The Iowa Legislature finished work last week on a de-appropriations package that stripped money out of the current fiscal year budget. This was due to weak economic performance in the state which yielded lower than expected revenue.
This self-inflicted budget crisis is years in the making, and should come as no surprise. Last year, Iowa ranked among the worst 10 states for the bloated size of our government workforce based on population.
Additionally, data from the Bureau of Labor Statistics indicates the average state government worker is making significantly more than Iowans in the private sector. This amounts to a higher burden on taxpayers in the state, which hinders economic growth.
A contributing factor to this bloat are laws governing state contract negotiations, commonly referred to as collective bargaining. Under the current arrangements, government unions get to lay out their wish list for salary and benefits and then negotiate against unelected bureaucrats whose salaries are not subject to market forces.
This process is made worse by the fact that persistent disagreements are settled in binding arbitration. This arbitration process prescribes comparison to other government employees rather than the private sector. It limits decisions to one of the two parties’ offers on a given item and includes a codified reminder that the government always has the ability to raise taxes to pay for the final contract. The incentives under this structure simply exist to appease both parties whatever the cost, rather than to do what’s best for taxpayers.
Making matters worse is the absence of any meaningful accountability for government employees. Government managers are all but banned from using merit-based pay systems — which reward and incentivize hard work — while the worst government employees are protected by a bureaucracy that all but prohibits their firing. Once again, the responsible stewardship of taxpayer dollars is not the primary incentive in government departments.
Reforming collective bargaining is nothing new and the results elsewhere are enviable. Wisconsin implemented smart collective bargaining reforms in 2011 and taxpayers have been the winners ever since, seeing over $3 billion in savings. The state’s budget deficit was eliminated and the economy has grown as government growth has been contained, exactly what Iowa needs right now.
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A key focus of the rest of the legislative session should be reversing the trend of government growth and a weakening economy. The priority should be improving economic performance to ensure that Iowa can meet its financial obligations and protect taxpayers across the state. In that pursuit, addressing the size and cost of state government should be a high priority.
Smart reforms of the collective bargaining system would be a great start to improving Iowa’s economic competitiveness and reducing bloat in government. It would also reduce the need for future broad-based cuts that could impact essential services.
• Drew Klein is the state director of Americans for Prosperity in Iowa.