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Danny Homan and Janice Laue Discuss the Economy and Organized Labor

posted on December 17, 2009

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Sharing the pain. Organized labor contemplates the risks of trading negotiated pay and benefit gains for job security. Perspective from union leaders, AFSCME's Danny Homan and Janice Laue of the Iowa Federation of Labor, on this edition of Iowa Press.

Borg: Although some see a hopeful horizon, economic recession realities continue biting deep and hard. Hard times and job losses in the private sector are sharply reducing tax revenue for state government in Iowa, and that reverberates into big cuts for state employees. The largest union representing state workers, AFSCME-- that's the American Federation of State, County, and Municipal Employees -- voted a couple of weeks ago to take off five days without pay between now and the middle of next year, in exchange for no layoffs. But beginning the middle of next year in the 2011 budget, the state is short as much as a billion dollars. Governor Culver is also displaying consultant recommendations for consolidations and other efficiencies, and that's making state workers, including organized labor, nervous. We’re seeking perspective today from AFSCME Council 61 President Danny Homan and Iowa Federation of Labor State Secretary-Treasurer Janice Laue. Welcome to Iowa Press.

Laue: Thank you.

Homan: Good afternoon.

Borg: And across the table, Associated Press Senior Political Writer Mike Glover and Radio Iowa News Director Kay Henderson.

Glover: Mr. Homan, let's start with you. A panel of budget experts has once again reduced the amount of money they're projecting the state will collect. They’re cutting another $38 million out of this year’s projected state budget, $13.1 million out of next year’s budget. What’s your reaction to that?

Homan: Well, Mike, I just found out about those numbers driving out here today. Based on the cut that we experienced in the last October, November, whenever that was -- October, I believe -- Dick Oshlo, the governor's Department of Management person, is saying that they have enough money to cover this downturn. I believe that the cut they're projecting in next fiscal year is less than what they had originally projected, so that shows a ray of hope that maybe Iowa’s economy is recovering. At least that can be what we cling to. At some time it's got to turn around.

Glover: And when you accepted the budget cuts, the furloughs that Dean mentioned in his introduction, you said this is it, this is all you're giving. How can you say this is it given this economy?

Homan: Well, firstly, we didn't accept furloughs. We accepted negotiated unpaid days. I believe that's the difference.

Glover: Okay. I’ll let you handle that distinction.

Homan: Secondly, I believe 'this is it' was my perspective. I believe we are at 'this is it.' AFSCME has negotiated no wage increase for last July. I see a lot of other people in Iowa getting raise increases in July. I know that certain people in Iowa have tried to persuade everyone that there was a 4.5-percent across-the-board increase last July. That’s just false. There were people that got step increases and will continue to get step increases, but that's money that’s due them because they're not at the top of their scale. And we agreed to take five unpaid days. So I think AFSCME has stepped up to the plate and has done our share. And it's time that we find other ways to help the state out of their budget problems other than keep doing it on the backs of state employees.

Glover: And that means tax increases. Is it time for the legislature and the governor to consider increasing taxes?

Homan: It's time to use a balanced approach. I have called for tax increases. I have also called for eliminating tax exemptions. We have wonderful exemptions in this state. Ostriches, for example, you don't pay any sales tax on ostriches. Somebody that goes out and buys an airplane, they don’t pay a sales tax on an airplane, nor do they pay sales tax on the parts to repair that airplane. If someone in this state can afford an airplane, they ought to be able to afford to pay taxes on that thing. Draft horses, wine -- wine shipped into this state does not suffer any sales tax. Rare and precious coins! I’m sorry, if you're trading in rare and precious coins, maybe you could afford to pay sales tax on that. Bottled water. Candy! If it's made with flour, it has a tax exemption.

Borg: Sounds to me like AFSCME, with you as their spokesman, is gunning for a change in Iowa’s tax structure.

Homan: I don't know what we're gunning for. I don't know that I’m gunning for anything, Dean. What we're saying is let's take a balanced approach. Let’s put everything on the table. The most regressive tax that we have would be a sales tax increase. I believe there's -- we could took a look at tax credits. This state started out with tax credits about six years ago, and it was about $100 million a year. Now it's over $700 million a year! There’s $600 million. I don't know if that's the way to do business. I think we have to look at all those things, not just keep coming knocking on the door of state employees and saying what are you willing to give up to provide essential services, needed services. I want to ask all of you how was your drive on Wednesday and Thursday of this week. I happened to be fortunate. I was in Washington, D.C. I missed this snow storm, but I hear it was a pretty bad one. Who was out plowing those roads? Public workers, state employees out risking their life clearing the highways so people could drive. And I seen a lot of cars in ditches. That tells me there were a lot of people probably out there driving when they shouldn't have been.

Borg: And the bottom-line message is what?

Homan: The bottom-line message is we provide essential services, the folks I represent, that this union represents, not only in state government, but city, counties, and schools provide essential services, correction officers keeping people locked up, DHS workers making sure that child abusers -- kids are protected, DOT workers, residential treatment workers working in our facilities.

Borg: You might say that everybody is essential in whatever job they perform, however. And so the point being you're advocating for better pay and no concessions?

Homan: I don't believe I ever said anything about better pay, Dean. I’m saying we have given up pay to help the citizens of this state out. We’re taking five unpaid days to help balance the state budget. I don't see anybody else doing anything to help balance the state budget. I could be wrong, maybe somebody is. Maybe some people have written a check into the general fund. I haven't seen them. All I’ve seen is our folks stepping up to the plate again. Again! And taking what amounts to giving money back to the state.

Henderson: Speaking of taxes, Ms. Laue, the former president of the Iowa Federation of Labor, Mark Smith, often advocated looking at taxes, increasing taxes. What is the position of the Iowa Federation of Labor in regards to state taxes?

Laue: Well, I do think we need to look at the whole system. Iowa is a state that has regressive taxes on the whole. As Danny said, the sales tax is the most regressive tax. The income tax is more progressive, but even with the sales tax, the income tax, and the property tax, the poor people in this state, the lower income people in the state pay more as a percentage of their income in taxes than do the well off. In 1997 we gave a 10-percent, across-the-board tax cut in the rate for everyone. Obviously those who paid the most got the biggest break. We used to joke and say that they got the down payment on a Lincoln Town Car while the worker got a happy meal. And that was the extent of that tax cut. Now when it's time for, you know, to tighten our belts and we're putting all the burden on the employees to carry this -- carry us through this hard time, we should go back and ask the citizens of this state if these services are important to them, which I believe they are, that everyone share in the burden, and it wouldn't amount to that much money.

Glover: And we know what Mr. Homan and his union have gone through. Give us a comparison. The private sector unions, how have they fared in comparison to how AFSCME has fared?

Laue: Well, it depends on where you are in the private sector. Obviously there are some private sector businesses that have moved or closed or laid off people. So there you have people that have lost jobs. Some of those jobs may have gone anyway because, as we know, there are companies that go out and move to Mexico or outsource to China and other countries offshore. So we have that going on and, yes, there's pain in the private sector too. But we all need to pull together. The AFL-CIO actually has a five-point plan for trying to revive this economy and bring jobs back. First of all, we need to -- I mean in all of this, we need to increase demand. We need to start out by extending unemployment benefits so that those folks who don't have jobs and won’t probably get jobs for a while -- they’re projecting that we won't see jobs return for probably another six months or so. And there are 15 million people in this country out of work. At the same time, there are not 15 million jobs for them to fill. So we have to get them through until we can create some jobs.

Glover: When they reduced their projections on the state's tax collections, the budget experts said they anticipate very little growth this year and nothing to turn around until probably next year. In their words, there's light at the end of the tunnel but it's a very long tunnel. Do you agree with that?

Laue: Probably. Iowa always seems to be a little bit behind the curve of the national trends, and so we may be a little bit later than that. In the meantime, hopefully the federal government and Obama can get some things started, as I said with the unemployment. Number two, to rebuild our infrastructure. I mean we have schools that need rebuilding. We have roads, we have the energy system that needs some help.

Glover: Mr. Homan, do you agree with that?

Homan: Do I agree that there's a little light at the end of the tunnel? Yes, I do, Mike.

Glover: How dim is that light?

Homan: It's not shining brightly, but I do believe that they did a study of the 50 states and Iowa was one of the 10 that they say is coming out and recovering a little faster than everybody else. And I think that's because we do things differently here in Iowa. We’ve had a balanced budget --

Borg: Let me ask you, then, what is the mood -- the general mood within your union, AFSCME?

Homan: I believe there are people that are concerned about what will happen come July 1 of next year. I believe there are people that are upset that they had to give up five days of pay and that they felt there are many people within our organization that said we ought to just raise taxes and be done with it. But I know there's 479 families today that are feeling a lot better than they were feeling a month ago.

Borg: Because?

Homan: Because our union and the membership of this union, at least 59 percent of them, stepped up and said we're going to vote to accept five unpaid days to save 479 jobs.

Borg: Ms. Laue, what's the mood generally? We’ve heard what AFSCME generally feels. What do you think is the mood among the Iowa Federation of Labor union members?

Laue: Well, I think the mood in general -- and it isn't just limited to union members. The mood in general among workers is fear, you know, fear that they could lose their job as well, and hope that something can be done to turn things around.

Glover: Mr. Homan, you gave up -- your workers gave up a pretty good concession in the terms of those unpaid days off. When you go to the legislature next session, what do you expect to get in return for taking those concessions? I mean unions, in my experience, don't give up something without asking for something in return. What’s your quid pro quo?

