Illinois gubernatorial hopeful Bruce Rauner has long supported the adoption of a so-called "Right to Work" law in Illinois, and he has made it a central talking point of his campaign. He has recently pushed for county governments to be able to individually enact "right to work" statutes for their employees.
"Counties and municipalities, if the state allows them to, can choose for themselves whether to be right-to-work. That could be a huge boon," Rauner was recently quoted as saying by Bloomington-based WJBC radio.
While federal law has for more than a half century allowed states to enact these laws, a county-by-county approach is a truly odd approach, especially with so many Illinois workers traveling across county lines to work. The application and enforcement of this law at a county level would create a staggering burden on local government, and there is no precedent for such an approach.
Rauner is the only candidate supporting a right-to-work law, which requires unions to represent workers who opt out of paying dues or membership fees. While some politicians and right-leaning think tanks contend that these laws create economic activity, the true aim of the legislation is to weaken unions, and it has been shown to depress wages and benefits.
Rauner is an outspoken opponent of unions and has made defeating them a goal of his administration if he is elected.
"Passing a law that weakens Illinois' middle class will not fix our fiscal problems," said Local 150 president-business manager James Sweeney. "For our economy to thrive, workers need to earn enough to have dispensable income. When people earn less, they spend less, which further slows the economy. Bruce Rauner is representing corporate America's interest in beating down workers in an effort to maximize profits. This is not a responsible plan for governing a state."
Today, the Northwestern Indiana Regional Planning Commission voted to add the Illiana Expressway to its long-term plan as a fiscally-constrained project. This decision enables the Illiana to request federal funding in Indiana, following a similar approval in Illinois in October.
The NIRPC board held a weighted vote, where each representative's vote carried weight corresponding with the population of the municipality he/she represented. The outcome was approximately 75 percent in favor to twenty percent against, with the remainder either absent or abstaining.
Had the project been denied from the long-term plan, it would have had no realistic path forward, so today's vote is a big win for supporters of the Illiana. Both states can now begin accepting bids from private investors interested in building and operating the road as a toll road. Construction could begin as soon as 2015.
Local 150 president-business manager James M. Sweeney was pleased by the vote.
"This road is desperately needed, and I am thankful that so many members of the planning commissions recognized the need," Sweeney said. "This will create construction jobs, spur new development, and bolster the freight and manufacturing industries that are among the few job creators in these states."
"Local 150 members have been watching and hoping that this day would come for several years now. We have gone to the open houses and the public hearings in support from the beginning. A lot of people said this day would never come, but it is due to our perseverance that we are now only a couple of years away from driving down the Illiana Expressway."
attorneys representing the International Union of Operating Engineers Local 150
appeared in the Seventh Circuit Federal Court of Appeals to present oral
arguments on an appeal of the union’s federal lawsuit, which was dismissed
earlier this year. This comes one week after State Judge Daniel Sedia ruled in
Local 150’s favor on a state lawsuit, declaring Indiana’s right to work law
Dale Pierson, general counsel for
Local 150, delivered the oral argument, focusing on a claim that attacked right
to work laws at their most fundamental levels. Pierson argued that the National
Labor Relations Act (NLRA), the nation’s original labor law, did not grant
states the authority to implement right to work laws.
“The NLRA allows states to pass
laws prohibiting mandatory union membership or the mandatory payment of dues or
fees equivalent to dues as a condition of employment,” Pierson said. “But for
50 years, federal law has allowed workers to willfully opt out of full dues
payment, so we believe that state right to work laws have operated beyond their
jurisdiction essentially unchecked since 1963.”
Last week’s state decision
declared the law unconstitutional on the grounds that while federal labor law
requires that unions provide equal services to non-members, the right to work
law makes it criminal to charge a fee for service, amounting to forced work
without compensation. The federal appeals panel asked questions and made
comments of the same nature.
“When people render services they are entitled
to be paid, and federal law imposes the obligation,” said Judge Diane P. Wood,
who presided over the appellate panel, to Assistant Attorney General David L.
Skiner. “I don’t see how you can get around that.” Judges Daniel A. Manion and
John D. Tinder were also on the Seventh Circuit panel.
“The court was very well
prepared, and the judges’ questions were indicative of their understanding of
the case law surrounding this statute,” said James M. Sweeney,
president-business manager of Local 150. “We are encouraged by the fact that
both state and federal courts have acknowledged and expressed concern about the
burdensome and unjust obligation that unions have to provide free services in
right to work states.”
The federal court took the
arguments under consideration. Meanwhile, Attorney General Zoeller’s office
filed an appeal to the state ruling with the Indiana Supreme Court on Thursday,
so the union will continue to prepare to make its case in both lawsuits.
Click Here for the Full Audio of the Oral Arguments
In a decision issued today in the Local 150's lawsuit against Indiana's right to work law, Judge John M. Sedia of Indiana’s Lake Superior Court entered declaratory judgments ruling the law unconstitutional.
Local 150’s lawsuit claimed that the law was a violation Article 1, Section 21 of Indiana’s Constitution, which states that, “No person's particular services shall be demanded, without just compensation.” Local 150 argued that Indiana’s right to work law is unconstitutional because it makes it illegal for unions to collect fees for services that they are federally required to provide.
