Advocacy Blue Arrows

Communities Controlling Their Own Costs -
PA 312 and Mandatory Binding Arbitration

Source: The Detroit News

Editorial: Repeal laws favoring unions over taxpayers

June 13, 2007

Michigan could accomplish two things by repealing a pair of state laws that reflect Big Labor's stranglehold on the political process: It could generate money for covering the budget deficit, and it could send a strong signal that politicians now work for the people, not the unions.

These two statutes are among the most egregious examples of how public policy is crafted to appease powerful special interests and not to serve the needs of the public.

  • Act 312. This law, providing for binding arbitration of police and fire labor disputes, was written by Coleman A. Young in 1969 when he was in the state Legislature and currying favor from union bosses. But when Young left the Senate to become mayor of Detroit and had to sit across the bargaining table from those same unions, he came to regret the damage he'd done.

Current Mayor Kwame Kilpatrick is calling on lawmakers to change Act 312, and they should give him what he wants. The law has driven up the cost of public safety -- average pay for police and firefighters rose at double the rate of other municipal workers after its passage -- and forced communities to cut other services or raise taxes to meet the obligations of arbitrated contracts.

Under the act, if a city and its public safety unions can't come to an agreement, the dispute must go to an arbitration panel. On matters of pay and benefits, the panel must choose between the best offer from the city and the best offer from the union. There is no middle ground and no requirement that city finances be taken into consideration.

The act adds 5 percent to 10 percent to the cost of police and fire labor contracts, according to economists who have studied its impact.

Gov. Jennifer Granholm was asked point-blank during her appearance at the Detroit Regional Chamber's Mackinac Policy Conference whether she'd support a repeal of binding arbitration. She answered "Yes," much to the delight of her audience. But then she waffled into a discussion of modifying or softening the act, rather than its repeal.

Binding arbitration has cost the state taxpayers enough money. Other workers have to reach contracts through good-faith bargaining and under the weight of the financial conditions of the community. Public safety officers should be no different.

  • The Prevailing Wage Act. This law keeps school districts, municipalities and the state from getting the best deal for the taxpayer dollar. It requires that for all publicly financed construction projects, workers must be paid the equivalent of a union wage, whether or not they belong to a union.

The law, passed in 1965, adds an estimated 10 percent to the cost of all public construction work in Michigan.

And Michigan vigorously enforces the act, just this week establishing a Web site to list violators.

Neighboring Ohio has moved in the other direction. It repealed the prevailing wage law in 1997 for school construction projects. Savings in the first two years were estimated at $135 million on $2.7 billion in construction work. And school districts reported that the quality of the work either stayed the same or improved.

Michigan could expect similar savings, if not more, by repealing its prevailing wage law.

Elected officials have a fiduciary responsibility to taxpayers to use their dollars as prudently as possible.

By allowing binding arbitration and prevailing wage laws to remain on the books, Michigan's leaders are failing in that responsibility and making a bad budget situation worse.



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