AFSCME makes first offer in Iowa contract talks

Yesterday Local 61 of the American Federation of State, County and Municipal Employees (AFSCME) released its first proposal for the next two-year contract covering roughly 20,000 state employees in Iowa. I’ll be shocked if these contract talks don’t end up in arbitration.

AFSCME’s current contract runs through the end of this fiscal year on June 30, 2013. Former Governor Chet Culver and union representatives agreed to across-the-board salary increases with no changes to benefits shortly after the 2010 election, over incoming Governor Terry Branstad’s loud objections.

Branstad has made clear that he considers the benefits package for most state employees far too generous. His administration has recently pushed the idea that most state worker salaries are too high.

Against this backdrop, AFSCME presented what Iowa Council 61 President Danny Homan described as “a modest and reasonable proposal.”

Our contract proposal requests a 1% wage increase during the first year and a 2% wage increase during the second year. We requested no other changes to the contract.

We did not request any changes to our health insurance benefits in the state contract.

Despite the rhetoric of some who attack public employees, our current health insurance is not “free.” It was paid for at the bargaining table many, many times, by trading wages and other items for our health insurance benefits.

Homan struck the same chord in comments to reporters yesterday:

“This union has made concessions in the form of giving up wage increases…and done many things to keep the insurance the way it is,” Homan said. “I’m sure this governor is not going give us back the wages we gave up in order to keep our insurance the way it is, so we see no reason to change.”

Branstad wants public employees to pay 20 percent of their health insurance premiums, but Homan has previously argued that such an expense would amount to 10 to 18 percent of lower-paid state workers’ salaries. Branstad is voluntarily paying 20 percent of his own health insurance premiums, which is easy to do when you pay almost no state taxes on a large six-figure income.

I can’t see public employee unions making a big concession on health care benefits without a significant salary increase. But I can’t imagine Branstad agreeing to any real wage hike for state workers when his administration claims (on very thin evidence) that most state workers are already overpaid.

This 2011 study by Andrew Cannon of the Iowa Policy Project found, “When average earnings are compared by education level, private-sector workers generally fare better than their public-sector peers,” even when taking generous public employee benefits into account.

Yesterday the Iowa Department of Management estimated the costs of AFSCME’s new contract proposal as follows, assuming all state employees (not only those covered by AFSCME) receive the same treatment:

$122 million increase in fiscal year 2014 ($35 million from across-the-board salary raises, $47.4 million from Step salary increases, and $39.5 million in higher costs for health care and retirement benefits)

$159 million increase in fiscal year 2015 ($72 million from across-the-board salary raises, $45 million from Step salary increases, and $42 million in higher costs for health care and retirement benefits)

Those aren’t negligible costs in comparison to Iowa’s general fund budget, which is in the $6 billion range annually. On the other hand, Branstad is happy to hand out tens of millions or hundreds of millions of Iowa tax dollars to large corporations promising to employ a few hundred people. The AFSCME contract covers tens of thousands of workers.

It’s also important to remember that our state finances are in good shape.

According to figures from the nonpartisan Legislative Services Agency to be discussed by legislators Thursday [October 18], the state officially closed the fiscal 2012 ledger with a $688.1 million budget surplus after its cash reserve and economic emergency funds were filled to the statutory maximum of nearly $596 million.

And, the projected surplus is slated to go even higher this fiscal year with a projected positive ending balance of $768 million expected by next June 30 and could possibly top $800 million in fiscal 2014 depending on decisions made by Gov. Terry Branstad and lawmakers during the 2013 session.

“That’s the largest surplus that I’ve seen,” LSA fiscal analyst David Reynolds said of the state surplus. “I know it’s never been that high.”

The $802 million surplus projected for fiscal 2014 is very preliminary and is based on revenue estimates issued last week purely as a means to give lawmakers a benchmark for their discussions, according to LSA officials.

The preliminary budget assumptions do not include collective bargaining costs, which usually range from $70 million to $100 million annually, and do not factor in potential federal funding and tax policy changes facing Congress and the president early next year.

If any of the Bush tax cuts expire, Iowa tax revenues will go down, because Iowans can deduct all federal tax payments from their income subject to state income taxes. Federal funding for Medicaid and other programs in Iowa may also decrease, depending on the outcome of President Barack Obama’s budget negotiations with Congress.

Any relevant comments are welcome in this thread.

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