*** UPDATE *** I just asked Senate President Cullerton’s spokesperson about this passage in the governor’s letter…

President Cullerton publicly expressed this week that he is open to changes in the prevailing wage law.

She said he made those remarks at the Tribune editorial board meeting. “He indicated that he could be open to looking at modest proposals but would rather look at other ways to maximize savings for local communities and school districts,” she said.

OK. So I asked if those “modest proposals” include allowing local governments to eliminate the prevailing wage.

“Nope,” she said.

* The governor just sent a memo to legislators…

To: Members of the General Assembly
From: Bruce Rauner, Governor
Re: Turnaround Agenda – Property Tax Freeze and Local Control Legislation
Date: July 31, 2015

As both legislative chambers prepare to reconvene next week, I want to begin directly communicating with you on our Turnaround Agenda and the state budget.

I know this extra session is frustrating for many of you – it is for me as well. It has already gone on far longer than necessary. As soon as all parties are interested in beginning real negotiations, there is no reason we can’t quickly reach an agreement that will make Illinois more competitive and free up resources inside state government so we can afford to be more compassionate. I am eager to reach an agreement soon on reasonable reforms to turn around the state we all love.

I also know that many of you may be having difficulty receiving full and accurate information about our proposals. I suspect that much of what you have read or heard about our compromise proposals is likely incomplete or lacking critical context. This memo is the first in a series that are meant to clarify our positions and explain directly why our reforms are both reasonable and necessary.

Before addressing the first policy area, I want to reiterate the motivation behind our Turnaround Agenda. I simply want Illinois to be the most competitive and the most compassionate state in the nation. It is not an ideological agenda – I have shown a willingness to embrace policies that run contrary to Republican orthodoxy. Our reforms are aimed at growing our economy so that over the long term we have more money to invest in our schools and social services, and our reforms are meant to free up money inside state government so that we can give the most vulnerable among us a hand up. I know it sounds trite, but I love Illinois and her people. They are the motivation behind our agenda.

One issue where the people of Illinois demand reform is on property taxes. As you know, we have the second highest property taxes in the nation, and those high taxes hurt middle class families as well as our economic competitiveness. We need to deliver property tax relief.
A short-term property tax freeze alone, while politically popular, is only a small step and will not be truly effective at helping our homeowners and small business owners unless we also give local units of government and school districts the ability to control costs. Absent those tools, property taxes will increase again as soon as the freeze expires. Our proposed legislation offers reasonable reforms that allow – but do not require – local units of government to use tools to control costs.

More detailed information on these tools is below:

Collective Bargaining Reform

Current Law

Years of court rulings and negotiations have gradually eroded management flexibility in collective bargaining agreements for schools, cities, counties, community colleges and other units of government. Once a topic is negotiated by an employer, the government is effectively obligated to continue negotiating over that topic for future collective bargaining agreements. This creates a “one-way ratchet” in which decisions made decades ago by other leaders effectively cannot be altered.

Proposed Changes

Local units of government and school districts should be allowed to “reset” this framework. The compromise Turnaround legislation gives local governments and voters the ability to determine what issues must be negotiated. If they do not want to change existing collective bargaining topics, they can keep the status quo. Local voters and elected officials would be given a choice to craft the best option for their communities, allowing them to free up resources, if necessary, for other critical government services.

Context

Chicago Public Schools is facing the very challenge this legislation seeks to address.

In 1981 CPS agreed to “pick up” most of the teachers’ share of their pension contributions. That means that on top of the employer share of pension contributions, CPS also picks up 77 percent of the employee’s share. This deal, created more than 30 years ago, has resulted in CPS in FY15 alone paying approximately $127 million towards the employee contribution for teachers.

Chicago leaders have requested that the state remove the “pension pick up” from collective bargaining and require teachers to pay their own share. In recent years, the state has given Chicago other requested collective bargaining changes. For example, CPS was given the ability to decline to negotiate over particular subjects, including the length of the school year and duration of instructional time, at the Mayor’s request in 2011. We should end the piecemeal-type approach to collective bargaining reform and give all our local leaders the tools and flexibility they need.

Prevailing Wage Reform

Current Law

Illinois law requires wages on state and local construction projects that do not reflect true market rates. This drives up taxpayer costs by up to 20 percent and diverts money that can otherwise go to fund our schools and social services. Illinois’ is an outlier in this regard. Nearly 20 states do not have any prevailing wage requirements, and more than 20 additional states limit prevailing wages to a monetary threshold.

Proposed Changes
The compromise Turnaround legislation allows true competitive bidding in local taxpayer- funded construction projects.. Local units of government and school districts would be allowed to opt out of or remain in the state prevailing wage law. They would be able to set their own local prevailing wage requirements that are better tailored to their community. Existing prevailing wage requirements would remain for all state projects

Context

Any prevailing wage changes would occur only if a local community decided to adopt changes. Additionally, local units of government could adopt local contractor preferences, similar to what the City of Chicago has already enacted, to encourage Illinois-based workforces. Reforming the law would also open up more economic opportunity for a broader range of small businesses and minority-owned firms.

President Cullerton publicly expressed this week that he is open to changes in the prevailing wage law. That is encouraging and a starting point for more serious discussions about ways to control costs for local units of government. Given the financial plight of the City of Chicago, Chicago Public Schools and many communities and school districts throughout the state, it is common sense to also include collective bargaining reforms to the list of what we should be discussing. There is no reason the state should be tying the hands of our local leaders as they try to rescue our communities from years of bad financial decisions. Instead of binding our local leaders to short-sighted and fiscally irresponsible decisions made in the past by others, let’s give our current leaders the tools necessary to fix the future.

President Cullerton has also appropriately noted that school funding is a major component of our property tax system and a discussion of school funding formula should be included in any discussion of property taxes. I agree. While some details need to be worked out, I am very willing to include school funding reform as part of a compromise property tax and local control package.

We still must find a way to give local units of government tools to controls costs, but little else should be standing in the way of an agreement on this critical topic.

I hope you find this information helpful. Please do not hesitate to contact me or our staff if you have additional questions or ideas.

Sincerely,
Bruce

Discuss.