Outsourcing the tough decisions: what collective bargaining & estate tax repeal have in common

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We hadn’t really intended to dig into collective bargaining reform in Ohio (Senate Bill 5), as it’s not an obviously budget-related issue. Yes, GOP proponents will say that it is, but when you look at the potential savings – which no one, not even the Legislature’s own budget analysts – can quantify, you have to be skeptical it will produce much more than a drop in the bucket toward filling what is reported to be an $8 billion hole. Put it this way: total compensation for all state employees is $2.6 billion, out of a general revenue fund budget of $29 billion. So while nobody is proposing eliminating all state workers, even that wouldn’t close the budget gap – what they are talking about is taking away certain, very small step increases and reducing the amount the state pays for workers health care. It would end up saving a tiny fraction of what the state needs to make up through cuts and/or revenue increases.

There is another budget-related aspect to collective bargaining reform and that is the potential for school districts and local governments to save money by eliminating their costly labor agreements. Again, it remains to be seen just how badly these units of government want to race to the bottom in paying their workers, but without collective bargaining, some level of savings could be expected. But these new tools to locals come at a steep price. State officials have been loudly foreshadowing major cuts (even elimination) to the local government funds that flow from the state budget to counties and municipalities each month. Similarly, school districts are being warned to expect cuts in school funding in the range of 10-20%. By playing up the size of the deficit, and the size of the potential local impacts, state officials have now laid the groundwork for local officials to expect very little from the state when the budget is put to bed. To soften the blow, throw in collective bargaining reform, and school districts and local governments now have a tool, if they elect to use it, to cut costs to make up part of the losses from the state. Or, as will almost certainly be seen in some areas, they can instead put levies on the ballot or pass local tax increases. Either way, the decision whether to take the cuts from public workers or from taxpayers has now been pushed to the local level. The Governor and state legislators are off the hook – they can tell the Tea Party they didn’t raise taxes, and they stopped the dreaded unions, and win accolades.

What does this have to do with the estate tax? Again, it is the Republicans in Columbus who are pushing for elimination of Ohio’s estate tax, the vast majority of which (80%) goes to pay for services at the local level. Senators are on the record admitting that many municipalities will simply raise local income taxes to make up for the lost revenue as a result of the elimination of the state’s inheritance tax. Here’s Senator Grendell:

“That’s what the majority of the voters in the November election told us they want,” Grendell said. “The Tea Party formed to tell us they want more choice in local government. If they want to fund local governments, they’ll have to pay for it.”

So there you have it – another decision pushed to the local level, so that state republican officials can take a victory lap with their tea party supporters and not have to clean up the mess they made. Mayors, school officials and county commissioners will take the heat, and state legislators can sit pretty. It’s quite devious, but clearly the strategy at work.

One last interesting, but unrelated observation: these two proposals demonstrate that the GOP prioritizes lowering taxes on the wealthy at the same time they intend to take away pay and benefits from the working class, all while we are supposedly in a budget “crisis.” Clear evidence of who they believe should shoulder the burden of recovery from a wall-street generated economic downturn.

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  1. What ever happened to “the Left” owning the idea of local is better? While this may not be the way to do that, I’d like to see that come back in a healthy way.

  2. Through the corporate-funded American Legislative Exchange Council (ALEC), global corporations and state politicians vote behind closed doors to try to rewrite state laws that govern your rights & boost their revenue.

    These so-called “model bills” reach into almost every area of American life and often directly benefit huge corporations. Through ALEC, corporations have “a VOICE and a VOTE” on specific changes to the law that are then proposed in your state.

    ALEC is a conduit, an intermediary between Corporate America & Politicians—whose campaigns are funded by the same corporations.

    Repeal of the estate tax is one of their goals, as well as dismantling unions.

    Check this site to understand the pre-packaged bills either introduced or recently passed in multiple states: http://www.alecexposed.org/wiki/ALEC_Exposed


  1. Governor Kasich: SB 5 is about job creation

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