Homan: What we're going to go ask for, Mike, is we would like to see an early retirement program passed. That’s not necessarily for us. That would be for the entire state. There’s at least 2,700 folks that qualify under the IPERS program that have not retired. The biggest reason why they haven't retired is because they can't afford the insurance. We're going to work with the legislature in coming up with more efficient ways to run state government and what other efficiencies we can find to help us create a budget in the next fiscal year that ensures that no AFSCME members gets laid off next year.

Glover: Ms. Laue, the same question to you. It’s been tough up at the hill for unions in recent years. What do you want from this next session of legislature, given that it's an election year?

Laue: Well, obviously we would like to see the legislature take another look at the priorities we have there. Iowa is one of only six states in the whole country that does not have any of these things that we're looking for, and these things don't cost any money. And I’m sure you know what our priorities are, you know, in terms of more for choice of doctor, fair share, collective bargaining, and prevailing wage. So we're still going to be looking at those things. We realize that probably not all of them are going to happen this year, but they are common sense items that are prevalent across this nation. And it's really time for Iowa to start catching up.

Glover: What's changed? I mean those were your priorities for the last session. You couldn't get them. It’s the same legislature next year.

Laue: That's true but we're not going to give up. You know, we're going to continue. Maybe the legislature has not changed, but one thing that has happened over the past that we've realized that needs to be corrected is that our issues are not being talked about the way they should be. And as a result many people don't understand what that really means. So we have a job to do to educate our members and the public on the common sense provisions that we’re talking about.

Henderson: Let's take a --

Borg: Before we go too far, Kay, I want to -- you said these don’t cost any money. Some contend they cost a lot of money -- expanding the scope of bargaining might cost taxpayers a lot of money in the long run.

Laue: Most of the things that are bargainable and cost money are already on the table. They’re already bargainable. You know, things like wages and health insurance and that sort of thing. What we're talking about are things that are in the private sector, we do all these things already. We have the ability to bargain over all wages, hours, and conditions of employment. And sometimes you can make workplaces work better. In fact, unions are known for making companies better managing -- managers of their resources.

Borg: Kay.

Henderson: Another proposal that failed to win legislative approval last year was the prevailing wage issue that you mentioned before, whereby workers who are working on projects financed by public money would be paid the prevailing wage in the county. Critics of that said, in particular in Linn County when they were trying to rebuild after the flood, that would have added cost to each individual project and meant that fewer projects would have been financed. How do you answer that criticism?

Laue: Right now many of the projects that get done without the prevailing wage actually cost almost as much as they would with the prevailing wage. It’s just that the difference doesn't go to the worker. The difference goes to the company. The out-of-state contractor that just pockets that money and takes it some place else. If the money goes to the worker from the state, it circulates in the economy, and that improves the Iowa economy.

Glover: Mr. Homan, the legislature did pass not long ago a bill that would have expanded the scope of topics for which unions can bargain. The governor vetoed it. What’s your take on that? This governor got a lot of support from organized labor, and that was a priority that he vetoed.

Homan: Well, it's still a priority, Mike. And I think as Jan said, we weren't trying to get everybody to immediately assume that that would mean the union would get everything that they put on the table. I only wish that were true. Negotiations are just that. It’s a give and take. If I want an item or if I want something in bargaining, many times the employer will look at me and say, well, we want this issue here, what are you willing to give if you want that. It doesn't matter what I bargain for. There’s a give and take.

Glover: Well, what's your relationship with this governor, considering he vetoed one of your top priorities and he's headed into an election year? By all indications, it's going to be a pretty tough election year for him. The polls don't show him running all that high.

Homan: Well, we work with the governor and his staff every day. Our relationship is what it is. I mean, at times it's difficult. At times it's cooperative. I think it's a relationship that will be improved hopefully, can be improved hopefully. It’s going to be up to our membership what this union does in the next election.

Borg: You worked hard -- unions worked hard last time to get Governor Culver elected. Are you going to work as hard this time?

Homan: That decision will be made by the membership of our union on who they want to endorse. It’s not made by Dan Homan. It’s made by a group of people who will come into Des Moines or other places like we did in the primary. We had town hall meetings all across the state. We invited the republicans to those town hall meetings. We will make a decision on who we're going to support in the next election when that time is appropriate. Currently the governor of this state is Chet Culver. The gentleman that I have to work with every day to try to make things better for the folks that I represent in state government is Chet Culver. I’m going to work as hard as I can to have a relationship with Governor Culver that is productive for the folks I represent. Not for me, for the folks I represent. That’s what this is about. Not me, the folks I represent.

Henderson: Ms. Laue, on this program this past spring, Ken Sagar, the president of the Iowa Federation of Labor, said he hoped that the six democrats in the Iowa House who did not support the labor related bills that we’ve been discussing might face primaries. Is that still the position of the Iowa Federation of Labor, that you hope those democrats face primaries?

