In Tough Times the UAW is a Vital Partner
Despite tough economic times, the UAW has bargained for reasonable wage increases and protected benefits. This made sense because state employees have become a smaller and smaller part of state expenditures – even with wage increases. However, tough times meant the state needed help balancing the budget, twice. The UAW worked with the state to craft a plan that provided the relief the state needed while protecting our members’ jobs. All signs are that each of the next several years will be a struggle when it comes to the state budget. The budget process comes down to priorities, the UAW works to make sure that our members, and the valuable contributions they make, are a priority.
What Does the Future Hold for the State Budget?
“After Five Consecutive Years of Mounting Deficits, A Long Range Forecast Indicates Shortfalls Will Continue and Potentially Worsen.” This report by the Michigan League for Human Services (MILHS) offers a sobering assessment of the state’s fiscal outlook. Below are a few highlights.
Read the full report. (PDF 220KB)
- Since FY2001, the state has come up with $3.8 billion by draining the rainy day fund and using one-time accounting adjustments to plug holes in the budget. With deficits still projected for the future, the state will not be able to building another rainy day fund in preparation for the next downturn. The result may be that budget deficits in the next downturn will exceed those of the most recent downturn.
- Although the state’s problems have been made worse by the economic downturn, they will still exist once Michigan’s economy gets back on track. That is because the revenue structure cannot keep pace with expenditures. This structural deficit creates uncertainty about the State’s fiscal health in the coming years.
- According to MILHS, even if the Single Business Tax (SBT) revenue is replaced and secondary education is protected from reductions, all other departments would have to be cut by 38% over the next 10 years. Since some areas can’t absorb those cuts (Medicaid and Corrections), others will have to bear an even greater burden.
State Employees Not the Problem
As a percent of total expenditures, employee payroll has fallen from 13.4% in FY 1995 to 9.9% in FY 2004. Clearly, state employee compensation is not the chief budgetary problem. However, in tighter economic times having a voice through collective bargaining becomes even more important.
Source: 25th Annual Workforce Report, State of Michigan, Dept. of Civil Service
