Delving into whether Rauner’s agenda would work and its chances at approvalPublished: Saturday, Sept. 3, 2016 11:22 p.m. CDT
By KEVIN P. CRAVER kcraver @shawmedia.com
A McHenry County Board vote last year to approve a symbolic resolution to support Republican Gov. Bruce Rauner’s “Turnaround Agenda” became a major legal weight around the board’s neck.
Local labor unions that call Rauner’s support for right-to-work laws an assault on the working class protested the vote, and one union took the County Board to court, alleging that board members who met with Rauner before the vote violated the Open Meetings Act. While the County Board settled the lawsuit and revoked its symbolic resolution, another headache continued in the form of a state investigation, sparked by that very same union, into whether board members work enough to qualify for their pensions.
Of all the facets to the agenda on which Rauner ran in 2014, the ones seeking to curtail collective bargaining and reform prevailing wage laws are by far the most contentious, especially in a state like Illinois where public-sector unions wield tremendous political clout. That clout, and the Democratic Party holding supermajorities in both houses of the General Assembly, make these proposed changes problematic at best.
Politics aside, would these proposals work and provide tax relief, and do they have a chance of approval? The answer, of course, depends on who you ask.
What it means
Rauner’s proposal would allow for the creation of right-to-work laws at the local level through “employee empowerment zones” that would give workers – public sector, private or both – the right to voluntarily join or refrain from joining a union, and would forbid requiring joining or paying union-related dues as a condition for employment. The zones either could be approved by the local government or by referendum. It also would allow local governments to exclude a number of topics from collective bargaining.
Another proposal would repeal the state’s prevailing wage law, a minimum hourly wage set by the Illinois Department of Labor, based on trade, for any building project undertaken by a local government. These rates typically are set to match union scale.
To Anders Lindall, spokesman for the American Federation of State, County and Municipal Employees Council 31, Rauner’s initiatives aren’t about helping taxpayers, but gutting organized labor and lowering wages. The council represents about 75,000 employees statewide.
“Having a voice at work through their union allows public service workers at the city and county level to advocate for enough resources to serve their community, to have a voice to keep political interference out of public service, and to have the tools they need to do their jobs, whether it’s responding to emergencies, protecting public health and safety, or teaching kids. If you’re talking about silencing the voices of public service workers in these helping professions, that is what’s at stake,” Lindall said.
Others see it differently. Michael Lucci, vice president of policy for the conservative-leaning Illinois Policy Institute, said that data concludes that right-to-work laws have increased wages in the three neighboring states – Wisconsin, Indiana and Michigan – that have implemented it. About half the states in the union have right-to-work laws.
“The normal criticism of right-to-work says, ‘If you adopt right-to-work, then boom, wages just fall.’ There’s absolutely no evidence of that, and in particular, in the three states around us that have enacted right-to-work, personal income increased faster than in Illinois,” Lucci said.
Besides the long shot that a Democratic legislature would even entertain the idea, there are legal roadblocks. Attorney General Lisa Madigan ruled that federal labor law allows only states and not local governments to enact such policies. The Lincolnshire Village Board created a right-to-work zone anyway and was promptly sued by a number of unions. The lawsuits are still ongoing – the village is getting free legal representation from a law firm funded by the Illinois Policy Institute.
Many of the 24 members of the McHenry County Board, all Republicans, have cited both union contracts and prevailing wage as roadblocks when it comes to cutting costs and reducing the overall budget. The board and its associated bodies, a sliver of the 7,000 units of local government in Illinois, make up about 10 percent of a resident’s property-tax bill.
More than half of county government’s workforce, which has steadily decreased since the Great Recession, is unionized through 10 separate bargaining units. Besides giving those employees benefits and raises, board members give their non-unionized workers a level of parity, lest they be convinced to organize as well. In Illinois, public employees are automatically unionized if a majority of workers in an office fill out the authorization forms, a process known as card check.
As for prevailing wage, board members allege that it jacks up the cost to taxpayers for projects. For the past three years, the County Board has symbolically voted against accepting the annual prevailing wage list mandated by the state. But while rejecting the schedule carries no penalty, willingly paying workers less than prevailing wage carries a Class A misdemeanor and fines – under the law, the elected officials face the charge, while the body, meaning the taxpayers, pay the fine.
Prevailing wage is no joke, said County Board member Michael Walkup, who is the Republican candidate for board chairman. During the April 2015 debate about supporting the Turnaround Agenda, Walkup brought up a project during his time on the Crystal Lake Park District Board to build a brick restroom at Veterans Acres Park that ended up costing $250,000. To put it in perspective, Walkup said, the quote he got to rebuild his entire home after a fire came in about the same.
“Prevailing wage probably doubles your labor costs. A true prevailing wage would be what the overall price is in the marketplace when you consider everything, but we’re not allowed to consider everybody – we only can compare union scale,” said Walkup, R-Crystal Lake.
Conflicting studies exist on prevailing wage’s effect on the bottom line.
Lucci said that prevailing wage typically increases costs by about 6 percent, but that 6 percent of the $11 billion or so spent on public construction in Illinois adds up to $660 million. The number, he said, also doesn’t include increased workers compensation costs.
But a new report released last week by the liberal-leaning Illinois Economic Policy Institute casts doubt on the allegation that prevailing wage is artificial or jacks up costs. The report analyzed wages in a number of Illinois counties bordering other states and concluded that the prevailing wage rates are not inflated, but match local rates. Local market conditions by far have more of an effect than prevailing wage, according to institute Policy Director Frank Manzo IV, who wrote the analysis.
“The state’s prevailing wage law prevents government from undercutting local standards, supports in-state contractors, provides a competitive level of compensation to workers, and promotes apprenticeship training. Illinois should continue this high-road public policy,” Manzo wrote.
Same old situation?
The next chance of any sort of deal being struck on any portion of Rauner’s agenda will be after the Nov. 8 election, when the six-month temporary state budget is set to expire.
Rauner’s main hope for getting some of the Turnaround Agenda approved could materialize as part of a “grand bargain” on a budget. Rauner has said he would entertain increasing taxes like Democratic lawmakers want, only if accompanied by meaningful pro-business and pro-taxpayer reforms he said are necessary to reverse Illinois’ dire economic fortunes.
David Yepsen, director of the Paul Simon Public Policy Institute at Southern Illinois University at Carbondale, said he is not optimistic about a deal being struck. With about two-thirds of General Assembly seats uncontested in this election, he does not see the current political calculus changing in a way that would favor either Rauner or House Speaker Michael Madigan by giving him enough of a cushion to override a gubernatorial veto and take the governor out of the equation entirely.
“I think they’re going to have to come to some agreement with the governor. I just don’t see a situation where the Democrats have either the numbers or the discipline to completely ignore the governor and think they can override vetoes,” Yepsen said.
There are, of course, other aspects of the Turnaround Agenda, such as workers’ compensation and tort liability reform, a statewide property-tax freeze, term limits and redistricting reform. But many of those are just as politically unpalatable to many General Assembly members. The Illinois Supreme Court last month slapped down a citizen initiative for a constitutional amendment to take the power to draw legislative districts away from lawmakers.
An outcome of this, Yepsen said, could be that the temporary budget deal that ended a year-long budget impasse between Rauner and Democratic lawmakers expires, and turns out to be nothing more than an intermission.
“With all the spending and rhetoric, we could be right back in the same gridlocked position,” Yepsen said.