STATEMENT BY
THE FEDERATION OF CONNECTICUT
TAXPAYER ORGANIZATIONS, INC.
BEFORE GOVERNOR RELL’S
COMMISSION ON UNFUNDED MANDATES
DECEMBER, 2006
The following are comments made by Susan Kniep,
President of The Federation of Connecticut Taxpayer Organizations, Inc. on
December 20, 2006 before the Governor’s Commission of Unfunded Mandates.
Thank you for
extending the time to me to appear before your Committee. I ask that you look at the most impacting
unfunded mandate in this state which is Binding Arbitration .
Due to Binding Arbitration ,
local officials cannot manage their budgets and every year taxpayers are forced
to pay for increased costs born through union contracts.
From 1989 to 1993
I had served as the Mayor of East Hartford
under a strong Mayor form of government.
I had previously served for several years as East
Hartford’s minority leader on its town council. I am currently the President of the
Federation of Connecticut
Taxpayer Organizations.
A few years ago,
the Federation assessed towns to determine the percentage of personnel costs to
budgets. Of the 169 Connecticut towns, we determined that
taxpayers were paying between 75% and 85% of their property taxes to support
government employee wages, pensions and healthcare. Taxpayers, some of whom had no health
insurance, were paying 85% or more for government employee healthcare costs.
Taxpayers are
impacted by local budgets which are now controlled by arbitrators passing
judgment on union contracts. Not only on
wage, pension or healthcare issues,
but grievances as well.
During my tenure
as Mayor, the State was in a recession resulting in layoffs in the private
sector. Some Connecticut companies downsized, others went
bankrupt. Some left Connecticut for states where taxes were less
impacting.
The State and
towns suffered economically, as did taxpayers.
Families were impacted by lost jobs and wages. Yet, as Mayor, I could see the obvious. Those in the public sector were secure. In fact, not only were they not losing their
jobs, they expected to receive wage increases.
In talking with
government officials from other towns, many of us knew we had few budget
choices as we were impacted by union contracts.
In an attempt to control the finances of East
Hartford as its Mayor, when elected to office in 1989 I
relinquished the taxpayer financed automobile I was entitled to. Concurrently, I instructed that the practice
of town employees driving town owned vehicles home would cease. This was done after a careful review of their
contracts which did not grant this entitlement.
I was subsequently
grieved by the unions. I lost my case
due to a seldom referenced term called “past practice.” If the union is doing something outside the
realm of their contract, arbitrators have ruled they have earned the right to
do it. In essence, an administrator may
be allowing a practice by a union member or members to occur over a period of
time which is unbeknown to the public or to other elected or appointed
officials. Once discovered, there is no
recourse to stop the practice which may have a dramatic financial impact on the
taxpayers forced to support it.
More recently, the
police chief of East Hartford had assigned a
work schedule which would have a positive impact upon his budget. The union grieved and they won, again
creating a financial hardship on taxpayers.
The most egregious
act by the government unions was when they successfully took control of
millions of dollars as a result of the Anthem stock distribution. Rather than towns being allowed to use this
money to offset union healthcare costs paid for through property taxes, the
unions felt entitled to the money and filled lawsuits to take possession of
it. Many towns acquiesced to the unions
believing the costs to litigate might exceed the benefits distributed by
Anthem. As you are aware, for years
many government union members paid nothing for their healthcare, while
taxpayers absorbed 100% of the cost.
Today, healthcare costs in the private sector are soaring while
taxpayers concurrently pay for the majority of the costs of healthcare for
government employees.
The Federation
recognizes that Binding Arbitration will not be abolished in the immediate
future although other States have done so.
However, there must be reform.
Taxpayers do not elect those who arbitrate a contract. The elected officials taxpayers elect however have no control
over their budgets or the taxpayers dollars when 75% to 85% of their budget pay
for personnel expenses and are under the control of arbitrators who have no
accountability to the voter. This is
an affront to the democratic process.
We urge your
committee to propose to the legislature that local municipalities be given the
following authority by statute:
Give local elected
officials the same powers that State elected officials have. Make it mandatory that local arbitration
awards be ratified by a majority vote of the town council. If, as in state government, these awards are
rejected, then require the Process to begin again.
Next, take the
fund balance off the table when negotiating contracts. Allow towns to build a fund balance without
the threat of union’s being able access this money for their members. Failure to do so will continue to force towns
to bond projects because they cannot now save their money to pay for future
projects.
Next, give towns
the right to suspend Binding Arbitration for up to three years when impacted by
negative economic conditions. I had
begged the legislature to allow for this suspension when I was Mayor, but my
requests were ignored.
Next, take the
negotiation table out from behind the closed doors of secrecy and into the
light of public debate. The taxpayers
fund union contracts and should have every right to follow negotiations and
comment on terms being negotiated before contracts are agreed to. In fact, taxpayers should be allowed to vote
on union contracts through referendum.
In conclusion, I
question why the CEO’s of municipalities are forced by our State legislators to
adhere to laws which prevent them from controlling their labor costs which are
ultimately passed on to property owners through property tax increases.
The majority of Connecticut residents
work in the private sector under “at-will” conditions wherein they can be
terminated at any time, for any legal reason, or for no reason at all by their
employer. They work in a state of
flux knowing that their employer on any given day can demand that they pay a
greater share of their health care premium, take on a greater workload, receive
a minimal salary increase, no salary increase or have their pay cut. There will be no debate, no bargaining, no
arbitration, and no elected official waiting to defend them. The words “out-sourcing” and “visas” have
become a part of the Connecticut
worker’s vocabulary as the agenda of many corporations is to put their stock at
the top of the portfolios of Wall Street analysts.
The “at-will”
employee is an unprotected class. They
are losing their jobs, their homes and their health insurance. They are being forced into jobs which are
below their educational and skill levels and at salaries which are a fraction
of what their previous jobs paid.
Yet, the American
dream is alive and well for those whom the “at-will” employee is forced by
elected government officials to financially support. They are the state and municipal government
workers. In contrast to the “at–will”
employee, government workers don’t have to accept what their employer tells
them. Taxpayers are their employer. Whether it is working conditions or salary,
healthcare or pension issues they exercise their State given right to force
negotiations and push their agendas, behind closed doors, under state Binding
Arbitration laws, which leave taxpayers
powerless. Unions vote to accept or
reject their contracts. Taxpayers do
not. Instead, taxpayers are simply
presented with the bill for these lucrative union contracts, through their
property taxes.
Thank you again
for your time. Taxpayers in the 169
towns and the State need property tax relief.
Reforming Binding Arbitration will provide that relief.