In his decision, Judge Sedia states that under Indiana’s right to work law, “it becomes a criminal offense for a union to receive just compensation for particular services federal law demands it provide to employees.” Judge Sedia concluded that, “the Court therefore has no choice but to find that [the laws] violate Article 1, Section 21 of the Indiana Constitution.”
“This is a huge victory for the middle class,” said Local 150 president-business manager James M. Sweeney. “These laws are nothing but thinly-veiled tools to weaken unions, and this is a big win for workers who rely on unions to provide decent wages and benefits. We pledged on the day that this law was passed that they hadn’t seen the last of us, and we are delighted with this ruling.”
Indiana Supreme Court rule 4(a)(1)(b) gives exclusive jurisdiction to the Supreme Court for appeals for final judgments declaring a state statute in whole or in part unconstitutional. The judgment is subject to mandatory review within 30 days.
Read the decision here
On September 6th, IUOE General President James T. Callahan will be present at a special meeting to administer the oath of office to Local 150's elected officials. At this meeting, the dues drawing will be replaced by a drawing for one of the remaining Local 150 custom Springfield 1911 .45 handguns.
The meeting will be held on Friday, September 6th at 7:00p.m. at the District 1 Hall, located at 6200 Joliet Road in Countryside, Illinois. Click here for a flyer!
This is sure to be an exciting meeting, so please make plans to attend. And as a result of this special meeting, there will be no regular District Meetings in the month of September.
Three Local 150 members were recognized on July 26th for their efforts to rescue a six-year-old boy who was trapped in a collapsed sand dune in Indiana.
Josh Zimmer, Ryan Miller and David Keen received the first Local 150 Humanitarian Awards. The three members arrived at the scene of the collapsed dune on July 12 to assist in locating the boy with excavators after the boy fell into the dune while walking with his parents. After being submerged in 11 feet of sand for nearly four hours, the child was located, removed and taken to a local hospital in critical condition.
Zimmer, Miller and Keen received a lengthy ovation from the members in attendance at the General Membership Meeting, and president-business manager James Sweeney called the men "three heroes that we are all proud to call our Brothers." In his remarks to the membership, Zimmer shared the relief he felt when the child was located and called his survival and recovery "a miracle."
At the General Membership Meeting on July 26th, Local 150 recognized the six winners of its first annual Scholarship Program. The program, which was started with president-business manager James Sweeney's salary as an Illinois Tollway director, awards children of Local 150 members scholarships ranging in value from $2,000 to a maximum of $10,000.
- Tyler Bailey, of Genoa, was the winner of the four-year, $10,000 Jim Seracki Award, given in honor of a past board member of the Local 150 Food Bank. Tyler will attend Monmouth College and study biology/pre-med. Tyler's father, Phillip, is a Local 150 member.
- Kristi Bagus, of Palos Heights, won a four-year, $10,000 award, which she will use to study nursing at Illinois State University. Her mother, Patti Bagus, is a Local 150 member.
- Cara Dowell, whose father, Steven, is a Local 150 member, was awarded a four-year scholarship. She is currently studying statistics at Harvard.
- Cory Lotz, whose father is a third-generation Local 150 member, won a four-year scholarship to study biomedical engineering at the Illinois Institute of Technology.
- Elise Kibbons, of Herscher, will use a two-year, $2,000 scholarship to study agriculture education at Olivet Nazarene University. Her father, Carl, is a member of Local 150.
- Amanda Manton, of Carol Stream, will study criminal justice at the College of DuPage after being awarded a two-year, $2,000 scholarship. Her father, William, is a mechanic and a Local 150 member.
Nearly 80 applications were received for this program, which will open again in the winter of 2013 for children in their senior year of high school. Eligibility for scholarships is limited to students whose parent or legal guardian is a member in good standing of Local 150. Children of staff members of Local 150 and its various entities are not eligible to receive scholarship awards.
Various criteria were considered in the scoring of applicants, which was performed by an objective outside panel headed by Professor Robert Bruno, professor of labor studies at the University of Illinois.
Application deadlines will be announced in upcoming issues of the Local 150 Engineer and on this website, so please check back for more information.
In less than one week, the southern end of the Chicago Transit Authority's "Red Line" will shut down for a five-month reconstruction. The project, CTA's largest, will impact 10 miles of track and cost approximately $425 million.
The 44 year-old railroad has reached the end of its useful life, and so the project will amount to constructing a brand new railroad, from the ballast to the rails. The progress of this project will be watched closely, as other CTA lines are reaching the end of their useful lifetimes as well.
The project would have taken four years to complete on a weekend-only construction schedule, and this plan saved $75 million which will be reinvested into modernization of the nine affected Red Line stations.
Illinois released the details of its Transportation Plan for Fiscal Years 2014-2019, and it includes details for many projects of interest, from local roads and intersections to multi-billion dollar expressway and rail projects.
