Bruce Rauner and the Winds of Change

 

This past November, Bruce Rauner was the only Republican candidate who was able to defeat a sitting Democratic governor, Pat Quinn. He did so in Illinois, a state that has long been subject to an excess of one-party rule, and one where the  electorate was obviously weary of the dismal economic performance of the state, constantly illustrated in painful detail by the state’s free-market gadfly, Illinois Policy.

One quick read of Rauner’s inaugural State of the State speech makes it clear that elections have consequences; in this instance, beneficial ones. Rauner’s election breaks the Democratic monopoly over Illinois government. In the face of a Rauner veto, the Illinois Legislature cannot continue to pile on additional laws that hamper growth and development in the state, nor can it advance new taxes and restrictive labor legislation. But stopping new legislation does not roll back the many current laws on the book that continue to drive productive businesses and workers to other states (especially Illinois’ neighbors, where job opportunities are greater and tax levels are lower). Modern federalism ensures that the exercise of these exit rights help discipline wayward state governments. Illinois is learning that lesson the hard way.

Rauner’s proposals for the rollback must have real sting given the fierce union response it has sparked. AFSCME Council 31 director Roberta Lynch has denounced his efforts as “a blatantly illegal abuse of power.” “Our union and all organized labor will stand together with those who believe in democracy to overturn Bruce Rauner’s illegal action and restore the integrity of the rule of law.” Her appeal is designed to make sure that all the special privileges that unions have secured for themselves with respect to pensions and collective bargaining rights will be preserved. The issue goes to the heart of union power, and has led to a system of high taxes and balkanized local government that put the state at an enormous disadvantage relative to its neighbors.

The concrete Rauner proposals that have attracted such wrath have two major components. The first of these is to insist that state workers who are not union members do not have to pay dues to a union that they do not wish to have represent them. This proposal to take on what are called “fair-share” provisions touches a raw nerve insofar as it tackles head-on the traditional compromise as represented by Abood v. Detroit Board of Education, which upheld a scheme that allowed unions to force non-members to fund the economic, but not political portions of their business. That ruling itself is now coming under increasing attack, as Justice Samuel Alito, in another Illinois case, Quinn v. Harris, indicated that he was unhappy with the Abood synthesis, and thought that any compulsory contribution to a union against the will of an individual worker amounted to a violation of First Amendment rights.

In my own view, the correct analysis of this question cuts much deeper. I do not think that any state should grant to its employees the power to unionize. What Ms. Lynch calls “democracy” is no such thing. Right now it is perfectly well understood that if all the firms in a given industry voted to raise prices and restrict output, the democratic process of setting prices and quantities would not insulate it from the operation of the antitrust law.

The same argument applies to workers who organize themselves in ways that permit them to hold up the public at large for wages and benefit packages that far exceed those available in competitive markets. Indeed, the situation is even worse in Illinois, where the state card check law allows public unions to gain members without the need to organize the kind of elections that ordinary democratic institutions allow. Getting rid of that statute should be high on the agenda of the state legislation.

The second of the Rauner proposals is to empower local government units to decide their own collective bargaining arrangements. In his words:

Empowerment means giving local voters the ability to control the collective bargaining issues in their local governments and take more responsibility for their employees’ benefits. Empowerment means giving local government employees the ability to decide for themselves whether they want to join a union. Empowerment means giving governments the ability to lower costs by reforming project labor agreements and prevailing wage requirements that block true competitive bidding.

It is always difficult to determine in the abstract how these changes will play out in particular cases. But in this case, it is likely that they will really matter. The words “prevailing wage requirements” are code words for contracts that will be at union wages so that non-union workers cannot underbid their union rivals. Starting with the Davis-Bacon Act of 1931, these proposals have ratcheted up the cost of contracting by perhaps as much as 20 percent. Allowing these changes on particular projects will have ripple effects that could bring down the cost of the whole system.

There remains huge uncertainty as to whether Rauner can use his executive power to achieve that end. He has already asked the prominent lawyer Dan Webb to seek a declaratory judgment that the current scheme of enforced dues is unconstitutional under the First Amendment, which will set up a certain fight with Illinois Attorney General Lisa Madigan, a Democrat, and Leslie Munger, the Republican Controller, who have both taken public positions that the “fair-share” law is valid. There is a delicious irony in all this positioning, given that the Democrats who have consistently supported President Barack Obama’s use of executive orders are now taking the view that the Governor does not have similar powers at the state level, even for public employees.

My own guess is that the Governor faces an uphill legal battle on these issues, but that, even if he loses these initial skirmishes, he will likely win the long-term political struggle. (Sorry for all these near-military metaphors.) Union privilege is no longer politically unassailable given the successes that nearby states like Wisconsin, Michigan and Indiana have had in taking on the once impregnable bastions of union power by introducing right-to-work laws and stripping public unions of many of their collective bargaining rights. These changes have hit AFSCME in the solar plexus, resulting in the loss of 50 percent of its members in Wisconsin.

No matter what the outcome in the short-term wars, any continued decline of Illinois might well give Governor Rauner the political clout to put major labor market reforms into place—and live to tell the tale.

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  1. Paul A. Rahe Contributor
    Paul A. Rahe
    @PaulARahe

    Richard, I should think that he might win on the compulsory dues question — given that Alito in effect invited a test case.

    Rauner has one great virtue and one advantage. In Illinois, there is no point in compromise. The current situation is unsustainable.

    In such circumstances, it is better to make one’s case and lose than to compromise — for compromise means collapse, and fighting offers hope.

    Would that we had a few more men of his temperament in DC.

    • #1
  2. EJHill Podcaster
    EJHill
    @EJHill

    Compulsory dues? Only partially. See Beck v CWA.

