Issue report # 2 Problem: The growing expenditures for government employees and the fiscal crisis in state and local governments Policy: Wisconsin’s new collective bargaining law: “Under current law, municipal employees have the right to collectively bargain over wages, hours, and conditions of employment under the Municipal Employment Relations Act (MERA), and state employees have the right to collectively bargain over wages, hours, and conditions of employment under the State Employment Labor Relations Act (SELRA). This [law] changes MERA and SELRA with respect to all employees except employees who are certain protective occupation participants under the Wisconsin Retirement System or under a county or city retirement system (public safety employees). This [law] limits the right to collectively bargain for all employees who are not public safety employees (general employees) to the subject of base wages. In addition, unless a referendum authorizes a greater increase, any general employee who is part of a collective bargaining unit is limited to bargaining over a percentage of total base wages increase that is no greater than the percentage change in the consumer price index. This [law] also prohibits municipal employers from collectively bargaining with municipal general employees in matters that are not permitted under MERA.” Client: Mike DeWine (Republican), Governor of the State of Ohio 14 Tasks: 1) Identify the advantages and disadvantages of Wisconsin’s new collective bargaining law; 2) If Ohio is to adopt a similar law to control the size (in terms of expenditures) of the state and local governments, how can the disadvantages of the Wisconsin law be addressed?; 3) If the Wisconsin law should not be adopted, what alternatives policies can be implemented to control state and local government expenditures?; 4) In summary, recommend to the Governor if he should push for the adoption of a new collective bargaining law similar to that passed in Wisconsin, or seek alternative solutions to the issue of increasing administrative costs.

Collective Bargaining Law: Wisconsin and Ohio Lidong Luo, Sam Taylor, Thao Nguyen, Caleb, Napuck Collective Bargaining Law 1 Table of contents • Collective Bargaining Law • General laws • The process • The economic effects • Wisconsin • Prior to Act 10 • Act 10 • Results of Act 10 Collective Bargaining Law • Ohio • Economic Snapshot • Potential impact from an Act 10 law • Recommendation • Alternative Solutions 2 CollectiveBargaining Collective bargaining is a strategy whereby agents of workers and managers arrange work conditions, regularly coming about in a composed contract setting stipulating the compensation, hours and other conditions to be watched for a stipulated time. Collective Bargaining Law 3 Federal Union Laws • National Labor Relations Act of 1935 (NLRA) • Established legal right to unionize in private sector • Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) • Created regulations for Union • The Civil Service Reform Act of 1978 (CSRA) • Created means for federal employees to unionize Collective Bargaining Law 4 Bargaining process • Good Faith Bargaining • Requires parties to meet with intention of resolving mandatory topics. • Mandatory topics • Hours, Safety, Pay, Benefits, Layoffs, Discipline, Ect. • Permissive topics • Employee rights, Managerial control, Retirement Benefits for Union Members • Impasse (Failure in Good Faith Bargaining) • Strike, Lockout, Arbitration/Conciliation/Mediation • • • • • Strike- Workers refuse to work Lockout- Management prevents workers from working Arbitration- Third party decides who gets what Conciliation- Third party works towards agreement with both sides separately Mediation- Third party works towards agreement with both sides together Collective Bargaining Law 5 Pros and Cons of Collective Bargaining Pros • Brings political pressure in favor of labor • Can create better working conditions/compensation • Prevents managerial monopoly/monopsony Collective Bargaining Law Cons • Higher cost of output • Can have free riders • Waste time and resources with negotiations • Prevents individual negotiations 6 Labor Supply and Demand • Like special interest groups Labor Unions help a few but cost others • The higher cost of labor means less labor demanded • Prevents equilibrium from