Posted on 01/07/2012 3:17:45 PM PST by Graybeard58
New York Gov. Andrew Cuomo is taking on his state's public-employee unions again, but this time he seems to have entered the game with a losing hand. The seven unions that filed class-action unions against the state for its efforts to bring retiree health-insurance costs under control have a point. To wit: The unions say the benefits, which taxpayers manifestly can't sustain, are matters of contract and therefore inviolable.
"According to the unions," explains Courthouse News Service in a Jan. 4 article, "retirement health insurance is deferred compensation for services rendered by the retirees during their working years. The union says that when an employee retires under such an agreement, the agreement continues to dictate retirement health insurance rights even after the expiration of that agreement."
Gov. Cuomo's spokesman says it's all perfectly legal: "The law clearly allows the administration to apply the terms of a new contract to retirees and it has been well-known standard practice to do so."
On Oct. 1, 2011, Gov. Cuomo, who earlier had exacted $450 million in savings by threatening to lay off nearly 10,000 state employees if they didn't agree to concessions, ordered that individual retirees pay 12 percent as their contribution to health-care premiums, up from 10 percent — a 20 percent increase. The retiree's share for family coverage increased from 25 percent to 27 percent.
The percentages look worse than the reality as measured in dollars. The increase for individuals is $150 a year, or 41 cents a day. For family coverage, it's costlier: $460 for a year, or $1.26 a day. The day a meaningful number of these retirees seek relief in the private insurance market or the Medicare pool will be the day the unions can apply the word "onerous" to the increases.
But no one should be surprised if the unions win the legal argument. If the court concludes the retirees are entitled to the benefits, as previously priced, under contract law, Gov. Cuomo's edict surely cannot stand.
Franklin D. Roosevelt, himself a Democratic former New York governor and a hero to Big Labor, must be having an I-told-you-so moment in heaven. He said in 1937: "All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress."
Should the state win the day, Gov. Cuomo will have extracted himself from between the proverbial devil and the deep blue sea — the extravagant costs of public-employee-union contracts and the limits of the taxpayer's purse. But it may actually be better for the public welfare if he loses. Why? Because taxpayers need a restoration of the terms articulated by Mr. Roosevelt 74 years ago, not another in a series of incremental delaying actions, each attained after everyone involved — workers, politicians, businesses and the public — has spent months or years in thrall to the negotiation and litigation industry.
Legislatures can change the terms of public employment so that they favor taxpayers and businesses, rather than unionized government employees and politicians. Soon, as Gov. Cuomo, Connecticut Gov. Dannel P. Malloy and other government chief executives are slowly learning, they must.
Ping to a Republican-American Editorial.
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The unions would win this argument if the contracts were with private entities, e.g. International Harvester's health plan ~ always a good read if you want to see how far this stuff can go.
When it comes to sovereign entities like States or Nations, odds are good they can rewrite the contracts at will and change the terms of employment ~ BUT, there are limits.
One limit is this ~ let's say Cuomo wins on the 2% issue and moves on to lay 98% of the cost on the retirees ~ and let's say Cuomo wins on that as well. I'd suspect the first candidate to pop up saying he'd rescind the Cuomo rule would win the Governorship.
So, lots of luck to Br'r Cuomo, but he's talking peanuts in this.
If Cuomo can’t revise the contracts and reduce the benefits enough he should just think like a normal lib and tax the too rich benefits enough to make his numbers work. Libs know how to tax anything as much as they want. A windfall public employee pensions tax would still be honoring the contracts. Sure it would be unequal taxation, but when has that ever stopped liberals?
Dear Gov’t retirees everywhere:
Would you prefer to get less $ in your retirement or NONE?
Those are your only choices.
Sadly, one can say this about all retirees. Pension fund returns have not averaged 8% in this decade and the money just isn’t there. Medical benefits are even more of a problem. There simply is no way that we can continue to pay for 10% per year cost in creases for health care when a 1-3% raise increase is considered generous these days.
Most won’t get it until there is nothing left. They will never settle for less.
And, then the whining begins....
wait...I'll get my sister's opinion....she's off snow birding down south, being a retiree in your mid 50's and having a lush pension and medical for you and your spouse really is like hitting the trifecta....nice work if you can get it...
They tax what you save for yourself in 401k’s. I think they tax your SS. Why the heck shouldn’t be pensions taxed??!! They are deferred income; deferred in the expectation your income, and thus income tax rates, will be lower when they are collected. If private industry people make more the libs want to tax the heck out of them. My dad retired at 70. His dad did the same. Both were doctors as am I. I figure I’ll probably do the same if the government bureaucrats and the government enabled insurance monopolies don’t do me in first. They’d say I’m rich, but I sure don’t feel like it. Those kids kicking up their heels with 15+ years of extra retirement are the rich ones.
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