by Dan Lucas
During last year’s gubernatorial race, the two public employee unions, SEIU and AFSCME, endorsed John Kitzhaber and contributed $750,000 to his campaign.
Unlike the education unions who backed Bill Bradbury in the primary, AFSCME endorsed John Kitzhaber in the primary. SEIU remained neutral during the primary, but endorsed Kitzhaber during the general election.
As governor, the same John Kitzhaber who was so heavily supported by these public employee unions was then tasked with renegotiating their contracts; an inherent conflict-of-interest. Not surprisingly, the public employee unions made out much better than the taxpayers did.
Unions’ Investment in Kitzhaber Paying Off
Kitzhaber recently renegotiated the contracts for SEIU and AFSCME, and the result was three permanent pay raises for the unions, continued gold-plated health care coverage, and no change to the 6% PERS employee pickup.
The public employee unions’ gold-plated health care coverage includes medical plans with no deductibles, and coverage for dental, vision and life insurance.
The small victories for taxpayers were a continuation of temporary furlough days and the requirement for state public employee union members to start paying up to 5% of their health insurance.
And 5% isn’t very much. 5% is half of what Washington state workers pay, less than a third of what California state workers pay, and one-fifth of what families in the private sector are paying. (see chart)
Even after factoring out the furlough days and 5% health insurance, Kitzhaber’s agreements will still result in a net increase of over 3.5% in pay for the average SEIU & AFSCME worker in the current budget. And pay isn’t the only payroll cost that taxpayers will be bearing. PERS retirement costs are expected to increase by almost 15% in the next four years, and health benefits for state workers are expected to increase by over 25% in the next three years – and 95% of that will be paid for by the state.
Note: unlike SEIU & AFSCME, most teachers and other school employees have already been paying for part of their health insurance and they have plans which include deductibles.
Kitzhaber’s Campaign Promises
During last year’s campaign, Keli Carender wrote that “Bloomberg Business Week reports that Oregon’s Democratic candidate for Governor, John Kitzhaber, is promising to get tough on public employee compensation if he is elected.”
Based on the concern that Kitzhaber was “fully supported by the public employee unions”, Carender also relayed this concern: “How can taxpayers be sure that Kitzhaber won’t betray them in order to satisfy his union base when push comes to shove?” How, indeed?
Recommendations from Governor Kulongoski
Before he left office, Governor Kulongoski issued his Governor’s Reset Cabinet Report on how to provide Oregon’s core services in an increasingly challenging fiscal environment. The report concluded “that the state will face a decade of deficits if it tries to sustain the type and scope of services it now provides. Business-as-usual budgets will no longer suffice.”
The biggest reason for the projected increase in spending was identified as:
“Payroll cost increases, as higher PERS rates take effect, salary freezes and furloughs end, and adjustments are anticipated in pay and health benefits”
In looking at what could be done, the report noted that “Approximately three of every four dollars that the state spends from its general fund ends up in a paycheck and in payments for benefits that accompany a paycheck.”
The report also noted “We found that compensation for state employees is now in alignment with that of comparable jobs in the larger labor market, but future increases in compensation are expected to exceed increases in the private sector.”
The report went on to provide a number of recommendations for controlling payroll costs. One example recommendation for controlling health benefit costs was to “Establish deductibles and co-payments in line with industry standards” for health insurance, and another example recommendation for controlling payroll costs was to reduce the 6% PERS payments to the Individual Account Program to 3% or lesser amounts.
- Over the last 4 years, the private sector has lost 110,000 jobs while the number of state employees has grown by 6,400.
- Oregon’s unemployment rate remains way too high: 9.4%.
- 187,000 Oregonians are still out of work – double the number out of work 4 years ago.
- 780,000 Oregonians are on food stamps. That’s 1 in 5 Oregonians on food stamps.
- Governor Kitzhaber hasn’t followed his predecessor’s recommendations to avoid a decade of deficits.
The governor should have demonstrated to Oregon employers, Oregon investors and Oregon taxpayers that Oregon is serious about controlling state spending and that public employee unions will begin paying their fair share.