High Court Deals Unions a Blow
July 26, 2018
The obvious winners from the Supreme Court's decision in Janus v. AFSCME last month are the hundreds of thousands of teachers and other public workers who will no longer have union “agency fees” involuntarily taken from their paychecks. In the long run, however, the benefits to "Blue State" budgets may prove more consequential.
Having promised public workers big pensions without saving the money to pay them, many of these states are fiscal time bombs. Nationwide, state pensions have unfunded liabilities totaling nearly $1.4 trillion, according to Pew Research. Not coincidentally, of the states with the 10 largest deficits by dollar value, eight do not have a right-to-work law. Three states--California, Illinois and New Jersey--account for a third of the pension hole. California and New Jersey each have net liabilities of about $170 billion, and Illinois’ gap is $140 billion.
The Illinois crisis is so severe that paying the promised pensions would require a 30-year property-tax increase that would cost the typical Chicago homeowner $2,000 a year, according to a study from three economists at the Chicago Fed. Not a penny of that added tax money would pay for better schools, police, roads, hospitals or libraries. Already, property taxes in Illinois are among the nation's highest.
The pension problems have gotten so bad because state lawmakers don’t dare to stand up to powerful government unions such as AFSCME, shorthand for the American Federation of State, County & Municipal Employees. Consider the legendary California Teachers Association, which collects some $240 million a year from its 325,000 members and about 28,000 nonmembers who have been forced to pay fees. The CTA is the most influential political force in Sacramento. It spent twice as much on politics from 2000 to 2010 as the next largest donor--also a government union, the California State Council of Service Employees.
The High Court's ruling in Janus will now allow teachers and other government employees to stop funding the union if they oppose its political goals. Under the Supreme Court precedent, public workers could choose not to join unions, but in 22 states--including California, Illinois and New Jersey--they were required to pay “agency fees” to cover the cost of collective bargaining, including over the pensions now swamping state budgets. Janus has freed such workers from that obligation.
Will the change spur pension fixes and other fiscal reforms in states like California and Illinois, New Jersey, Connecticut, Massachusetts and Maryland? At least at the margins, it will help--as evidenced by the cries of despair from union leaders when the decision was recently announced. Since Michigan passed its right-to-work law in 2012, membership in the teachers’ union is down 25 percent while the rolls at AFSCME Council 25 have fallen one-third.
Even after Janus, public unions will remain powerful in left-leaning Blue States. But now maybe they won’t be quite as flush with political cash. It will still take courage for lawmakers from Sacramento to Springfield to Trenton to stave off crisis. But with Janus, the Supreme Court has tossed residents of Blue States a fiscal life jacket.
Can you believe the nerve of some people? Cousin Neil for over 10 years has been shouting to one and all about excessive pension checks given by some contracts to some of our employees. Personally, before I let those tax-and-spenders at City Hall close to my hard-earned savings accounts, I would request an item-by-item check and double-check of the City's finances.
Transparent California recently said that the total pension benefits promised by the California Public Employees Retirement System increased 886 percent from 1987-2016. As a pubic service this column will have at least one item each week to help enlighten the voter.
Boeing Stock Soars
The stock price of my former employer, Boeing Co., has been soaring this year. While the ride higher has been with worries over trade war protectionism and tariffs, higher-than-expected earnings and a robust cash-flow are a few reasons why Robert Baird analyst Peter Arment gives the airplane manufacturer’s stock a "buy" rating and given his price target sees another 25 percent rise on the horizon. Boeing's year-to-date performance is up over 20 percent with a price target of $450 and a backlog of just below 6,000 aircraft at the end of the second quarter.
Of course, before making any type of investment, you should talk with your financial advisor.
Will Seniors Get a Full Exemption?
The last time our City asked for a tax increase, they offered seniors an exemption. What seniors didn’t know was that it was not the usual 100 percent, but only half of that.
Now that our School Board has spent our district into a $3-million structural debt, the members have passed a resolution putting yet another tax increase on November’s ballot. This new $189 tax would raise about $2.36 million annually and would cost local owners more than $16.5 million over the next seven years.
I, along with my inquisitive cousin Claudine, wonder what percent exemption does the Board have in mind for us seniors? Will it be the 100 percent we deserve, or just the 50 percent like our “scrooge” of a Council offered?
For those who missed an article, all my commentaries can be found at http://www.culvercityobserver.com; scroll down the page and underneath Opinion look for Rubenstein.