    • #2
  3. Nick Stuart Inactive
    Nick Stuart
    @NickStuart

    Glad he won. Hope he experiences some success at least. I would have liked to see some mention of teacher accountability in his education reform proposal though.

    • #3
  4. Illiniguy Member
    Illiniguy
    @Illiniguy

    To Richard’s points:

    • Democrats hold veto-proof majorities in both houses. It will be a test of Rauner’s negotiating skill (and the use of the cudgel created with a $20 million fund established to reward legislators who back his agenda) to carve off enough Democrat votes to stop an override, especially in the House, where Mike Madigan holds an exact three-fifths majority needed for an override.
    • In their book “Fixing Illinois”, James Nowlan and Thomas Johnson note that there used to be three layers of state employees (top layer who make policy, middle management protected by civil service system and lower level who belonged to a union). Under Blagojevich, the middle layer basically disappeared and now the upper level are also union members.
    • Prevailing wage and right to work are going to be major sticking points as Rauner sits down to negotiate a new contract with AFSCME later this spring. Rauner is proposing a plan along the lines of what’s happening in Kentucky, where “home rule” districts can enact these types of ordinances without having to get state approval. My county, McHenry, will become a home rule county in 2016 when we elect our first popularly elected county board chairman. I’m very curious to see how this plays out in the election and beyond.
    • Dan Webb has recently stepped down from representing the state on this issue due to conflicts, and Phil Beck, who represented George Bush in Bush v. Gore will take over. Teeth are gnashing throughout the state.
    • Leslie Munger is taking a conservative position by abiding by the AG’s opinion on the matter. I think she’s sympatico with Rauner on the issue, but she’s still feeling her way into the office. I also think Rauner staked out his position to set the stage for the AFSCME negotiation, which is going to be bloody and delicious for those of us who pay attention to such things.

    When 10% of the budget is given over to paying for pensions, property tax rates are at 5% or more of a home’s fair market value and rising, school districts are in open warfare with each other over a funding proposal working its way through the legislature, and municipalities are being left ever more on their own as the state sinks under the weight of insolvency (a bill’s been proposed to allow Illinois municipalities to file for bankruptcy, which they cannot do now without legislative approval), Bruce Rauner has few good choices. The last governor spent most of this year’s budget before he left office, so between now and July 1, things are going to get even more dire. The state funded child-care program is out of money, many other programs are in similar shape, and the governor has very little leeway in moving money from one program to another. I don’t think he loses anything by confrontation. His budget message is going to be delivered soon, that’s where we’ll see what he intends to do about getting the state on track. I originally thought Rauner was running for Governor because it was on his bucket list, but given what he’s done since taking office, I’m ready to have my opinion changed.

    • #4
  5. Illiniguy Member
    Illiniguy
    @Illiniguy

    Richard:  If you have not abandoned Chicago for sunnier and warmer climes, we’re having a meetup in the city on Thursday night. It’d be a pleasure to discuss the wreckage that is Illinois over a beer.

    • #5
  6. 9thDistrictNeighbor Member
    9thDistrictNeighbor
    @9thDistrictNeighbor

    Illiniguy was more clear and concise than I could have been. Tribune columnist John Kass calls our state Madiganistan, an assessment that is spot on. The state government gets its tentacles into far more areas where they don’t belong…we’re in Augean Stables territory.

    • #6
  7. Nick Stuart Inactive
    Nick Stuart
    @NickStuart

    Taking into account a large number of factors, my wife and I have pretty much decided to stay where we are in the western suburbs of Chicago, and hunker down.

    That said, I wonder what the collapse of Madiganistan is going to look like?

    Public sector pensions are a great big $h*t sandwich, and we’re all going to have to take a bite (it will be crammed down the taxpayer’s throats, but if there isn’t at least some real pain borne by the public sector workers, there just might be a taxpayer revolution).

    There’s an interesting article at Illiniospolicy.org  currently on how much out-migration is costing state and local governments.

    I tell my kids “use your state veteran’s educational benefit to go to college here, but don’t settle in Illinois.”

    • #7
  8. Illiniguy Member
    Illiniguy
    @Illiniguy

    Nick Stuart:Taking into account a large number of factors, my wife and I have pretty much decided to stay where we are in the western suburbs of Chicago, and hunker down.

    That said, I wonder what the collapse of Madiganistan is going to look like?

    We love McHenry County, and consider this to be home. It will remain so.

    The collapse of Madiganistan will fall heaviest upon those least able to afford it, but those responsible for it will not be held accountable. That’s why Rauner needs to go big, he has nothing to lose. His budget address will be (I hope) a watershed, and should be required listening for every citizen of Illinois.

    • #8
  9. Devereaux Inactive
    Devereaux
    @Devereaux

    Nick Stuart:Taking into account a large number of factors, my wife and I have pretty much decided to stay where we are in the western suburbs of Chicago, and hunker down.

    That said, I wonder what the collapse of Madiganistan is going to look like?

    Public sector pensions are a great big $h*t sandwich, and we’re all going to have to take a bite (it will be crammed down the taxpayer’s throats, but if there isn’t at least some real pain borne by the public sector workers, there just might be a taxpayer revolution).

    There’s an interesting article at Illiniospolicy.org currently on how much out-migration is costing state and local governments.

    I tell my kids “use your state veteran’s educational benefit to go to college here, but don’t settle in Illinois.”

    I live in Barrington, just into Lake Co. It is allegedly republican run. You’d find it hard to tell. The RE taxes are exhorbitant, the services poor. No real response to any input. Waukegan is as isolated from the county as DC from the country.

    I will not EVEN comment on Cook Co.

    • #9
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