Collective bargaining has changed dramatically, but what does this mean to you, the taxpayer? Before these reforms, state employees in Iowa had been paid on average almost 1.5 times the amount the average private-sector employee had been paid. How will these changes affect the high tax rates we currently have? We have read that after the passage of Act 10, Wisconsin was able to save $5 billion for taxpayers. But what do the Chapter 20 reforms mean for the economy of Iowa?
As we look at the Chapter 20 reforms, the first major change is in regards to the scope of negotiations. Before House File 291 (HF 291) was signed into law, which reformed collective bargaining, the only illegal subject was retirement systems. Now, with the changes to Chapter 20, the following are illegal matters for bargaining according to the Public Employee Relations Board, “All retirement systems, dues checkoffs, and other payroll deductions for political action committees or other political contributions or political activities shall be excluded from the scope of negotiations.”
Now, the only mandatory item is base wages. Among these changes, note that staff reduction has been changed to an illegal subject, as this allows public entities to make reductions that are truly in the best interest of the organization, not what the contract says must be done.
The next section that has a significant financial impact is Section 22, which deals with binding arbitration. Previously, arbitration had no financial cap on arbitration awards and allowed the arbitrator to consider past collective-bargaining agreements, comparison of wages, hours, and conditions of employment with other public employees doing comparable work, interest and welfare of the public, and power of the public employer to levy taxes and appropriate funds.
The following changes are vital to the taxpayer, as the awards cannot exceed the lessor of 3 percent or the percentage equal to the increase in the consumer price index. Additionally, arbitrators cannot consider past collective-bargaining agreements and the power of the public employer to increase or impose new taxes, fees, or charges.
These changes are very likely to have a great impact on budgets for public employers. Before, with no consideration for restricted funds or limiting growth, an arbitrator could often rule in favor of the union, which would have a severe impact on taxpayers. This reform should restrict growth when it is not warranted.
In addition to the substantial changes to Chapter 20, HF 291 makes changes to other code sections, such as Chapter 279, which deals with Powers and Duties of Directors (school boards); Chapter 22, Examination of Public Records; and Chapter 70, Financial and Other Provisions for Public Officers and Employees. These changes are also imperative to controlling the growth of government. From FY15 to FY16, the Iowa budget grew 2.67 percent, yet the inflation rate for 2016 was only 1.26 percent. So the state government is growing much faster than inflation.
The hope is that with these changes to the state’s collective-bargaining procedures, most governmental agencies will see less strain on their operations because they will be able to make cuts that work the best for each entity. Additionally, with an arbitrator considering economic conditions, there should be more common-sense solutions for public entities.
The changes that were made to Chapter 20 are important to the taxpayers of Iowa, especially for restraining the growth of government and not seeing the steady increase in the tax burden on all Iowans.
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