ever being met Collective Bargaining Law 7 Wisconsin Wisconsin Act 10 /Wisconsin Budget Repair Bill Collective Bargaining Law 8 Prior to the Act 10 (2010) • Wisconsin general operating budget for Fiscal Year (FY) 2010 is approximately $12.82 billion and $13.57 billion in 2021 Wisconsin Spending Supports Local Services Aid to individuals , 18.70% • In 2010, about $7.2 billon or 56.5% of the total expenditures on Local Assistance • Of $7.2 billion, $5.1 billion was spent for supporting public K-12 education, $812 million for aiding municipal and county governments to provide public services. State Agencies, 16.90% Local Assistace , 56.50% UW System, 7.90% Data from Annual Fiscal Report Budgetary Basis, State of Wisconsin 2011 Collective Bargaining Law 9 Unions in Wisconsin Pre-Act 10 • In 1959, Wisconsin became the first state to grant teachers’ unions the right to collectively bargain • Unions had the ability to collectively bargain with local school boards over many aspects of the teaching profession (eg: working conditions, teachers’ compensation schemes, layoff procedures) • All unionized districts in Wisconsin paid their teachers according to a salary schedule (years of experience and level of education were the two sole determinants of compensation) • Unions bargained for policies that protected teachers with longer tenure from layoffs or less desirable school assignments. • State employees were required to pay on average 6% of their annual health insurance premiums, and most paid little or nothing toward their pensions Collective Bargaining Law 10 Act 10 Wisconsin • What is it? • A legislation signed into law on March 11, 2011 by Republican Governor Scott Walker and passed by the Wisconsin Legislature to address a projected $3.6 billion budget deficit • It reduced collective bargaining rights for state and municipal employees, including K-12 teachers. • It required teachers and other public employees in Wisconsin to pay more toward their retirement and health care plans • The law weakened unions by implementing mandatory annual recertification elections and prohibiting paycheck deductions for union dues collection. • It eliminated teachers’ and other public employees’ rights to bargain about pay, hours and other conditions of employment. Collective Bargaining Law 11 What happened after the Act 10 Wisconsin Advantages: fiscal and budget advantages, positive impacts for stakeholders and Wisconsin citizens, and positive externalities. • General operating budget in FY 2012 is decrease by $183.8 million or – 1.4% from FY 2021 (Predicted $3.6 billion budget deficit)* • Of $183.8 million, Wisconsin could cut $499.9 million or –6.5% from FY 2011 for Local Assistance • Tax burden per individual shrank from $-5,700 in 2010 and 2011 to $4,800 in 2012 * Data from: https://www.data-z.org/state_data_and_comparisons/detail/wisconsin Collective Bargaining Law 12 What happened after the Act 10 Wisconsin Disadvantages: fiscal and budget disadvantages, negative impacts for stakeholders and Wisconsin citizens, and negative externalities. • Public employee union membership dropped significantly after the law passed, from 62,818 in 2011 to 28,745 in 2012 (Over 50%) • A recall of election to replace Gov. Walker, Republican Lt. Gov. Rebecca Kleefisch and four GOP state senators. • Thousands of opponents to Walker’s collective bargaining actions filled the streets of the state capital protesting the proposed legislation and the Supreme Court’s overturning of Sumi’s ruling. Collective Bargaining Law 13 Ohio Collective Bargaining Law 14 Ohio – Economic Snapshot • General Revenue Funds from Operating Budget for Fiscal Year (FY) 20-21 = $48.8 billion • Decrease in tax revenue collected in FY20 (before pandemic) • Pandemic-related revenue decreases projected for FY21 • Ohio has about 52,000 state employees • Of these employees, about 30,000 belong to unions • Act 10 (Wisconsin) would prevent these employees from receiving larger raises than the Consumer Price Index (more on next slide) • This does not include municipal employees, such as teachers, employed by counties and cities Collective Bargaining Law 15 Ohio – Implications of Adopting Wisconsin Laws • Consumer Price Index = 1.4% nationally, 0.8% in Ohio • Employee raises of 2.5% in FY 17, 18, 19, 20 • Raises of 2.5% for 52,000 