Relationship Problems

Government employee unions should not be eligible for special tax breaks. Here's why.

The already problematic relationship between the State of Michigan and the Service Employees International Union is becoming more and more troubling, as SEIU Local 517M, which represents around 4,400 state employees in the human services, scientific and engineering, and technical bargaining units, reached terms for changes to their contract with the state of Michigan. (Another SEIU local, #526M, represents about 8,200 corrections staff.) As we have reported on this blog, another SEIU subsidiary, the Member Action Services Center, received $2 million in refundable Michigan Economic Growth Authority tax credits last month.

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Details of the new contract remain sketchy, and the pact is subject to ratification by Local 517M's membership, but the contract appears to contain some important givebacks, particularly in terms of health care coverage for new employees. The agreement extends the current contract, which had been set to expire at the end of 2010, for another two years. Wages for state employees will not be increased during those last two years. The renegotiated contract is considered a critical part of the governor's plan to reduce employee costs by $50 million. It is not clear that other unions will agree to givebacks; the Michigan State Employees Association, which represents around 4,800 state employees, has already announced they do not intend to follow suit.

With SEIU officials agreeing to make concessions for state employees in one context while receiving special state tax breaks (and quite possibly cash subsidies) in another, the obvious question is whether or not there was some sort of quid-pro-quo here, and the unfortunate answer is it's hard to say for sure. The Michigan Economic Development Corp. itself is far from transparent in its operations, and collective bargaining negotiations tend to take place behind closed doors. There is a serious potential for conflicts of interest to arise when government employee unions apply for special tax breaks.

The SEIU already receives more than $6 million in the form of union dues and agency fees for state government employees they represent, money that is effectively guaranteed them under the collective bargaining agreements they negotiate on behalf of those same state employees. There is every reason to believe that SEIU uses much of that money for lobbying and political activism. They have no need for another $2 million in refundable tax credits. And in a time of economic crisis, state taxpayers should not be in a position where they are obligated to pay off union officials as part of a deal to restore fiscal sanity.

The SEIU and the other government employee unions have no business extracting any further special benefits from the state, and if the functionaries who administer the state's economic development programs cannot apply such a rule on their own, the Legislature should write it for them.