Earlier today Michigan Senate Majority Leader Mike Bishop released a reform agenda on behalf of his caucus. The agenda, which is directed at state spending and the overall cost of government, makes some potentially important changes to government-employee compensation. Among them: a 5 percent across-the-board wage cut, a new requirement that public employees contribute 20 percent of the cost of health care and an expedited binding-arbitration rule for police and firefighters. In addition, the package sets limits on school districts noninstructional costs and encourages privatization, a proposal with serious implications for school employees. The agenda is available at the GOP Senate Caucus Web site.

At the time this post is being written, it would appear that language for two bills has yet to be finalized. A fuller analysis will need to wait until the package is complete, but two initial reactions on the labor front:

• The binding-arbitration rules for police and firefighters are not likely to deliver dramatic savings. Delays in the arbitration process are a real enough problem; the average arbitration procedure takes 15 months to produce a decision, and the possibility of back-pay awards after long-delayed decisions is a serious headache for local officials and employees alike. But the real, lasting problem is poorly thought-through decisions that overestimate the ability of local governments to pay and add up to 5 percent to the cost of government. (That’s according to a task force convened by Gov. Granholm.) Speeding up the arbitration process does not guarantee that decisions will be more responsible. Elimination of arbitration, or at a minimum new standards that emphasize ability to pay and place a higher burden on unions to show funds are available, would be preferable.

• The wage reductions and health care contributions do address the problems created by government-employee collective bargaining, at least temporarily. It is interesting to note that among the elements of the Senate GOP plan is a constitutional amendment to the effect that union contracts must conform to state standards in terms of health care benefits. One would like to see this principle expanded to all aspects of public policy, so that contracts must conform with all applicable state laws and local ordinances. Still, this is at least a start in terms of reining in the “union veto” that the Public Employment Relations Act inadvertently created.

The reform package also includes consolidation of state agencies and the creation of a single state office for business licensing. The package covers a wide range of topics, and the sheer size of the legislative parcel means that citizens and lawmakers should take their time and pay close attention to the details.

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