Chicago's "Circle Interchange," which links Interstates 90, 94 and 290 to Congress Avenue, will be started in 2014 with a budget of nearly $500 million dollars. It is expected to last for three years and will include the replacement of 20 structures in total, with six overhead roads and several connecting ramps.
The future of the Illiana Expressway is also laid out, with continued funding for the route study that is currently taking place, and an estimated construction start of late 2014. When this project begins, it is expected to take approximately four years to complete, as it will be a "greenfield" highway. The current plan has it connecting Interstates 57 and 55 in Illinois to Interstate 65 in Indiana. Funding is expected to come through public-private partnerships that would see private investors fund construction and recover costs by operating tolls along the road. The cost of this road is estimated at $1.25 billion.
Also included in this plan are projects in the CREATE (Chicago Regional Environmental and Transportation Efficiency) Program. CREATE modernizes passenger and freight rail lines, and several high-profile grade separation and bridge reconstruction projects have already come from this program. There is $3.2 billion in funding for CREATE set forth in this plan.
These are only a few of the larger initiatives detailed in the plan, but all projects are laid out in the official plan document, which you can access by clicking here.
Faced with a choice between a downtown casino location built by out-of-state contractors and a location near Interstate 80 using local union labor, the Davenport City Council selected the latter. Yesterday, the council voted to enter into a contract with Ingenus, a developer that has committed to a project labor agreement on the casino.
Ingenus plans for a large casino near the interstate and a smaller boutique casino downtown.
"With this plan, we won't have local families watching workers come in from Missouri and other states to do the work," said president-business manager James Sweeney. "Local workers will be put to work on this project, which only enhances its effect on the area's economy. The council's unanimous vote further demonstrates the appeal of this plan."
On February 7th, Illinois Governor Pat Quinn signed a bill that will pump an additional $675 million into the Illinois Department of Transportation budget for road construction this spring.
This infusion comes at a very important time, with this year's budget being previously reduced by nearly 40 percent compared to last year's.
The "found money" comes from leftover state and federal funds, but the new funding still leaves IDOT funding lower than last year by nearly half a billion dollars.
Work on the Illinois Tollway will help to offset this decrease. As new work, including the reconstruction of Interstate 90, begins this year, the Tollway expects to spend nearly $600 million on construction alone. Tollway work is all within the geographic jurisdiction of Local 150.
"This funding will soften the blow of IDOT's budget reduction," said president-business manager James M. Sweeney. "Much remains to be done to secure Illinois' road fund in the future and put it on a sustainable path, but this funding will make a difference this year. We will continue to maintain our infrastructure, and thousands of good-paying jobs will be created."
One of the less-publicized elements of the fiscal cliff deal reached by Congress on New Year's Day was the extension of the Wind Energy Tax Credit, which gives developers an economic incentive to construct wind farms. The extension will affect all wind farms that begin construction in 2013.
Had the tax credit not been extended, almost half of the 75,000 wind-energy-related jobs in the United States might have been lost. Hundreds of manufacturing jobs would also have been shed.
The extension of the credit will have a positive impact on Local 150 members in Northwest and North-Central Illinois, who have been put to work moving dirt, digging foundations, erecting towers, and paving access roads.
Local 150 members placed more than 100 phone calls to Congressmen and Senators in the weeks leading up to the extension, urging them to protect this vital source of employment and renewable energy.
When Illinois' lawmakers return to Springfield over the next week, they will decide whether to add $275 million to this season's budget for road and bridge construction. This money is part of $400 million that could be added to the budget over the next five years, mostly made up of federal and freed-up state dollars.
We badly need this extra funding. The urgency to frontload the money into this year's budget comes due to the drop-off in funding from last year. Even with the additional $275 million, the 2013 budget will be reduced by 17 percent from last year.
With state funding for infrastructure declining, Local 150 members must continue to contact lawmakers about the need for another capital spending plan. The $31 billion "Illinois Jobs Now!" plan that members helped pass in 2009 went a long way to modernizing infrastructure and helped avert a massive depression in the construction industry, but it is reaching its end.
Members' activism in 2011 helped deliver a $13 billion plan from the Illinois Tollway. This plan has already put hundreds of members to work, and it will continue to do so, with the Jane Addams reconstruction, Route 53 extension, and Illiana Expressway still in the future.
Still, if we have learned anything in the last few years, it is that if we do not join together and take the bull by the horns, we will be left in the dust. We must be prepared to fight for funding that keeps our roads safe and puts people to work.
With the "fiscal cliff" fast approaching, Congress and the White House have offered contrasting proposals, but one item in President Obama's package is especially encouraging-- the allocation of between $50 billion and $75 billion for new infrastructure spending.
Some pundits have called this a bargaining chip that they believe will be axed early in the reaching of a deal, but there is reason to believe that this investment could pass. The U.S. Chamber of Commerce, which is extremely influential within the Republican caucus, has repeatedly called for this type of investment, and the Chamber has thus far withheld criticism of this piece of President Obama's proposal.
The impact of this spending would boost the two-year, $105 spending bill passed by the United States Department of Transportation this past fall and would likely be focused on roads, bridges, and rail. Increased investment in high-speed rail in the Midwest has fueled speculation that a large sum would be put toward making meaningful progress on the regional high-speed network.
