How Does the Budget Repair Bill Impact Wages for Local Government Employees?
The Budget Repair Bill (BRB) substantially modifies the way local governments and school districts (collectively “local governments”) establish and maintain compensation systems for their employees. Prior to the BRB, local governments had to bargain wages with collective bargaining unit employees. If the parties did not agree on wages, arbitrators chose between the two wage proposals and required the local government to implement the one deemed most reasonable. Under the BRB, local governments will be prohibited from bargaining with general municipal employees (non-public safety employees) in collective bargaining units on any form of compensation other than total base wages. Other forms of compensation such as overtime, premium pay, merit pay, performance pay, supplemental compensation, pay schedules and automatic pay progressions are expressly designated as prohibited subjects of bargaining. See BRB, Section 223.
1. Modifications to Base Wages for Represented Employees.
The BRB limits increases to base wages that may be bargained by local governments, and in some cases requires employers to bargain for decreased base wages. This is because the BRB ties negotiated base wages to the consumer price index (CPI). The CPI measures changes through time in the price level of consumer goods and services purchased by households. Changes in CPI are used to measure price changes associated with the cost of living and are often used as a measure of inflation.
If there is an increase in CPI over the 12 month period immediately preceding the date of determination (CPI Change), a municipal employer cannot make a bargaining proposal to increase the total base wages of general municipal employees (as determined six months prior to the expiration of the previous collective bargaining agreement) by a percentage greater than the CPI change. If there is a decrease in CPI over the 12 month period immediately preceding the date of determination, a municipal employer cannot make a bargaining proposal that is more than total base wages (as determined six months prior to the expiration of the previous collective bargaining agreement) decreased by a percentage of that expenditure that is equal to the decrease in the CPI change in the last 12 months.
If a local government wishes to increase total base wages by a percentage that exceeds the CPI change, the governing body of the local government must adopt a resolution specifying the amount by which the total base wages increase will exceed the CPI limit. See BRB, Section 150. The resolution may not take effect unless it is approved in a referendum called for that purpose. The referendum must occur in November for collective bargaining agreements that begin the following January 1. The results of a referendum apply only to the total base wages in the next collective bargaining agreement.
2. Limits Appear Intended To Apply Only To Represented Employees .
The limitations on increases to base wages for general municipal employees found in Section 150 of the BRB appear intended to apply only to represented employees, notwithstanding the arguable lack of a clear limitation to that category of employees. First, section 150 incorporates the definition of “general municipal employee” from Section 192 of the BRB. Section 192 of the BRB, in turn, relates solely to collective bargaining. Second, the final sentence in the new Wis. Stat. § 66.0506(2) states that the “results of a referendum apply to the total base wages only in the next collective bargaining agreement.” (Emphasis added). