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Fri, 01 Aug 2008
Where will the hardball bounce?
Last week, members of the state's biggest public employee union, AFSCME Council 94 voted to reject the contract deal negotiated between the state's union leadership and the Governor. No one is quite sure what happens next, because something like this hasn't happened in a long time.
Let's be clear what did happen: the union membership unequivocally repudiated their own leadership, rejecting what those leaders had described as the best deal available under the circumstances. So now the leadership is in a hard place, stuck between a Governor who won't give and a membership who won't budge.
"Hasn't happened in a long time" isn't to say it never has. In March 1991, on the heels of the credit union shutdown, Council 94 members rejected a proposal their leaders had crafted for pay cuts and deferrals, prompting Governor Bruce Sundlun to enact a plan for layoffs and to close down state government for ten furlough days.
As it turned out, though, we only shut down for three days, and within a month or so, a compromise had been reached that involved limiting the layoffs and deferring some compensation and this second plan squeaked by the membership. There were fireworks, but there was a compromise, too.
Sadly, things are pretty different this time around. For one thing, much of the union leadership had supported Governor Sundlun in his election. They felt he was, at root, a sympathetic figure. (Many changed their minds a couple of years later.) He made certain his own paycheck was affected -- a small gesture for a multi-millionaire, but a gesture nonetheless. He made it clear the choice was between layoffs and pay cuts, and promised no layoffs if the cuts were accepted. The compromise included some layoffs, but they were limited.
Contrast that with Governor Carcieri, to whom small gestures are foreign (and who announced last Friday that he's not interested in more negotiation). He asked employees to accept less money, but is also on record that accepting less money wouldn't rule out layoffs. I can imagine taking a pay cut in order to avoid being laid off, but what, exactly, would be the point of taking a pay cut in order not to avoid being laid off? Would you take that deal?
And here's the other big difference. Bruce Sundlun was ambushed by events not under his control. He took office only to find a third of the state had bank accounts in insolvent and possibly insolvent credit unions. Ed DiPrete left him a fiscal and economic disaster. That first year Sundlun was trying to fill a $222 million mid-year deficit in a budget half the size of today's. He cut the budget and inveighed against tax hikes, but when the Assembly passed a budget that included higher taxes, he didn't veto it. And you know what happened? We got out of the crisis, we paid back the DEPCO bonds ahead of schedule, and a few years later the budget was in surplus.
Today, though, our fiscal crisis is the result of events very much under our control, the result of a tax cut overdose administered long before the economy tanked. The Governor and Assembly leaders knew this crisis was coming -- and have known for years -- because they caused it. The Assembly leadership is more responsible than the Governor for most of the tax cuts, but it's not as if he's objected to them.
The union leadership is in a hard spot here. For years, they have played the inside game at the state house, cultivating and protecting personal relationships with Assembly leaders and members. But over the last many years, those relationships have won them very few victories. Last year they won a provision to make it harder for the Governor to privatize state services, but they've also lost big time in the pension "reform," the casino, health care options and more. Given the circumstances of 1991, it's easy to see why a compromise happened. Given the circumstances of today, it is going to be hard for union leaders to explain to their members why they should compromise with this Governor. This year, we're in year three of a five-year cut to the taxes of the wealthiest individuals in our state. Are they telling their members to take less pay in order to preserve those tax cuts?
Oh, and for all the people cheering for unions' defeat, thinking this will mean lower taxes: Think again. The money saved by these cuts in union wages and health benefits and pensions? It's already claimed by those 12,000 people at the top of our income pile who still expect years four and five of their tax cuts. If it doesn't go to that or some new "targeted" corporate tax cut, it will pay the interest of new borrowing to prop up a bankrupt Department of Transportation. It is not going to you.
The record of the past few years is all too clear on the point: Reducing the taxes of low and middle-income people is simply not on the table at the state house. What is on the table instead are state demands that cities and towns reduce your taxes while at the same time providing more services. That sounds similar, but it's a very different thing indeed.
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