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.