Feb 18 What's Not To Like? Details Of Wisconsin's AB 11

First the Superbowl, now this! 

Wisconsin is fixin' to be Number One in the nation when it comes to reining in the government worker unions that are driving state governments into bankruptcy.  In Minnesota, here's just one part of the problem: Government worker pension debt in the state is $19.4 billion.  In 2010 the state's three largest pension plans were $495 million short of the annual funding needed to finance their share of this long-term liability.  The 2010 Legislature passed $119 million in annual new taxpayer financing for the bailout, but it ain't near enough and more bailout dollars are being requested. 

This comes at a time when you, the taxpayer, have lost 30 to 60 percent of your 401k value, lost your job, lost much of the equity you had in your home, and probably have lost hope of a decent retirement. 

Special Session AB 11 hasn't passed either chamber of the Wisconsin Legislature yet since the DNC is doing all it can to stop that state's elected officials from exercising their constitutional rights as policymakers and performing their fiduciary responsibilities as budget balancers.  The Democrat senators have skipped out of the state (reportedly to Illinois) to thwart passage of the bill.  (For fiscal bills like AB 11 the Wisconsin Constitution requires "three−fifths of all the members elected to such house shall in all such cases be required to constitute a quorum therein.)  

Minnesota Republicans should steal this page from the Cheesehead legislative playbook.  The Wisconsin bill is a general cost-cutting effort similar to Minnesota's HF 130 (which shaved about $1 billion off of Minnesota's $6.2 billion budget shortage before it was watered down in the Senate and unceremoniously vetoed by Gov. Dayton). 

But Wisconsin's bill also contains some fundamental, pro-taxpayer reforms of the state's public employee collective bargaining process and makes critical changes to retirement financing laws.  FDR would undoubtedly approve.

Pension-Related Provisions Reduce Taxpayer Liabilities
SS AB 11 removes the ability to negotiate who pays the employee share of pension plan contributions.  Wisconsin law currently requires general state employees to pay five percent of their salaries toward their pensions, but that requirement is subject to collective bargaining.  The bargaining chip was negotiated away years ago and the full tab was picked up by the taxpayers (most likely without their knowledge).  SS AB 11 removes pension fund contribution rates from the collective bargaining table and replaces it with a requirement that the employees must contribute "an amount equal to one−half of all actuarially required contributions."  In other words, the full cost of these Cadillac defined benefit pension benefits will be split down the middle. 

The fiscal note shows anticipated cost savings of $207 million for the biennium as a result of putting the employee share of retirement contributions back on the employees where they belong.  The bill also reduces the formula multiplier for elected officials and executive employees from 2% to 1.6%, the equivalent of the current general employee formula.  (No savings is provided for this change, pending actuarial work.  The change is effective for future service.)

Taxpayer-Friendly Overhaul of Government Union Structure
The meat of the Wisconsin bill is its bold attempt to bust the government worker unions.  Regardless of what you think of private sector unions, our unionized government workers are without question the most powerful political force in history - and they are ruining our economy state by state.  The Wisconsin bill overhauls the way government worker unions are certified in Wisconsin.  Instead of a one-time vote with only a majority of those voting needed to certify a labor organization, SS AB 11 requires annual union certification and requires a majority vote of all members of the union, not just those who show up to vote.  Contract periods are reduced from two years to one and contract extensions are prohibited.  Union dues can no longer be automatically deducted from paychecks and members who opt out of paying their dues to can remain a member of the collective bargaining unit.

Pay and benefit provisions that can be collectively bargained are limited in the bill:  "This bill limits the right to collectively bargain for all employees who are not public safety employees (general employees) to the subject of base wages. In addition, unless a referendum authorizes a greater increase, any general employee who is part of a collective bargaining unit is limited to bargaining over a percentage of total base wages increase that is no greater than the percentage change in the consumer price index." 

Go Pack Go!

Bob Shipman is a Fellow with the Minnesota Free Market Institute.