2011 : 5:08 p.m.
Lol, a link to a poor post. Gawk, Ryan want a cracker?
ToddGack
Sun, Mar 13, 2011 : 4:50 p.m.
The city is using Public Act 312 as the scape goat for their own failures. How can the city blame Public Act 312 when they won the last arbitration case against the police union? Why did the city wait years and years and years before they decided to look at health care? How bout when times were good and the private sector had the same health care or better than a public service union and they received high increases in pay while the public service unions accepted 2% to 3% increases in their pay.
braggslaw
Sun, Mar 13, 2011 : 1:48 p.m.
The opinions will fall along one bright line. Those who benefit from the law and those who do not. The numbers are glaring the tax payers are being fleeced by unions/special interest groups. The best and brightest along with their companies are fleeing this state, we can't afford to keep doing the same irresponsible actions. Fiscal reality must be recognized.
1bit
Sun, Mar 13, 2011 : 1:14 p.m.
The cost of healthcare is really the underlying problem. Until we fix rising costs there, this will be a losing battle year after year for all parties.
yourdad
Sun, Mar 13, 2011 : 10:44 p.m.
I wholeheartedly agree. The HR department in each city should be getting the best deal they can for their communities. As far as that goes, many of the smaller communities should look into a larger group pool for healthcare. The unions understand this too, but since the city has so blatantly showed that it will say whatever it wants to appease a union, why should the unions trust them?
Mark
Sun, Mar 13, 2011 : 1:14 p.m.
Tony, ToddGack is right on point with his comments. Please do a follow up column detailing which contract negotiations or arbitrations included an argument by the city of its' inability to pay. I bet that you will be unable to find any. As for the length of time it has taken to settle or arbitrate contracts Act 312 is not to blame. My experience has been that it was either the city's desire to delay negotiations or arbitration or that the city's staff was insuffecient to handle negotiations of multiple open contracts.
Edward R Murrow's Ghost
Sun, Mar 13, 2011 : 2:35 p.m.
But Tony, it is precisely the cities' financial positions that comes to bear in the arbitrations--ability to pay. If they cannot pay, they cannot pay. I am somewhat concerned that this law makes it difficult to maintain a rainy day fund, at that ought be addressed. But, then, there is a move in the state legislature to make school districts spend down their rainy day funds. One can only assume that such legislation soon will come for municipalities. Truly bizarre. Punishment for fiscal conservatism. But I digress. If the process is as slow as you say, indeed it must be made more speedy. But I fail to see how "ability to pay" is an inappropriate standard for cities by which cities ought be judged. Seems fair given that police and fire have given up their right to strike. Good Night and Good Luck
Tony Dearing
Sun, Mar 13, 2011 : 1:56 p.m.
Mark, I appreciate what you and Todd are saying, and I will take a look at that. Let me add, though, that one of our primary concerns his is how rapidly the financial position of cities across Michigan is deteriorating, and their ability to pay is much more of an issue now and in the future than it has been in past years. We may well see 30 or 40 cities across Michigan fall into insolvency in the coming year. But your point is well-taken, and I appreciate you raising it.
ToddGack
Sun, Mar 13, 2011 : 12:10 p.m.
Dear Tony, Please understand Public Act 312 before you write your opinion. You are way off base on your issues. Did the City of Ann Arbor postpone picking an arbitrator this year? Did you look to see if that might have happened and that is why it took so long for picking one? Did you know that city and the police officers union had settled their last contract in the shortest amount of time since they went to arbitration? Their contracts that were agreed upon before this last one were always expired by the time they agreed to it. The contracts were already expired by the time they took effect. Their last contract that went to an arbitrator was settled six months before it was expired. So how is your opinion that it takes longer to go to arbitration then just settling the contract. The facts do not support your opinion. The city has to argue in binding arbitration that they can not pay. If they argue that, they then must open up their books which the City of Ann Arbor does not wish to do. If you look at the last arbitrated contract, the city never argued they did not have the ability to pay. I understand you have your opinion on this matter but the real facts do not support your opinion.