Unions’ grip on Carson City

The most powerful people in local government are not elected officials.

Nor are they selected by voters.

Nor are the names of these politically formidable individuals even known by most members of the public.

The most powerful individuals in local governments are the officials of local government employee unions.

Because of Nevada state law, these union officials have more influence over how taxpayer money is spent than the elected officials that taxpayers choose to represent them.

The effects of this are profound.

North Las Vegas teetered on the brink of insolvency last year, yet government employee compensation kept increasing.

Consider the city’s 500 highest earners. In 2013, their average compensation, compared to 2012, increased by $5,040.86 per employee.

The city of Henderson cried poverty last year in a failed quest to raise property taxes — and then gave every employee group a pay increase.

Clark County officials proposed to get rid of longevity pay for new hires, a form of compensation unheard of in the private sector, and offered current workers a 4.5 percent pay increase over two years, retroactive to last year.

Union officials have balked, demanding three yearly 3 percent pay increases and continued longevity pay. The dispute is likely headed to arbitration.

It’s a classic example of why the liberal excuse that “local government officials shouldn’t have signed exorbitant contracts” simply doesn’t hold water.

If local governments don’t give into union contract demands, the disputes go to binding arbitration, where an unelected, unaccountable, out-of-state arbitrator usually sides with the union’s final offer and awards back pay.

The root of this problem is that collective bargaining requirements are imposed on local governments by state law. Because all political power in Nevada flows from state government, local officials have their hands tied.

In private conversations, local government officials will readily admit that Nevada’s collective bargaining requirements hamstring their ability to govern — especially with employee salary and benefits taking up 80 percent or more of a local government’s budget.

In public, however, local government officials are loath to say anything negative about union compensation demands. They fear antagonizing the union officials who hold all the cards.

Imagine trying to run your household if your children had the final say on how you spent 80 percent of your income. Even that is not a fair analogy, however, because your children have a personal interest in ensuring the household they share has adequate safety, shelter, food and transportation.

Not so with many union members. In 2011, as part of a contract dispute, the North Las Vegas police union put up signs declaring, “We can no longer guarantee your safety.”

They were virtually welcome signs for criminals, but what did most of those officers care? Only 25 percent of them lived in North Las Vegas, a Nevada Journal report found. Two years later, Review-Journal columnist Glenn Cook found that even fewer — 23 percent — still lived there. Just 5 percent of the city’s firefighters live in North Las Vegas, with one commuting to work from Alabama.

With Democrats controlling the Assembly for decades, chances for needed labor reforms were bleak. But Republicans are indicating a willingness to address this issue. Speaker-designate John Hambrick wrote local government leaders that collective bargaining reform is a top priority. So power could soon be returning to the people.

The best reform would be to repeal collective bargaining entirely and return local government control to citizens and those they elect. If Gov. Brian Sandoval fears embracing his inner Scott Walker, making collective bargaining optional would still be a good compromise.

Other common-sense reforms: ending government collection of union dues; requiring that unions periodically recertify, to ensure they still represent a majority of workers; making bargaining sessions transparent; and ending the practice of governments paying union employees to conduct union businesses.

Contract disputes should not go to binding arbitration but to a vote of the people. That’s only fair, since voters will be footing the bill.

Another thing breaking the banks of local governments, but out of the direct control of local officials, is Nevada’s underfunded pension system, PERS. Falling investment returns and income-replacement-level pensions for full-career retirees have left PERS with an unfunded liability of around $40 billion.

To try and close the funding gap, PERS has increased required pension contributions rates from 10 percent of employee salaries in 1962 to today’s rates of 40.5 percent for police/fire employees and 25.75 percent for regular employees. Without reforms, the contribution rate for regular employees is scheduled to increase to 28 percent. Moving to a hybrid plan with defined contribution elements, as lawmakers have done in Utah and Rhode Island, is a must.

The problems across Southern Nevada show why President Franklin Delano Roosevelt and other liberals opposed collective bargaining for government employees. Collective bargaining “cannot be transplanted into the public service,” wrote FDR, because “(t)he employer is the whole people.”

Unless Nevada lawmakers pass collective bargaining and PERS reforms, the state’s taxpaying, private-sector families will never find relief. Union officials will continue extorting ever-higher taxes on those families — simply so local government employees can further increase their six-figure compensation packages.

This commentary was first published by the Las Vegas Review-Journal.

Victor Joecks is Executive Vice President at the Nevada Policy Research Institute, a non-partisan, free market think tank.