New Labor Contracts Will Add to Taxpayers' Burden

New union contracts will make state government more expensive, according to two analyses released by the Independent Fiscal Office (IFO).

The IFO projects contracts negotiated by the Wolf Administration with the state’s two largest unions—AFSCME and SEIU—will cost taxpayers an additional $507 million over three years.

Thanks to Act 15 of 2016 (and then Act 100, which added the new language to the Administrative Code), the IFO must review all proposed collective bargaining agreements before they take effect.

Prior to this law, neither lawmakers nor the public knew the true cost of these contracts.

In the near term, the contracts will add to the state’s challenging fiscal predicament. The current budget is “balanced” by borrowing money and counting on unreliable revenue from harmful tax increases and other changes to state law.

Add to this the additional costs of the new contracts, which will require an estimated $61.4 million more in General Fund spending (plus another $100 million in other funds) in 2017-18, and Pennsylvania’s budget picture now looks even bleaker.

Note, in addition to the cost estimates calculated by the IFO, the Office of Administration estimates the savings due to higher employee health care contributions would be $4.7 million for SEIU and $13.6 million for AFSCME. The IFO says each of these is “a reasonable estimate.”

Currently, the wage base (not including benefits) of affected workers is $1.835 billion. The IFO represents the increase in costs, both salary and benefits, above this baseline resulting from the new contracts.

The IFO did not consider savings from administrative changes to the PA Employees Benefit Trust Fund (PEBTF), as these savings are irrespective of the union contracts.

The lack of legislative oversight over the collective bargaining process is a glaring problem. This is why Rep. Garth Everett is sponsoring HB 2289. The legislation, which passed the House State Government committee just yesterday, would give the General Assembly the authority to rescind state labor contracts negotiated by the governor. 

The proposal would provide a much needed check on the governor, who has the power to negotiate contracts with campaign contributors behind closed doors.