Laue: Well, I’m not sure if that was exactly what he said, but as a result of what has been happening -- and, as I said, we need to do a better job to educate the public on our issues. As a result of that, we are working on a program to do that, to better educate folks and also to encourage more of our members to run for public office, especially at the local levels. And that's where a lot of our legislators come from. You know, they're mayors, they're county supervisors, they're school board members. We need to have that kind of knowledge in those --in those organizations and at those levels, and hopefully we can, you know, change things. We need to have -- I’m not a sports person -- but a farm team, so to speak, to come in and be in the legislature eventually. Whether that means a primary or not, I don't know. The primaries are very, very difficult. And what we really need is a farm team.

Borg: Mr. Homan, you mentioned you wanted to work with legislators and with the governor on efficiencies. But within the past 24 hours, I looked at the AFSCME Web site, and there there's a message in there that refers to the efficiency report that was displayed by Governor Culver earlier this week given by a private consultant. And about three times it says there to your union members this is not a done deal. In other words, don't worry about this but you may have cause to worry about it. Are you not in favor of -- help me to reconcile. You said you're in favor of efficiencies but you’re trying to relay fears, it appears, about the efficiency report that the governor has.

Homan: Just because some consultant comes into Des Moines, flies in here or drives in here, does a report, doesn't mean that we're going to agree to it. There are parts of that report that we do not agree with. And we're going to sit down with the governor, and we’ve asked to meet with the governor and his staff to talk to them about the parts of that report that we personally do not agree with. So we will share our concerns with this consultant’s report. We believe there are some infalacies in that report and that because they don't know exactly how Iowa works and how each one of our institutions work, as well as our members do, that there are problems with the report. We’re going to share those with the governor. But ultimately, he is the governor and there’s only so much we can do. But we will definitely let him know where our concerns are. That’s the message to the members. Don’t know that I agree with everything in that report. Some of the things I may.

Henderson: One of the conclusions in the report was that the state is spending an estimated $3 million providing health care to state employee associates, maybe family members who aren't entitled to that coverage. Is that one of the bugaboos that you see in the report?

Homan: Well, that goes into this person's unknowledgeable fact of what happens. I believe what he's referring to is the dual spouse provision we have in our collective bargaining agreement. That has been in the collective bargaining agreement for many, many, many years, and it's the subject of bargaining. So, you know, that consultant ought to stay out of things that he has no business being in. That's a collective bargaining issue and we’ll deal with it at the table.

Glover: Ms. Laue?

Homan: But I believe we save money by doing that, not cost the taxpayers money.

Glover: You're going to be pretty involved in politics next year. It’s a big year in Iowa. It’s a governor’s election year. A lot of Congress people up for election. Give me your take on the mood of the electorate. History would tell us that it's the first midterm election of a democratic president, so that ought to mean it ought to be a good year for republicans. However, the economy seems to be the driving force throughout the electorate. Historically that helps democrats. Step back and look at the mood of the country and the state next year.

Laue: Well, I think the mood of the country and the state is very similar to that of workers, that there is a fear that we won't get things turned around quickly, but I think there is hope that, you know, something can be done. After all, we've gone through these cycles before. The question is how long will it last and is it going to hit me.

Glover: Mr. Homan, same question to you. What’s the mood of the electorate next year?

Homan: I believe people are waiting to see what happens in this legislative session, to see just exactly what happens. There are people that have strong opinions about the current folks holding office, and there are others -- both ways, support them strongly and want to throw them out. I believe we inherited a huge mess that was left here by George W. Bush, and I don't believe anybody understood the depth of that mess. And it's not going to change overnight. But I guess we're going to have to see what happens in the next session.

Borg: Mr. Homan, if fifteen seconds, which is what we have left, give me the advice that you would give to teachers who are sitting down with school boards across Iowa in the next few months on what they ought to do, given what your union has already given.

Homan: I refuse to do that, Dean, because it’s not my place. The last time I checked, my title is President of AFSCME Iowa Council 61, not of the ISEA. I believe the ISEA will make whatever recommendations they feel pertinent to their membership.

Borg: Thank you. Thank you both for spending time with us today. On our next edition of Iowa Press, a republican perspective on the state budget challenges. We’ll be questioning the senate republican minority leader, Paul McKinley of Chariton, and his counterpart in the House of Representatives. That’s Kraig Paulsen of Hiawatha. That conversation with republican leaders McKinley and Paulsen at the usual times, 7:30 Friday night and 11:30 Sunday morning. And at the bottom of your TV screen right now is the address for comments you might want to make on Iowa Press to our staff. The e-mail goes to iowapress@iptv.org. We'd like to hear from you. I’m Dean Borg. Thanks for joining us today.

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