As with solutions to the "fiscal cliff" and the national debt, urgency is critical in making investments in our nation's crumbling infrastructure.
Associated Press: November 7, 2012 (CHICAGO) --
A proposed amendment to the Illinois Constitution that would have made
it more difficult to expand public employee retirement benefits has
With about 90 percent of the vote reported on Wednesday
morning the proposed amendment had support from 56 percent of
Illinoisans who voted on the measure. But that fell short of the two
criteria needed for passage.
The measure needed either
three-fifths of Illinoisans who voted on the measure, or 50 percent of
the total number of votes cast in Tuesday's election. Nearly 5 million
people voted in the election.
You don't have to look very far or very hard to see that Mitt Romney's policies toward unions are not favorable. In his speeches, commercials, flyers, website, and even in the debates, Mitt Romney has clearly shown his favor to having an America where unions are weakened.
But don't just take our word for it. Here are the words straight from the man himself:
- Supports a National Right to Work Law — “Right to work is the right way to go and I’d like to see it at the national level.” (Detroit Free Press, 2/19/12)
- Vows to Repeal Davis-Bacon Act Prevailing Wages
“If I become President…I will fight to repeal Davis-Bacon!” (Speech to
the Associated Builders and Contractors, Phoenix, AZ (3/7/12)
- Will Prohibit Project Labor Agreements
— “If I become President, on day one I will end government’s favoritism
towards unions and contracting on federal projects and end Project
Labor Agreements.” (Speech to the Associated Builders and Contractors,
Phoenix, AZ (3/7/12)
- Wants to Eliminate the National Labor Relations Board
— “The National Labor Relations Board is now stacked with union stooges
selected by the President.” (The Hill, 1/5/12) Richard Griffin, the
former General Counsel to the IUOE in Washington, DC, is a member of the National Labor
Mitt Romney's solution for struggling businesses has always been to cut wages and eliminate benefits for workers. He criticized the automotive bailout in the third debate, saying that he would have taken it a step further to eliminate excess benefit costs. Despite the fact that the automotive industry is once again turning profits quarter after quarter, he would reduce pensions, healthcare, and wages to squeeze every last dime out of the companies.
Mitt Romney is bad for workers. Keep this in mind when you go to vote this fall.
Local 150's endorsements for the upcoming 2012 General Election have been released in a PDF document, which can be found here.
On the morning of Sunday, September 9th, more than 1,500 members gathered at the William E. Dugan Training Center and voted to approve major contract extensions in five districts as well as to ratify changes to the Adminstrative Dues section of the Local 150 By-Laws.
Heavy-Highway and Building Contracts covering Districts 1, 2, 3, 4 and 5 were passed unanimously by a show of hands vote. These extensions contained no changes to current language and include total package increases of 3.25 percent compounded annually for four years.
Contract extensions for Districts 1, 2, 3 and 5 will be effective from June 1, 2013 through May 31, 2017. The District 4 Extension will be effective from June 1, 2014 through May 31, 2018.
Members also approved by a ten-to-one ratio the adoption of a By-Laws amendment that will terminate the one-percent Administrative Dues Assessment on June 1, 2013. This assessment, passed in 2004, will pay off the construction of the facility within the next six months. Administrative Dues will be set at a rate of 2.5 percent.
Finally, members discussed the effects of economic and political uncertainties both domestic and foreign that could pose threats to investment returns on the Pension Fund over the coming weeks, months, and years.
On June 15, the Illinois Department of Transportation posted its bid lettings on road, bridge, aviation and other transportation projects statewide.