state employees would = $77.6 million • If raises were capped at 1.4%, state would save $34.2 million on payroll • If raises were capped at 0.8%, state would save $52.8 million • For context: Wisconsin saved $30 million in 2011. • These savings are .07% and .11% of the budget, respectively • Very small savings from capping raises negotiated through collective bargaining • This does not include savings at the local level (ex: cities capping raises for municipal employees) Collective Bargaining Law 16 Ohio – Senate Bill 5 • Similar to Wisconsin, attempts to limit collective bargaining power caused backlash in Ohio • Senate Bill 5 of 2011: • Prevented public workers from striking • Prevented public workers from bargaining on non-wage benefits • Senate Bill 5 of 2011 was repealed by a voter referendum in November 2011 • Despite Republican Governor John Kasich winning 49-47 in 2010, the Senate Bill 5 referendum passed 62-38 • Important for political considerations Collective Bargaining Law 17 Recommendation for Ohio At this time we feel that the negative externalities of Wisconsin’s Act 10 are ultimately more harmful and difficult to deal with than the benefits obtained to the state deficit. Collective Bargaining Law 18 Alternatives to Wisconsin-style Legislation • Ohio could increase revenue • Specifically: Reinstate the business tax rates from FY2019 and prior • Ohio tax revenues increased 4.8% between FY2018 and FY2019, but decreased 1.1% between FY2019 and FY2020 • Reduce expenditures on non-payroll items • Greater oversight of general government expenditures by utilizing Reduction in Force (RIF) Policy to reduce government redundancies Collective Bargaining Law 19 References • Laws | U.S. Department of Labor. (n.d.). Retrieved from https://www.dol.gov/agencies/olms/laws • NLRB. (n.d.). National Labor Relations Act | National Labor Relations Board. Retrieved from https://www.nlrb.gov/guidance/key-referencematerials/national-labor-relations-act • Zantow E. Wisconsin Unions Fight Collective-Bargaining Limits. Courthouse News Service. Retrieved Mar 10, 2020 from https://www.courthousenews.com/wisconsin-unions-fight-collective-bargaining-limits/ • Wisconsin Public Worker Union Post Act 10. School of Workers Education for workplace democracy, University of Wisconsin-Madison. Retrieved Mar 10, 2020 from https://schoolforworkers.wisc.edu/wisconsin-public-worker-unions-post-act-10/ • Annual Fiscal Report Budgetary Basis, State of Wisconsin 2010. Retrieved Mar 10, 2020 from https://doa.wi.gov/budget/SCO/WI%202010%20AFR.pdf • Annual Fiscal Report Budgetary Basis, State of Wisconsin 2011. Retrieved Mar 10, 2020 from https://doa.wi.gov/budget/SCO/WI%202011%20AFR.pdf • Annual Fiscal Report Budgetary Basis, State of Wisconsin 2012. Retrieved Mar 10, 2020 from https://doa.wi.gov/budget/SCO/WI_2012_AFR.pdf • Marley P. Act 10 at 10: Four takeaways from the Scott Walker legislation that shook Wisconsin. Milwaukee journal sentinel. Retrieved Mar 2, 2020 from https://www.jsonline.com/story/news/politics/2021/02/08/act-10-turns-10-four-takeaways-law-shook-wisconsin/4402917001/ • Vetterkind R. 10 years later: Wisconsin’s Act 10 has produced labor savings, but at a cost. Wisconsin State Journal. Retrieved Mar 5, 2020 from https://madison.com/wsj/news/local/govt-and-politics/10-years-later-wisconsins-act-10-has-produced-labor-savings-but-at-a-cost/article_04022e8182ba-5c23-88f9-25070c031f7c.html • Ohio’s 20-21 Budget. Policy Matters Ohio. Retrieved February 25, 2020 from https://www.policymattersohio.org/files/assets/budgetwrapintrooverview2019.pdf • Rowland, Darrel. (2018, March 30). State of Ohio gets its first employee making more than $500k. The Columbus Dispatch. Retrieved from https://www.dispatch.com/news/20180330/state-of-ohio-gets-its-first-employee-making-more-than500k#:~:text=The%20state%20says%20the%20official%20state%20worker%20count%20was%2051%2C716%20in%202017. • Ludlow, Randy. (2018, May 14). Many state employees receive 8.7% raise over 3 years. The Columbus Dispatch. Retrieved from https://www.dispatch.com/news/20180514/many-state-employees-receive-87-raise-over-3-years. Collective Bargaining Law 20 References, continued • Annual Report: Fiscal Year 2020. Ohio Department of Taxation. Retrieved on February 18, 2021 from https://tax.ohio.gov/static/communications/publications/annual_reports/2020ann