The government employee unions created by
PERA may be the single largest obstacle to restoring the state’s prosperity. The repeal or restructuring of PERA could resolve the state’s chronic fiscal crisis. Read more about this at
Public Employment Relations Act, the 40-year-old law that governs local
government labor relations, puts local officials in a bind and places
increasingly unjustifiable burdens on taxpayers. It does this by inadvertently
giving government employee union officials an effective veto power over many
areas of policymaking and by simultaneously creating a permanent,
government-funded lobby for big government. But it is possible for local
governments to enact responsible budgets and administer themselves efficiently
— if local officials are able to present a united front and throw out all the
standard misconceptions regarding collective bargaining.
For an example
of what responsible government subject to PERA looks like, consider the example
of Oakland County. A combination of solid leadership, keen legal strategy and
an electorate that by and large remains fiscally conservative has produced a
county government with balanced books, manageable future obligations and a
reasonably strong economy in spite of its proximity to the imploding city of Detroit.
One very common
mistake that Oakland County has managed to avoid is that of guaranteeing unions
a permanent revenue stream. With the exception of the sheriff's office, Oakland
County employees are not forced to pay union dues as a term of employment.
Oakland County's determination not to underwrite union politics makes unions
more accountable to their members and limits the power of the union political
machine. If agency fees were in place, government employee unions would take in
tens of thousands of dollars more than they currently do, money that could
easily be diverted to political campaigns and lobbying. Instead, unions in
Oakland County are obliged to seek voluntary contributions from employees who
have the power to say no. According to Deputy County Executive Robert Daddow,
about half of the workers who have the choice opt to sign up.
County's smart approach to collective bargaining has given the county one clear
advantage over other local governments — a majority of its employees have
defined contribution retirement plans, as are common in the private sector,
rather than the defined benefit programs that most local governments are
saddled with. This allows Oakland County employees more control over their
retirement funds, and at the same time frees Oakland County taxpayers of the
burden of guaranteeing retirements. As a result, Oakland County's retirement
costs are substantially lower.
On the whole,
Oakland County's financial position is less dire than those of neighboring
Macomb and Wayne counties. A good general indicator of a county's overall
fiscal health is its level of unrestricted net assets, which can generally be
used at the discretion of county leaders. While Oakland County's unrestricted
net assets have declined, they remain positive, meaning their assets cover
their expected costs of government and have some money left to meet additional
needs. Meanwhile, Wayne and Macomb counties don't have that luxury. They have
unrestricted governmental net asset deficits.
Though all is
not sunshine and daisies in Oakland County, the county's fiscal prudence and
smart labor relations have benefitted its residents. Given its location in a
struggling state in the midst of a recession, Oakland has managed to maintain
relatively low unemployment and respectable per-capita income growth.
Not every local
government in the state will be able to follow Oakland County's example
immediately. Restraining unions in the wake of PERA requires a strong political
consensus that is hard to achieve under the best of circumstances. Unions that
have successfully used the combination of forced dues and bargaining leverage
to become powerful will be especially hard to dislodge. Reform or repeal of
PERA will be needed to restore local control and fiscal sustainability. But in
the meantime, Oakland provides a good example of smart labor relations for
local officials to emulate.
Paul Kersey is
director of labor relations and James Hohman is a fiscal policy analyst at the
Mackinac Center for Public Policy, a research and educational institute
headquartered in Midland, Mich. Permission
to reprint in whole or in part is hereby granted, provided that the author and
the Center are properly cited.