EDITORIAL: Legislature must overhaul collective bargaining

In case Nevada lawmakers needed a reminder of the urgent need for major public-sector collective bargaining reforms, Clark County and the Service Employees International Union were kind enough to provide them with one last week.

As reported by the Review-Journal’s Ben Botkin, on Monday the county and the SEIU Local 1107 finally agreed to have an arbitrator settle their dispute over a new contract for about 5,000 employees. The decision comes after almost two years of negotiations that went absolutely nowhere by design. Under current Nevada law, public-sector unions have no incentive to bargain in good faith and every reason to drag out talks, because doing so does not decrease their chances of cashing in at taxpayer expense. Local governments and their elected stewards have no control over the bargaining process, and as a result they have no control over their greatest expense: personnel.

That structure creates a rigged game against taxpayers, with ever-rising government compensation creating pressure for ever-higher taxes. The Legislature, which is poised to enact more than $1 billion in tax increases this month, owes it to the public to ensure that taxes support improved services, and not merely pay raises for the existing government workforce.

The SEIU’s plan all along was to stall negotiations through a strengthening economy and hope that an unelected, unaccountable arbitrator might consider conditions strong enough to support the union’s pricey demands. No fewer than four provisions in existing Nevada law incentivize this approach:

First, so-called “evergreen” language that allows the terms of public employee contracts — including some pay raises — to remain in effect after expiration until a new contract takes effect. Second, the requirement that contract negotiations take place in secret. A lack of public scrutiny leads to a lack of shame in union demands. Third, resolving contract disputes through binding arbitration. Arbitrators usually live outside Nevada and, unlike taxpayers, have no stake in the outcomes of their decisions. Fourth, allowing an arbitrator to subjectively consider a government’s “ability to pay” in choosing between offers from labor and management. If an arbitrator believes a government has the funds to support a new round of employee pay raises, regardless of that government’s other obligations, the arbitrator will side with labor.

Because of these advantages, the SEIU asked for the moon.

In 2013, the union rejected the county’s initial offer of a 4 percent pay raise in exchange for eliminating longevity pay for future hires. Longevity raises, which have no nexus to performance, give employees an annual 0.57 percent pay bump for every year of service at eight years and beyond. Ending the benefit would save the county tens of millions of dollars in the decades ahead.

According to a union memo obtained last year by the Review-Journal, the SEIU countered by demanding a four-year contract with a 4 percent raise in the first year and 3 percent raises in each of the next three. Compounded, that’s almost a 14 percent raise over four years — for workers who received a cumulative pay increase of 13.5 percent between 2008 and 2013, when Nevada’s private-sector workers led the nation in income decline. Those terms, if approved, would have created $70 million in new annual personnel costs by the fourth year of the contract.

Under current law, no one is allowed to laugh the SEIU out of the room at any point in the bargaining process.

The county was offering a three- to four-year contract that gave workers a 2 percent pay raise in the first year, along with merit pay raises, then reopened the contract every year after that to negotiate additional pay raises. Again, longevity pay would be eliminated for future hires.

As reported by Mr. Botkin, the agreement to go to binding arbitration is for a contract of up to four years, ending June 30, 2017. But the arbitrator can only award salary increases for a two-year period that ends June 30, 2016. Depending on how long the arbitrator takes to make a decision, the county and the SEIU might have to start negotiating their next contract before the ruling is issued. The county has spent almost $40,000 on outside counsel throughout the negotiation.

Rinse. Repeat.

Lawmakers have a solution before them. Assembly Bill 182 addresses all of the shortcomings in state law that have contributed to the SEIU’s money grab. It ends the “evergreen” contract rollovers by prohibiting compensation increases after a deal’s expiration. If a local government and its union can’t reach agreement on a contract, the final offers from the union and management must be posted on the government’s website and presented at a public meeting. AB182 abolishes binding arbitration as a means of settling contract impasses for some bargaining groups. And it walls off up to 25 percent of government fund balances from collective bargaining negotiations and a fact finder’s consideration of “ability to pay.”

The bill goes further by prohibiting the unionization of some supervisors, banning the use of tax dollars to pay government employees performing union activities and allowing governments to base layoffs on factors other than seniority.

AB182 would prevent the kind of costly standoff the SEIU has prolonged. It would bring balance to a bargaining process that overwhelmingly favors labor and needlessly punishes taxpayers. It would give governments more control over personnel costs and ensure that tax dollars go further.

AB182 has passed the Assembly Commerce and Labor Committee and is awaiting action by the full Assembly. Without major labor reforms, the public shouldn’t support major tax increases. The Legislature must pass AB182.