ualreport.pdf. • Ohio Economy at a Glance. U.S. Bureau of Labor Statistics Retrieved on February 25, 2021 from https://www.bls.gov/regions/midwest/ohio.htm. • Consumer Price Index Overview Table – Midwest. U.S. Bureau of Labor Statistics Retrieved on February 25, 2021 from https://www.bls.gov/regions/midwest/data/xgtables/ro5xg01.htm. • Guillen, Joe. (2011, March 20). What’s really in Senate Bill 5? Clearing up the rumors, misinformation surrounding collective bargaining overhaul. The Plain Dealer. Retrieved from https://www.cleveland.com/open/2011/03/whats_really_in_senate_5_clear.html. • State Issue 2: November 8, 2011. Ohio Secretary of State. Retrieved on February 25, 2021 from https://www.ohiosos.gov/elections/election-results-and-data/2011-electionsresults/state-issue-2-november-8-2011/. Collective Bargaining Law 21 Back Up Collective Bargaining Law 22 Disadvantages Collective Bargaining Law 23 MEMORANDUM Mar 9, 2012 Good. A very big improvement from the earlier version Your final total grade: 95=A BSJ 1. Introduction The effect of greenhouse gas emissions on global warming has raised concern in the international community and lead to numerous proposals and bills that aimed at reducing emissions. This memo examines the impacts of the Clean Energy and Security Act of 2009 (ACES OR H.R 2454), a proposed legislation to establish a national renewable energy standard and the implementation of a national cap-and-trade system for the entire U.S. economy endorsed by Representatives Henry A. Waxman of California and Edward J Markey of Massachusetts, both Democrats. ACES has five major components: 1) Emission Trading 2) Promotion of Clean Technology 3) Renewable Energy Standards, 4) Energy-Efficient Standards, 5) Agriculture and Forestry related offsets. This memo focuses only on Title III, which establishes a cap-and-trade system for greenhouse gas emissions. This section of the bill aims to reduce greenhouse gas emissions from the combustion of coal, oil, and natural gas without slowing the US economy. In practice, most countries have chosen to control the pollution by using taxes instead of capand-trade programs. Presumably this is because taxes are a policy instrument better known than can be applied using existing administrative mechanisms. However, it is anticipated that the use of cap-and-trade is growing perhaps at a faster rate in the European Union as this approach combines the market along with governmental regulation. 2. Context The 1,457-page legislation will set a ceiling on carbon emissions and create a landscape where companies are given allowances, i.e. caps, as to how much greenhouse gases they could emit. After these caps are distributed, a stock market trade is allowed, in which companies are authorized to buy and sell those allowances. The key elements in this bill include: • Entities must have an emissions permit for every ton of carbon dioxide it releases into the atmosphere. • States or authorized agencies will create a compulsory cap on total emissions for all the top emitters in the United States, and will also provide “emission permits” to emitting entities. • The cap on emissions by 2012 will be of 4,627 MTCO2 and by 2016 of 5,482 MTCO2. • In addition, only 85% of the allowances are free, while the remainder is to be auctioned off. Revenues will go directly to conservation of rain forest and low-income households. • Each year the entities that reduces its emissions and it has more permits that it needs will be allowed to sell its excess to other companies that exceeded their quotas or stock them for future use. • Entities that do not possess enough permits can also borrow future credits and pay interest on them. 1 MEMORANDUM • • • • • Non-regulated entities such as banks or nonprofit organizations will be allowed to buy or sell permits. Company emissions exceeding permits will be fined two times the fair market value of the permits for not purchasing them in its advanced. The Bill covers 85 percent of the overall economy, including electricity producers, oil refineries, natural gas suppliers, and energy-intensive industries such as iron, steel, cement and paper manufacturers. It also provides that a permit to emit 1 ton of carbon dioxide or its equivalent will be worth about 11 or 15 dollars in 2012. Subsequently, its