Wisconsin and Illinois, two states compelled by financial necessity to take on their powerful public sector labor unions, are experiencing very different outcomes.
In a 5-2 ruling on July 31, the Wisconsin Supremes upheld Governor Scott Walker's controversial collective bargaining reforms. Major provisions included a prohibition on bargaining over non-wage matters, an end to mandatory dues deductions, and a requirement that unions be re-certified by members each year.
The law weakened public employee unions and cut membership in the largest teachers' union by a third. Governor Walker contends that the law has saved state and local governments $3 billion. That's pretty big money. And it's noteworthy that the bargaining reforms paved the way for savings on health insurance costs.
The Illinois General Assembly cut hundreds of millions of dollars in employer health insurance costs with a 2012 bill that ended full health insurance subsidies for retired state employees. The recent Kanerva vs. Weems decision negated that important reform.
So why is Wisconsin able to secure taxpayer savings while Illinois is running into a brick wall? The difference is in their respective constitutions. Illinois has a very strongly-worded pension protection clause. No such clause exists in the Wisconsin Constitution.
I posted previously about my disagreement with the Illinois State Supreme Court's linkage of health insurance subsidies to the pension clause. Unfortunately, the Court did what they did and retiree health insurance subsidies can't be unilaterally cut by the General Assembly. So no savings will be found there.
Unencumbered by similar constitutional restrictions, a majority on the Wisconsin Court reached a very different verdict concerning the powers of a legislative body:
The decision was 5-2, with Justice Michael Gableman writing the lead opinion, which found that collective bargaining over a contract with an employer is not a fundamental right for public employees under the constitution. Instead, it's a benefit that lawmakers can extend or restrict as they see fit, he said.
"No matter the limitations or 'burdens' a legislative enactment places on the collective bargaining process, collective bargaining remains a creation of legislative grace and not constitutional obligation. The First Amendment cannot be used as a vehicle to expand the parameters of a benefit that it does not itself protect," Gableman wrote.
The issues involved aren't exactly the same, but two different constitutions yielded two very different high court rulings on what a legislative body can and can't do with respect to collective bargaining and existing benefits.
So it was fitting that, the day after the Wisconsin Supreme Court ruling, the Chicago Tribune reports that the City of Chicago will defer plans to increase property tax revenues until 2015 while the City explores ways to reduce costs and mitigate what would otherwise be a huge property tax increase on Chicago residents. The property tax increase would be necessitated in part by a mandatory funding requirement inserted into a 2010 law that created a second tier of reduced pension benefits for police and fire new hires.
By the end of next year, the February city elections and any potential April runoffs will be history. Delaying a decision also will buy the city more time to get the General Assembly to enact pension changes that could significantly reduce the required payments to the two retirement funds.
"We are going to work on reform because we need that," Budget Director Alexandra Holt said. "It's got to be sustainable for taxpayers. And since the additional payment for the police and fire pension systems isn't due until 2016, we need to work as hard as we can to get reform."
Reducing taxpayer costs is certainly the responsible thing to do. But those reforms might not get the green light if the Illinois Supreme Court finds them unconstitutional because of Illinois' stringent pension protection clause.
Wisconsin may be renowned for it's cheese, but Illinois taxpayers may be the ones forced to fork over the cheddar.
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