To view the entire letting, click here. Some of the highlights within Local 150's jurisdiction appear below:
- $33.4 million - 2.1 miles of new four-lane highway with intersections,
bridges, and noise walls in Algonquin
- $13.4 million - reconstruction of Route 2 in Rockford
- $6.7 million - addition of lanes at three intersections in Killdeer
- $6.6 million – construction of a new pump station along Route
59 in Naperville
- $4.2 million - reconstruction of the Stuenkel Road Bridge
over I-57 in University Park
- $3.8 million - various resurfacing in Lake County
- $2.4 million - patch and overlay on Kennedy Drive in East
- $2.4 million - various resurfacing in Cook County
- $2.4 million - 1 mile of resurfacing and drainage correction
on Route 171 in Lyons
- $1.96 million - resurfacing of Route 24 in Sugar Creek
- $1.9 million - paving, curb and gutter along Burns Road West
- $1.6 million - resurfacing on Route 113 in the Village of
Diamond in Grundy County
- $1.5 million - 18 miles of microsurfacing along I-39
- $1.4 million - various resurfacing in Kane County
- $1.3 million - guardrail installation in Livingston, Grundy,
Bureau and LaSalle Counties
- $1.3 million - two miles of resurfacing on Church Street in
- $1.23 million - resurfacing on Highland Avenue in Grayslake
- $1.2 million - various resurfacing in DuPage County
- $1.1 million - resurfacing on I-57 in Iroquois County
- $1.1million - construct right turn lanes and modernize
traffic signals at Cross Street and Route 47 in Sugar Grove
- $1 million - resurfacing in McHenry County
- $979,000 - replacement of Cal Sag Road Bridge over Mill Creek
in Cook County
- $915,000 - replace 7th Street Bridge over Indian
Creek in Livingston County
- $897,000 - 2 miles of resurfacing on Vermont Street in Calumet
Park, Blue Island and Chicago
- $864.000 - intersection improvement on Route 131 and Yorkhouse
Road in Beach Park
- $881,000 - resurfacing of Woodward Avenue in Woodridge
- $833,000 - repair of 183rd Street in Homewood
- $797,000 - various work on Rivertech Boulevard in Moline
- $769,000 - cable median barrier along I-55 between Gardner
- $759,000 - intersection improvement at Route 72 and Beverly Road
in Hoffman Estates
- $723,000 - repairs to three bridges over the Des Plaines
River in Joliet
- $653,000 - various resurfacing in Will County
- $620,000 - bridge repairs carrying Ogden Avenue over I-290
- $519,000 – resurfacing along Route 18 in Streator
- $463,000 - replacement of joints on the Route 20 bridges in
Boone and Winnebago Counties
- $398,000 - guardrail improvements in Kane County
- $393,000 - ditch improvements along Route 20 in JoDaviess
- $334,000 - full depth reclamation of northbound lanes on I-39
- $259,000 - repaving on Washington Street in Genoa
- $254,000 - resurfacing of Rockton Road in Roscoe
Today, the Illinois Tollway announced that it was seeking bids for more than $135 million worth of planning, design, and construction services on various roadways. This is not the first such request for bids from the Tollway this year, but one particular item makes this one unique-- major funding to plan a Western Access to the Elgin-O'Hare Expressway from O'Hare International Airport.
The $3.4 billion project has been discussed for years, but recent debate over the construction of a western terminal within the airport threw the planned roadway into jeopardy. Today's commitment strengthens the Tollway's promise to include this road in its 15-year, $12 billion capital plan.
"What makes this capital plan so beneficial to commuters and workers is that it not only maintains existing roads, but constructs brand new ones where demand is high," said President-Business Manager James M. Sweeney, who serves as a Director for the Illinois State Toll Highway Authority, the board that oversees the Tollway.
"This move makes it possible to get construction on the project underway as soon as 2013, and we expect construction to take 10 years to complete, so this is truly a major addition to the Tollway," said Sweeney.
One of the other new roads being examined by the Tollway is the northern extension of Route 53, which would intersect with a widened Route 120. This is a total of around 26 miles of new road at a cost above $2 billion. While the board has repeatedly voted to support this project, it is still working to secure funding.
The Illinois Tollway's capital plan will modernize roads that fall entirely within Local 150's jurisdiction, and the Tollway was one of the first public agencies in Illinois to implement a project labor agreement, which guarantees union construction in exchange for labor peace.
From Mary Walsh's story in the May 27th edition of the New York Times:
Few investors are more bullish these days than public pension funds.
While Americans are typically earning less than 1 percent interest on their savings accounts and watching their 401(k)
balances yo-yo along with the stock market, most public pension funds
are still betting they will earn annual returns of 7 to 8 percent over
the long haul, a practice that Mayor Michael R. Bloomberg recently called “indefensible.”
Now public pension funds across the country are facing a painful
reckoning. Their projections look increasingly out of touch in today’s
low-interest environment, and pressure is mounting to be more realistic.
But lowering their investment assumptions, even slightly, means turning
for more cash to local taxpayers — who pay part of the cost of public
pensions through property and other taxes.
In New York, the city’s chief actuary, Robert North, has proposed
lowering the assumed rate of return for the city’s five pension funds to
7 percent from 8 percent, which would be one of the sharpest reductions
by a public pension fund in the United States. But that change would
mean finding an additional $1.9 billion for the pension system every
year, a huge amount for a city already depositing more than a tenth of
its budget — $7.3 billion a year — into the funds.
But to many observers, even 7 percent is too high in today’s market conditions.
“The actuary is supposedly going to lower the assumed reinvestment rate
from an absolutely hysterical, laughable 8 percent to a totally
indefensible 7 or 7.5 percent,” Mr. Bloomberg said during a trip to
Albany in late February. “If I can give you one piece of financial
advice: If somebody offers you a guaranteed 7 percent on your money for
the rest of your life, you take it and just make sure the guy’s name is
Public retirement systems from Alaska to Maine are running into the same
dilemma as they struggle to lower their assumed rates of return in
light of very low interest rates and unpredictable stock prices.
They are facing opposition from public-sector unions, which fear that
increased pension costs to taxpayers will further feed the push to cut
retirement benefits for public workers. In New York, the Legislature this year cut pensions for public workers
who are hired in the future, and around the country governors and
mayors are citing high pension costs as a reason for requiring workers
to contribute more, or work longer, to earn retirement benefits.
