Privatization, retirement benefits and tax reform—to build revenue—are the top issues that locals are addressing in the coming year

TABOR: The ultimate anti-government tax giveback
As Coloradans prepare to go to the polls Nov. 1 to vote on two referendums that would give the state budget relief from the Taxpayer Bill of Rights (TABOR), other states, ironically, are gearing up for TABOR initiatives.

“The biggest thing on the radar for us moving into the fall is TABOR because it is being reintroduced in October,” says Gabe Kirchner, political organizer for AFT-Wisconsin. “We are getting ready for a big TABOR fight, and that means getting out there and re-educating people [about its consequences].”

Though the name suggests it’s a pro-taxpayer policy, it is far from that. TABOR is an instrument used by anti-government lawmakers and activists to reduce the size of government—the availability of public services. The Center on Budget and Policy Priorities (CBPP) in Washington, D.C., summarizes TABOR as limiting “the growth of state and local revenues or expenditures to a highly restrictive formula—the annual change in population plus inflation.”

Coloradans approved TABOR, a constitutional amendment, in 1992. The allure is the promise of tax rebates.

As TABOR’s ratcheting-down effect has become more pronounced over time, proponents of the two referendums, including the Colorado Federation of Public Employees (CFPE), are banking on the fact that taxpayers can now quantify the cost of those rebates: a drastic reduction in public services from social programs to higher education.

“Indeed, there is no better way to shrink the scope of what government can accomplish,” according to the CBPP. “TABOR creates conditions that each year pit programs and services against each other for survival.”

Colorado’s Referendum C would eliminate the ratchet effect of TABOR, allowing the state to keep some of the money that would be given back to taxpayers, and mandate spending on infrastructure, healthcare and higher education, explains CFPE president Jo Romero, who was a key player in bringing the issue of TABOR reform to the forefront when CFPE formed the ONE COLORADO coalition in 2003. Referendum D earmarks the funds that would become available as a result of Referendum C’s passage, for such public needs as transportation projects and maintenance and repair of the state’s public schools, including university and community college buildings.

“If [Referendum] C doesn’t pass, we will have to cut $400 million from the budget next year,” says Romero, noting that jobs will be targeted to close the gap.

TABOR was introduced in more than 20 state legislatures in 2005, and the Ballot Initiative Strategy Center reports that signatures are already being gathered by TABOR proponents in Ohio, Arizona, Oregon and California to get the issue on the November 2006 ballot.

In order to get on the ballot in Wisconsin, Kirchner notes, TABOR would have to pass the Legislature in two consecutive sessions. “We’re not interested in allowing this thing to pass even once,” he says.

AFT-Wisconsin will be using its LEADER program—Linking Educated Activists Directly to Elected Representatives—to fight the measure. “The idea is for our members to meet with a number of Senate and Assembly members to discuss the value of their jobs and the potential ill impacts of TABOR should it ever pass.”

Illinois takes the offensive with its budget reform plan
“For us, taxes, revenue and the state budget are always critical,” says Steve Preckwinkle, director of political activities for the Illinois Federation of Teachers (IFT).

The state’s structural deficit has strapped public services, and the IFT, an AFT state federation representing a number of the union’s constituency groups, including state employees, is tackling the issue head on with a comprehensive $7.2 billion budget reform package that combines tax relief with tax increases.

A large component of the plan is to capture revenue from personal services. “In Illinois, we don’t pay taxes on any personal services,” says Preckwinkle. “This is the growing sector of the economy, and if we want to keep pace and be able to afford to provide the same level of public services year to year, we need a revenue system, a tax system, that keeps the same pace.”

Dave Piccioli, the IFT’s state revenue analyst, puts the absence of a sales tax on personal services in perspective. Right now, he says, 100 percent of the state’s cost going forward is being supported by the two-thirds of the economy that is being taxed. The current system, he notes, is based on property taxes and income taxes.

“Expansion of the sales tax to services makes the revenue system match the nature of the 21st century economy,” Piccioli says.

The revenue plan solves three major problems, according to the IFT: education funding needs, funding for public services and property tax relief. Under the plan, which was developed in coalition with the Illinois Center for Tax and Budget Accountability, the state sales tax would be applied to a broad spectrum of personal services, ranging from hair cuts and manicures to automotive repair and maintenance to movie and sporting events tickets. It also raises individual and corporate income tax rates.

From the revenue that’s raised, public services will receive much needed funding, and property owners will get some relief on their bills. “By providing dollars to address the structural deficit, we hope to free up additional revenue for vital public services and the public employees who provide them,” says Dave Comerford, IFT’s media director.

‘Go Public’ push continues for clean contracting laws
Locals also report that laws establishing accountability standards for privatization of public services remain a key objective.

AFT Connecticut’s measure mandating privatization standards and ethics reform cleared the Legislature, only to be vetoed by Gov. Jodi Rell. “We will be back at it in January,” says Pauline Kruk, chair of Connecticut’s Administrative & Residual Employees Union committee on political education, noting that “it usually takes about three years for [final determination on] a controversial bill.”

“We are beginning to work with a coalition of other public employee unions on an anti-privatization bill that would set some very specific standards in the law to determine the circumstances under which privatization could be undertaken,” says the IFT’s Preckwinkle. Specifically, he says, the union wants required cost-savings standards that the employer proposing privatization would have to show. The union also wants specific job protection rights for the potentially displaced public employees.

The New York State Public Employees Federation’s (PEF) $1 million “Go Public: Invest in Public Employees, The Returns Are Better for New York Taxpayers,” continues to move forward. PEF’s approach to keeping government work the responsibility of public employees is two-pronged. It is addressing the issue legislatively, as well as publicly through advertisements and a Web site (www.stopprivatization.com).

In 2005, the New York Legislature considered several PEF-backed measures that would institute rules and standards for privatization of public services. Although two of the measures cleared the Assembly, only one was signed by Gov. George Pataki. That measure requires lobbyists to report more about their efforts to influence the award of state contracts, says PEF president Roger Benson.

“PEF will be right back in the fray when the Legislature reconvenes in January, working to convince state lawmakers to pass our remaining Go Public bills,” says Benson. “We will keep fighting until this battle has been won.”

Lawmakers expected to eye pension benefits
AFT Public Employees locals are on the watch for legislative proposals that would shortchange current and future public employees on retirement.

During Alaska’s 2005 session, the majority party’s politics prevailed and the Legislature passed sweeping changes to privatize its public employee pension system, which covers employees working for state, municipal and borough governments, school districts and the university system, by discontinuing the defined-benefit system and replacing it with a defined-contribution plan under which employees manage their own investments—and have no guaranteed income upon retirement.

News about Alaska’s change hasn’t gone unnoticed by lawmakers in other states. Gary Feist, president of the North Dakota Public Employees Association (NDPEA), notes that members of an interim legislative committee studying employee compensation asked why Alaska dropped its
defined-benefit plan at the committee’s first meeting.

Colorado’s Jo Romero says that a special commission formed earlier this year “to restore fiscal stability” to the Public Employee Retirement Association (PERA) is not recommending such a sweeping change—but a member of the commission is. “Barry Poulson has formed a committee to get a ballot initiative for 2006 to flip it from a defined-benefit to a defined-contribution,” says Romero, noting that unions and other progressive organizations are in the midst of forming a PERA Defense Coalition.

As AFT Public Employees locals move forward with their legislative agendas in the coming year, one thing is certain: Union members will be called upon to take action.

As the IFT’s Steve Preckwinkle notes about this year’s pension fight in the Illinois Legislature: “Without our members’ active involvement, the success we had would not have happened.”

The same could be said for all union endeavors.