The following statement was delivered by Susan Kniep, President of The Federation of Connecticut Taxpayer Organizations

during a May 11, 2009 Press Conference, hosted by State Representative Arthur O’Neill, at the State of Connecticut’s Legislative Office Building….

 

BINDING ARBITRATION LAWS COULD BANKRUPT CONNECTICUT!  

 

 

 

Thank you for being with us today.   I want to extend a special thank you to State Representative Arthur O’Neill for hosting this Press Conference.  Art is well known for being a taxpayer advocate and bringing common sense to government.   In his quest for tax reform, he has championed a Property Tax Cap recognizing Connecticut has one of the highest property taxes in the nation. 

 

We are also fortunate to have with us Mike Guarco who heads the Connecticut Municipal Consortium for Fiscal Responsibility.  To learn more about the Consortium please visit FCTO’s website at the following link…. http://ctact.org/default.asp?callcontent=yes&filename=Consortium.htm%20%20%20&location=Home&buttonname=Home

 

 

As municipalities struggle to find the money to support their budgets they are faced with the realization that 85% or more of local property taxes are dedicated to supporting union salaries and benefits, which are, in turn,  driven by State Binding Arbitration laws.  They also struggle with the fact that many management rights, due to Binding Arbitration, have been transferred to the unions.  From the unions dictating the size of classrooms, to the control of town cars, to the number of fire stations which must remain open, to the work schedule of police which results in the build up of overtime which is factored into their pensions, neither the Governor nor town officials can control their budgets or the taxes we pay until Binding Arbitration Laws are reformed. 

 

Minimum funding requirements to local Boards of Education are due to sunset in 2009.  However, this funding requirement may be extended by the legislature which could explain why many teachers unions have refused to give concessions even though many of their students are witnessing the effect of unemployment in their own households. 

 

When Governor Rell introduced her budget with no tax increase she asked the State Legislature to give her what she and town leaders needed in this economy to control their budgets and their personnel.  The Governor asked for reform of State Binding Arbitration Laws.  She asked specifically for, and I quote: Suspension of binding arbitration requirements for two years while we confront our economic troubles. At the end of the two-year suspension, I propose that we limit mandatory subjects of binding arbitration to salaries and benefits only.

 

The Federation believes that many more reforms to Binding Arbitration must be made but we endorse what the Governor has requested as an initial effort toward reform. 

 

The Governor also asked the Democrat-controlled State legislature to reject the $86 million contract for 5200 state employees driving some salaries to a 6% increase in wages.  

 

As we stand here today, all three of Governor Rell’s requests have been ignored by the Democrat-controlled legislature.  The 5200 member union got their raise and her two proposed reforms to Binding Arbitration have been ignored.   

 

With the Federal government sending Connecticut $745 million for education and millions more for other projects, more government employees will be hired and fall under union contracts.   There is an obvious concern when this federal money is depleted as some ask the question - Who will fund these new hires?  The answer is simple – local and state taxpayers! 

 

Binding Arbitration laws exert an unhealthy power by government sector unions over taxpayers and those public officials who are not intimidated by the unions and actually want to do the jobs they were elected to do.   The Governor attempted to do her job – she produced a no tax increase budget but wanted help from the legislature through binding arbitration reform.  Without the two year suspension of binding arbitration laws as requested by the Governor, the end result was the State unions receiving a no layoff guarantee for two years while the state anticipates a near $8 Billion deficit for 2010-11.

 

Taxpayers, the Governor, and the CEO’s of the 169 towns are held hostage to union contracts.  Either the wage increases are paid or our officials are forced to go back to the bargaining table and give the unions what they want.  And who wouldn’t want to be guaranteed their job.  But this guarantee is at the taxpayers’ expense, many of whom do not have jobs and couldn’t comprehend expecting their employer to give them a no layoff guarantee.      

 

And there is much to fear for our State, our towns and our families, many of whom have lost their jobs, their homes and their savings.   The losses in the housing market are now being seen in the commercial market.  General Growth Properties, which filed for bankruptcy, owns the Buckland mall and malls throughout the country.  As commercial bankruptcies and home foreclosures escalate, the impact on sales taxes, property taxes, state income taxes and other taxes and fees will be significant.  The loss of those taxes will come at a time when the greatest cost of government will grow as wage increases will have to be paid to State government sector unions who agreed to limited concessions while receiving a two year no layoff guarantee. 

 

So as the scale tilts with less money coming to the State and the State having to pay more, what will the end result be?  Could it be less money going to towns which will, in turn, have to raise property taxes!  Or will state officials have to raise taxes if their collection rates cannot be sustained.  And if the towns and the state cannot find the money they need to keep the engines of government running, with their greatest cost being state and town employee salaries and benefits governed by binding arbitration, then what? 

 

With the economy continuing to plummet, mounting job losses affecting the payment of state and local taxes,  and a two year no-lay off clause for state employees as the state’s debt continues to climb, Connecticut and some of the 169 towns in the State could be brought to the edge of bankruptcy.  Ironically, the end result would be dissolution of public sector union contracts.   

 

The Federation of Connecticut Taxpayer Organizations encourages State legislators to reform State Binding Arbitration laws as the Governor has proposed.  We ask local elected officials and taxpayers throughout the State to phone or email their state representatives and tell them that without Binding Arbitration reform it will be impossible to limit the growth of government spending and control property taxes. 

 

In conclusion, I would reflect upon the past to demonstrate the effects of Binding Arbitration today.   When elected Mayor in 1989, under a strong mayor form of government, I refused the Mayor’s car.  I then instructed town personnel to find another means of transportation to and from home as they could no longer rely on town cars.    I was grieved by the unions.  I thought for sure I would win as this condition was not included within their union contract.  But I was wrong.  I lost based on Past Practice.  If a union is allowed to do something long enough outside the realm of their contract, they have earned the right to continue the practice according to arbiters.  The effects of that arbitration decision rendered several years ago are being felt today by towns which are trying to take their taxpayer owned vehicles back from the unions.  In order to get them back, they must return to the bargaining table and agree to give the unions something in return. 

 

If this practice is allowed to continue and the state and towns cannot get control of their finances while tax dollars shrink, the end result could be headlines similar to those reflecting on the future of GM: 

General Motors Bankruptcy All But Inevitable, Analysts Say

http://www.foxnews.com/politics/2009/05/10/general-motors-bankruptcy-inevitable-analysts-say/

 

As the Federation continues to pursue reforms to state binding arbitration laws, we are pursuing other matters which I would like to make you aware of.  

 

First, Armand Fusco, a former superintendent of schools and a Board Member of the Federation has been conducting citizen audits of Boards of Education in Brookfield, Woodstock, New London, Monroe, Redding, Farmington and Trumbull.   Armand wrote the book School Corruption and Public Trust as well as How to Reduce Property Taxes with a Citizens Audit Committee.

 

Second, The Federation has also initiated a campaign to put Connecticut’s Checkbook Register on Line as other states are doing to provide taxpayers with greater transparency as to how their money is being spent by state government. 

 

More can be learned on these issues and others by visiting the Federation’s website at ctact.org.

 

********************************

 

 

Change Binding Arbitration Law?

By Mark Davis, WTNH Chief Political Correspondent, on May 11, 2009

http://connpolitics.tv/index.php/2009/05/11/change-binding-arbitration-law