In addition to lowering the projected rate of return, Mr. North has also
recommended that the New York City trustees acknowledge that city
workers are living longer and reporting more disabilities — changes that
would cost the city an additional $2.8 billion in pension contributions
this year. Mr. North has called for the city to soften the blow to the
budget by pushing much of the increased pension cost into the future, by
spreading the increased liability out over 22 years.
Ailing pension systems have been among the factors that have recently
driven struggling cities into Chapter 9 bankruptcy. Such bankruptcies
are rare, but economists warn that more are likely in the coming years.
Faulty assumptions can mask problems, and municipal pension funds are
often so big that if they run into a crisis their home cities cannot
afford to bail them out.
The typical public pension plan assumes its investments will earn
average annual returns of 8 percent over the long term, according to the
Center for Retirement Research at Boston College. Actual experience since 2000 has been much less, 5.7 percent over the last 10 years, according to the National Association of State Retirement Administrators. (New York State announced last week that it had earned 5.96 percent last year, compared with the 7.5 percent it had projected.)
Worse, many economists say, is that states and cities have special
accounting rules that have been criticized for greatly understating
pension costs. Governments do not just use their investment assumptions
to project future asset growth. They also use them to measure what they
will owe retirees in the future in today’s dollars, something companies
have not been permitted to do since 1993.
As a result, companies now use an average interest rate of 4.8 percent
to calculate their pension costs in today’s dollars, according to
Milliman, an actuarial firm.
In New York City, the proposed 7 percent rate faces resistance from
union trustees who sit on the funds’ boards. The trustees have the power
to make the change; their decision must also be approved by the State
“The continued risk here is that even 7 is too high,” said Edmund J. McMahon, a senior fellow at the Empire Center for New York State Policy, a research group for fiscal issues.
And Jeremy Gold, an actuary and economist who has been an outspoken
critic of public pension disclosures, said, “If you’re using 7 percent
in a 3 percent world, then you’re still continuing to borrow from the
The city’s union leaders disagree. Harry Nespoli, the chairman of the
Municipal Labor Committee, the umbrella group for the city’s public
employee unions, said that lowering the rate to 7 percent was
“They don’t have to turn around and lower it a whole point,” he said.
When asked if his union was more bullish on the markets than the city’s
actuary, Mr. Nespoli said, “All we can do is what the actuary is doing.
He’s guessing. We’re guessing.”
Vermont has lowered its rate by 2 percentage points, but for only one
year. The state recently adopted an unusual new approach calling for a
sharp initial reduction in its investment assumptions, followed by
gradual yearly increases. Vermont has also required public workers to
pay more into the pension system.
Union leaders see hidden agendas behind the rising calls for lower
pension assumptions. When Rhode Island’s state treasurer, Gina M.
Raimondo, persuaded her state’s pension board to lower its rate to 7.5
percent last year, from 8.25 percent, the president of a firemen’s union
accused her of “cooking the books.”
Lowering the rate to 7.5 percent meant Rhode Island’s taxpayers would
have to contribute an additional $300 million to the fund in the first
year, and more after that. Lawmakers were convinced that the state could
not afford that, and instead reduced public pension benefits, including
the yearly cost-of-living adjustments that retirees now receive. State
officials expect the unions to sue over the benefits cuts.
When the mayor of San Jose, Calif., Chuck Reed, warned that the city’s
reliance on 7.5 percent returns was too risky, three public employees’
unions filed a complaint against him and the city with the Securities
and Exchange Commission. They told the regulators that San Jose had not
included such warnings in its bond prospectus, and asked the regulators
to look into whether the omission amounted to securities fraud. A
spokesman for the mayor said the complaint was without merit.
In Sacramento this year, Alan Milligan, the actuary for the California Public Employees’ Retirement System,
or Calpers, recommended that the trustees lower their assumption to
7.25 percent from 7.75 percent. Last year, the trustees rejected Mr.
Milligan’s previous proposal, to lower the rate to 7.5 percent.
This time, one trustee, Dan Dunmoyer, asked the actuary if he had calculated the probability that the pension fund could even hit those targets.
Yes, Mr. Milligan said: There was a 50-50 chance of getting 7.5 percent
returns, on average, over the next two decades. The odds of hitting a
7.25 percent target were a little better, he added, 54 to 46.
Mr. Dunmoyer, who represents the insurance industry on the board,
sounded shocked. “To me, as a fiduciary, you want to have more than a 50
percent chance of success.”
If Calpers kept setting high targets and missing them, “the impact on
the counties won’t be bigger numbers,” he said. “It will be bankruptcy.”
In the end, a majority decided it was worth the risk, and voted against Mr. Dunmoyer, lowering the rate to 7.5 percent.
Further delay in passing a fully-funded federal transportation plan will cost the region millions of dollars per day, reports the Chicago Tribune. The last multi-year plan expired in late 2009, and has since been granted eight short-term extensions, the most recent of which will expire on Saturday.
The trouble with short-term extensions is that planning agencies are often unwilling to commit to large projects due to the uncertainty of long term funding. The two options that have been floated aside from extensions are the Senate's two-year, $109 billion plan and the House Republicans' five-year $260 billion plan. Critics say that the Senate plan's short duration prolongs the current trouble with securing large projects, and that the House GOP plan cuts out transit funding, which is vital in metropolitan areas like Chicago.