value will depend on the market rules (the law of supply and demand). The costs of permits will be approximately 60 billion dollars by 2012 and 113 billion dollars by 2025.1 3. Task I have your communication wherein you asked for recommendations on whether to take up the legislation. The decision on the cap-and-trade system ought to consider parameters such as political feasibility, cost, and effectiveness. Being aware of your strong support of core industries and your tremendous effort on policies that allow producing clean and reliable fuels in West Virginia, it is important to provide you with an integrated view with respect to the economic and political impacts that goes hand in hand with any environmental benefits offered by this program. 3.1 Pros of Waxman-Markey i. Cuts Carbon Pollution: In terms of climate a cap & trade system is a smarter way to tackle carbon emissions more efficiently by putting in place a declining cap on GHG pollution. Waxman-Markey calls for US emissions to be reduced to 20% below 2005 emissions level by 2020, 42% below 2005 levels by 2030, and 83% below 2005 levels by 2050. In other words, under this policy energy savings alone will reduce projected carbon pollution in 2020 by the equivalent of taking 57 million cars off the road for a year. ii. Increase Revenues. A study developed in June 2009 by the non-partisan Congressional Budget Office2 indicated that establishing this legislation could increase future surpluses by about $24 billion over the 2010-2019’s period. A percentage of this revenue is allocated to help offsets costs to affected industries and any price increases for low and middle income Americans as a result of the transition costs. iii. Energy Independence: This act promotes cutting down use of foreign oil by approximately 5 million barrels a day in 2030, and using all forms of America energy portfolio, including: renewable energy (wind energy will increase more than 500%, solar energy will increase 20-fold, biomass will increase by more than 350%), nuclear power and natural gas.3 iv. Less Government Intervention: Under a cap & trade system government does not mandate every specific action, it rewards instead the creativity of the private sector on how to cut emissions. President Obama believes that: “with top-down micromanagement, regulators 1 Retrieve from: http://www.iniciativasustentable.com.mx/boletin_x/03_boletin_ideas_esp.pdf 2 See http://www.cbo.gov/ftpdocs/102xx/doc10262/hr2454.pdf 3 See http://globalwarming.house.gov/files/WEB/ACESPacket/ACESCleanEnergyPlan.pdf 2 MEMORANDUM dictate every single rule that a company has to abide by, which creates a lot of bureaucracy and red tape and often-times is less efficient.” 4 v. Invest in Clean Energy: This bill provides considerable incentives for development of climate-friendly technologies (e.g., advanced coal technology with carbon capture and storage technologies, shift to use alternatives fuel such as low-sulfur coal and natural gas, installation of scrubbers, or advancements that result in new coal-to-liquids plants that offset the drop in demand for coal) in response to its deployment program and financial incentives including bonuses. vi. Strength relations with emerging economies: As stated by Paul Krugman5 emission taxes and tradable emission permits aka cap-and trade is equally effective as carbon taxes in terms of limiting pollution. But in reality, the latter has some major advantages achieving effective international cooperation such as those with emerging markets like India and China. He argues that this policy is more effective even when allowances are allocated to utilities free of charge in the first years of the program operation because they still have an incentive to use less-polluting technology and cut their emissions, so they can sell their excess permits to others. vii. Creates jobs: This legislation ensures that by investing $150 billion in clean energy will create a net gain of 1.7 million jobs and improve opportunities to low income families. viii. Supporters: This bill is backed up by a coalition that includes electric utilities, manufacturers and a number of environmental organizations ranging from the League of Conservation Voters to the Environmental Defense Fund, based on the premise …
Purchase answer to see full attachment