Article by Erik Smith. Published on Monday, August 24, 2010 EST.

Governor’s Office Takes Aim at Health Benefits – Ferry Unions Going to Arbitration

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Aug. 23.—Gov. Christine Gregoire is on a collision course with Washington’s public-employee unions as the state hammers away at health benefits and ferry-system perks that were the subject of a hard-hitting series of TV news stories.

            Unions say the governor’s office is crossing a line that until now has been sacrosanct – the “88-12 split” that requires the state to pick up 88 percent of the cost of health-insurance premiums. They say the state is demanding a 75-25 split. Unions go behind closed doors with the state for the second time Tuesday, after two weeks of blowing off steam. But after two years of cutbacks, layoffs, furloughs and no pay increases, they say health benefits are one item on which they’re not going to budge.

            Meanwhile, the state’s ferry unions are in an uproar. They say the state is nickel-and-diming them because of a series of news stories on KING-5 TV that alleged waste and mismanagement in the ferry system. The unions say it’s a management issue, and the biggest of them have announced they will seek arbitration.

            Also demanding arbitration are unions representing home care and childcare workers.

            The state isn’t telling its side of the story. It keeps mum as a matter of policy. But it’s safe to say that this year’s labor negotiations are not going smoothly.

            Shortfall is Big Culprit

            Behind the trouble is the enormous shortfall that looms ahead for next year’s Legislature. Current estimates are that the state will run $3 billion short of the amount required to maintain current programs at their present level. That’s on top of the $12 billion shortage the state had to resolve over the last two years.

            Only in the last few months has the state begun a recovery from its recession plunge, but the economy remains sluggish, and tax revenue remains well below expectations. Gregoire has been trying to lighten the load, appointing a commission to study state programs that might be thrown over the side, and warning state agencies that they will have to take four to seven percent cuts next month. With reporters she has been tight-lipped about the labor negotiations.

             “You know, we are at the table right now,” she said Aug. 12. “All the issues are still on the table. I don’t think we have an agreement with anybody right now on anything. Yes, that’s a fair statement.”

            Asked if she was considering a whack at health benefits, she said, “I can’t be negotiating here. But let me be clear. It’s on the table.”

            Unions Draw the Line

            It’s an odd position for a governor whom the outside world sees as a staunch ally of the public-employee unions that are a key constituency of her own Democratic party. But friction has become intense over the last two years, as the governor and the Legislature have struggled to balance the budget. Last year the governor canceled scheduled cost-of-living pay increases, junking contracts that her office had negotiated with the unions a few weeks before the Wall Street meltdown. Most of the unions sued, but lost the fight in court. They were forced back to the table.

            This year came furloughs, pay freezes and a host of other measures the unions found distasteful. And there was a large but little-understood increase in health-insurance costs for state employees. Although the 88-12 split remained in place, becoming a favorite target for Republicans and other critics, the state this year hiked health-insurance copays and deductibles for state employees and family members. Because of it, state employees pay about 25 percent of the cost of their health benefits – about in line with the private sector, said Tim Welch, spokesman for the Washington Federation of State Employees.

            “We’re drawing a line in the sand on health care and on maintaining the current benefits structure,”  Welch said. “We may not gain much in the negotiations, but certainly we don’t want to lose anything.”

            A general tax hike for state employees may not be a popular idea. But the unions say the state ought to consider ending some of its $14.8 billion in tax exemptions. Most of those go to the general public, but about $4 billion of those exemptions go to business – what unions call tax loopholes.

            Meanwhile, they’ve been taking the fight to the ballot box, funneling labor contributions toward Democrats who take their side and targeting those who do not. In the most prominent of the contests in the primary election, labor groups spent $275,000 trying to unseat Democratic Sen. Jean Berkey of Everett. Currently she trails her two opponents by 17 votes in late vote-counting and may wind up a casualty. Berkey maintains she was targeted because she voted with Democratic party leaders and crossed the unions – and because the union leaders wanted to make an example.

            Ferry Unions Angered

            Health benefits aren’t the only flashpoint. The state’s ferry unions say the state is giving them the short end of the stick, because of the negative publicity that came with the KING-5 stories. Among other things, the station chided the state ferry system for allowing excessive overtime and travel pay. Most of them ran after the talks with the unions had begun. And as furor grew, the state started insisting on concessions – travel pay, mileage, ferry passes for workers and their families.

            “They put those off to the very end,” said Gordon Baxter, lobbyist for the ferry unions. “That’s incompetence. If you’ve got a big issue, you put it up front. They didn’t seem to understand that. The governor’s staff doesn’t know what it’s doing.”

            The affected ferry unions – representing the bulk of the 1,698 workers – would have none of it. They sent the matter to arbitration. That’s a big expense for the state and the unions, Baxter said. He noted that the ferry unions, unlike the others, didn’t sue the governor last year when she junked the contract and sent them back to the table.

            “We said, governor, you’ve got bigger problems than us. And this is what we get?… [The Department of Transportation] is trying to set us up as a scapegoat for all their problems.”

           65,458 Employees Covered by Negotiations

            For the last five years, the state has been negotiating contracts with a growing number of public-employee unions through the state Labor Relations Office. Today a little over half of the people who draw a state paycheck are represented in the talks. Some college and university employees continue to negotiate with their own institutions, and others – childcare and home care workers – are covered by labor agreements but are not considered state employees in the traditional sense.

Most of the 65,458 represented employees are affected by Tuesday’s health care negotiations. Technically the talks affect only those who are at the “general government” table, but traditionally the state has extended the same health benefits to all represented employees. That point may be on the table this year.

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