President Obama has proposed a six-year $476 billion plan, almost double the annual funding of the other two plans, in an effort to "keep construction workers on the job and keep our economy growing."
It seems that any plan that is to have hope of passage will have to be of several years, maintain current funding levels, and include funding for transit. When this kind of plan could be passed, however, is very uncertain. Election year politics have made bipartisan coalition building an immense challenge despite both parties' stated desire for a comprehensive transportation bill.
On February 22, Local 150 filed a lawsuit against Indiana's governor, attorney general, and labor commissioner over the recently-passed "right to work" law.
From the Associated Press:
INDIANAPOLIS — Union members went to federal court Wednesday to ask a judge to block Indiana’s new right-to-work law from being enforced, the first lawsuit and latest conflict over the divisive legislation.
The International Union of Operating Engineers Local 150 filed the lawsuit Wednesday in U.S. District Court in Hammond, said Marc Poulos, an attorney representing the union. The suit names Gov. Mitch Daniels, Attorney General Greg Zoeller and Labor Commissioner Lori Torres.
Daniels signed the right-to-work legislation into law last month, making Indiana the 23rd state to ban unions from collecting mandatory fees for representation. Indiana was the first in the generally union-friendly Rust Belt to pass such legislation, and the first nationally in about a decade, as Oklahoma did so in 2001.
Indiana Democrats vehemently objected and boycotted the House session for several days, and union members turned out by the thousands to protest what they called “the right to work for less bill.”
Daniels spokeswoman Jane Jankowski said the governor’s office had no comment, but Indiana Attorney General Greg Zoeller said late Wednesday that his office would defend the state from the legal challenge.
“Legal challenges are part of the process to test whether laws are constitutional. Though we respect the right of private plaintiffs to disagree with this new law, the State’s position is that the Legislature was within its authority to create a new policy concerning mandatory union dues. My office’s duty is to defend the laws the Legislature passes and we will do so diligently here,” Zoeller said in a statement.
Poulos said the union would file a motion seeking a temporary restraining order to block the law for 10 days until a judge can decide on its longer-term fate. He hoped a hearing could be held as early as Monday, but said he did not know how long it would be before the judge ruled.
Last year, a federal judge in Indianapolis struck down a law restricting Medicaid funds from abortion providers about six weeks after Planned Parenthood went to court. The ruling is under appeal.
A draft copy of the lawsuit provided to The Associated Press by the union, which has 4,000 members in northern Indiana, claims the right-to-work law contains multiple violations of both the state and federal constitutions.
Among other things, the union claims the law violates the equal protection clause of the U.S. Constitution by treating building and construction workers and public workers differently from others. The law’s provisions regarding construction trades took effect immediately, impairing existing contracts, the union said. Public employees aren’t allowed to opt out of union membership to the same degree as private-sector worker, the union said.
“No legitimate state interest is served by requiring public sector employees to subsidize the cost of representation services for private sector employees who refuse to pay any fees to the Union,” the lawsuit said.
Union members had protested that the law unfairly makes union members who pay dues also pay for the representation of non-union members who choose to opt out under the new law.
The lawsuit also said that the law violated the prohibition against ex post facto laws — retroactively making legal activity illegal — in both the state and federal constitutions. The Indiana law makes violations a class A misdemeanor.
The union also claimed the state law is pre-empted by and conflicts with the National Labor Relations Act.
More than 1,000 members from every corner of Local 150's jurisdiction traveled to Indianapolis on Wednesday, February 1 to demonstrate in opposition to the "right to work" law, which was ultimately passed by the Senate and signed into law by Governor Daniels.
The deceptively named legislation forces unions to provide equal services to workers who do not choose to be members and who choose not to pay dues. Proponents of the law claim that it enables workers to make their own decision, yet these claims are diminished by the fact that federal law allows a worker not to join a union as well as pay a representation fee in lieu of full dues if they opt out of membership. The law goes into effect immediately.
Local 150 members have maintained a presence at the capitol throughout the month of January as the contentious bill moved forward in the face of massive protest. When the bill was passed in the Senate, members took to the streets.
"Enough is enough," said President-Business Manager James M. Sweeney. "If this is what career politicians do to us, we have to run our own people for office." Several Local 150 members are registered as candidates for the House of Representatives in the upcoming primary election.
Members marched through Indianapolis with signs, banners, and megaphones voicing their displeasure with the lawmakers in Indiana. Tourists in town for the Super Bowl applauded and offered support as the crowd wound though Downtown Indianapolis.
"The only people that this bill will put to work right now is attorneys, because we are not waiting for someone else to challenge this. We will file our lawsuit immediately," Sweeney said. The lawsuit will challenge the constitutionality of a law that mandates services while prohibiting fees for those services.
Amidst a heated battle against so-called "right to work" legislation in Indiana, Local 150 President-Business Manager James Sweeney once again expressed his disappointment in Governor Daniels for changing the position Daniels took on "right to work" when he sought Local 150's support in his 2004 campaign.
