The state has a legal process
for managing local governments and school districts that are approaching
bankruptcy. This law, the Local Government Fiscal Responsibility Act, calls for
examination of local finances by state officials, and in the case of a financial
emergency, the appointment of an “emergency financial manager.”
This EFM has fairly broad powers over government operations and may rework the
local government’s budget; approve or reject expenditures, including the hiring
of new staff; consolidate departments; sell off unneeded government assets; and
contract with nearby governments for the provision of essential government
services, such as police and fire. The EFM also takes over the local
government’s role in collective bargaining and may ask to have current
collective bargaining agreements renegotiated.
as the EFM’s authority may be, the act still leaves union officials in a
position to delay and perhaps undermine the EFM’s work. The EFM may need to
remove an unaffordable wage or benefit provisions from a city’s collective
bargaining agreement. The sooner he or she is able to do so, the sooner the
city can have its budget balanced and begin its return to financial and
economic health. Yet under the law, the EFM must still engage in good-faith
bargaining, while the union continues to draw dues payments that it can use to
reverse the EFM’s changes later on, either through collective bargaining or
through the political process.
The EFM has other tools at his
or her disposal. As long as nearby governments are willing to contract to
provide services to the troubled municipality, the contracting-out power may
allow an EFM to dispense with collective bargaining and effectively purchase
services elsewhere. The consequence of this is likely to be layoffs, however —
layoffs that can often be avoided by the prompt restructuring of wages,
benefits and work rules.
If a city, county or school
district is truly facing an emergency in fiscal terms, then the situation
should be treated as an emergency. In an emergency, necessary decisions are not
negotiated; they are made and implemented. Collective bargaining is a
privilege, not an inalienable right, and it is entirely reasonable that
privileges that complicate the resolution of an emergency should be suspended
until the emergency has passed. The Legislature should revise PERA or the Local
Government Fiscal Responsibility Act to provide that all collective bargaining
and collective bargaining agreements are automatically suspended for the
duration of the emergency. Among other things, this would suspend the local
government’s collection of union dues.
Such a rule may seem harsh, but
the interest of taxpayers in the prompt and thorough resolution of the
financial emergency and the continuation of city services must take precedence
over the interests of union officials or government employees in the
continuation of collective bargaining. This rule would also have the salutary
effect of providing union officials with a strong incentive to monitor the
economic health of the communities where their members work and the fiscal
strength of local governments and school districts with whom they bargain.
Furthermore, it provides the unions with disincentives against making contract
demands that cannot be sustained over the long term. Again, abuse the
privilege, lose the privilege.
At a minimum, the EFM should
have the authority to rescind or amend collective bargaining agreements. Such a
rule will allow EFMs to act quickly to void the most expensive collective
bargaining agreements while keeping more reasonable contracts in place. This in
turn will make it easier for EFMs to provide relief to taxpayers without
disrupting services or laying off workers unnecessarily.