“Massive layoffs and pay cuts are likely coming to state and local governments as federal aid goes elsewhere,” says a CNBC headline. It’s easy to find headlines like that across the country now. “The only answer for the states, counties and cities that want to survive is to slash budgets now — probably 30 to 50 percent — eliminate all nonessential spending and reduce taxes today,” said a column this month in The Hill.
But Illinois is going ahead with a pay raise for about 40,000 unionized state workers of 2.1 percent starting July 1, as reported by WBEZ.
Because it’s in their union-negotiated contract, Governor JB Pritzker says. “If you look at the four years of no raises and the negotiated raises in those contracts, they’re very reasonable for the taxpayers,” Pritzker said. By contrast, New York Gov. Andrew Cuomo invoked his emergency powers this month to defer state employee pay raises in that state, said WBEZ.
Pritzker obviously should be asking the unions to voluntarily suspend the pay raises. For everybody else, unemployment is approaching Great Depression levels and tens of millions more have had their income slashed.
And if public workers decline, he can and should ignore the contract and let them sue.
That’s because contracts can be adjusted when a crisis such as this makes full contract performance unreasonable. If ever there is a time when the “police power” applies, allowing governments to suspend or modify their contract obligations, it is now. That’s the same principle that we’ve explained often in connection with pension reform. The Illinois Supreme Court declined to apply it for pension reform, basing its decision largely on the pension protection clause, which is separate. However, the doctrine is firmly established for other purposes.
Pritzker made clear from the start who wouldn’t sacrifice in this crisis: state workers.
Way back on March 15, Pritzker quietly announced, buried in a press release about something else, that state workers would continue to be paid in full and receive full pension accruals even if they are at home and not working at all. Similarly, he announced that school teachers could get the same regardless of whether they were teaching remotely, which he left to school districts. Many teachers – most, I suspect – are working very hard to teach remotely. But some are making little or no effort. Many get paid the same either way.
“Shared sacrifice?” Uh-uh.