In a letter sent to Governor Daniels on Friday, Sweeney wrote that we know that Daniels understands that "right to work" does not work "because you put it on paper" and that "to say we are disappointed in your flip-flop would be a tremendous understatement."
Read the letter from Sweeney by clicking here
The "right to work" legislation passed in the Senate on Monday night, and House leaders claim that the legislation has enough votes to pass in the House. When it clears both chambers, it will go to Daniels for a signature, and Sweeney urged Daniels to reconsider his support because the majority of Indiana residents do not support the legislation.
"If you need proof of that, just look out your office window. Indiana's middle class is right there," Sweeney wrote.
In 2004, when Daniels sought Local 150's endorsement, he pledged against the legislation on his campaign letterhead.
In his first seven years as Governor, Daniels supported initiatives that created thousands of jobs for Local 150 members in Indiana, but this final act is nothing short of outright betrayal.
The so-called "right to work" bill currently being discussed in Indianapolis would have serious negative consequences on the wages and benefits of workers, but signatory contractors have stepped up with a concern of their own - this law would affect the types of contracts that they would be able to negotiate with their employees.
The "right to work" law would make any contract requiring non-members to pay a fee to the union null and void, and would make requiring "fair share fees", currently collected from non-members, a criminal offense. Many of our signatory contractors have decried having the State of Indiana dictate what types of agreements they can enter with their employees, saying it is overstepping on the part of the government.
Nearly thirty of Local 150's signatory contractors have written letters to Governor Mitch Daniels and the legislative leaders pushing this legislation.
By denying the Indiana House of Representatives a caucus and preventing them from doing any business, the boycotting House Democrats have pushed debate on the bill as well as a possible vote into the later part of this week or early next week.
To view the letters, click the link beside each contractor's name.
This morning, the Indiana House of Representatives labor committee voted 8-5 to send the legislation, unamended, to the full House for vote. Democrats then boycotted the session in the house, leaving the chamber short of the required number of legislators present to conduct business, so the House was unable to take up the matter for discussion or vote.
Democrat legislators boycotted House sessions last week, and finally returned yesterday. Several legislators said that the "fast track" process employed in the House committee today prompted them to boycott the session.
According to the Indianapolis Star, Rep. Craig Fray, a Mishawaka Democrat who is taking part in the boycott said he had "never seen such a neglect of the constitution and the rules of the House as what we witnessed this morning when they didn't take testimony or allow amendments on such an important bill. We have to keep fighting all the way to the Super Bowl."
Until enough Democrats return to the House for it to conduct business, the "right to work" bill cannot be voted on or moved forward. While Democrats has acknowledged that they cannot stop the bill from passing by sheer numbers alone, they are aiming to slow the process to give Indiana workers and lawmakers time to learn more about what damage this law will really do.
Late last week, Local 150 Financial Secretary David Fagan announced the establishment of the Lunchpail Republicans PAC in Indiana, which will raise money to fight legislation like "right to work" and support candidates who run against legislators who support this kind of legislation.
"It is bewildering to see Republican legislators supporting a bill that forces a private business to work for free," said President-Business Manager James M. Sweeney. "For the most part, Republicans in Indiana have gone too far to the right, and I applaud an effort to support a shift back to moderate Republicans who don't bring harm to their states' workers."
"Right to work" legislation makes it illegal to force workers to pay dues, but union contracts require that these same workers be represented just the same as regular dues-paying members. This law is being pushed as "worker freedom," but it is nothing more than union-busting.
Today, more than a hundred Local 150 members traveled from across Northern Indiana to the Statehouse in Indianapolis to voice their displeasure with the "right to work" bill that is being pushed by the extreme-right wing leaders of the House and Senate.
A "right to work" law makes it illegal for a union to require members working under its contracts to pay dues, but the contract still requires the union to represent those who pay nothing, effectively forcing the union to work for free.
For this bill to come from Republicans is ironic, since Republicans typically frown on any sort of private-sector intrusion from government bodies.
"This is about as un-Republican as it gets," said Financial Secretary David Fagan. "This isn't about worker freedom or creating jobs. This is about weakening unions, lowering wages, and bringing in campaign dollars from the corporate interests that will profit from a weaker working class."
The bill is also been given the go-ahead from Governor Mitch Daniels, who Local 150 supported in each of the past two gubernatorial elections for his job-creating efforts including the Major Moves capital plan and his general support of infrastructure investments.
Members will be taking the trip to Indianapolis on Thursday the 5th and Friday the 6th as well, as Republican leaders attempt to "fast track" this bill toward passage.
If you would like to get on one of the buses bringing members to the Statehouse, call the District 7 Hall at 219-736-7710.
With snow beginning to fall in some parts of Local 150's jurisdiction, the need is already apparent for operators willing to plow snow this winter. From parking lots to airports, operators are always in demand, and it can be a great way to pick up extra hours and cash before and after the holidays.
Be sure to call your District Hall to make sure your name is on the list to be called for snow. For District Hall phone numbers, click here.
If you want to plow at O'Hare Airport, you must complete the training class before you can get on the list. For a schedule of training sessions, click here.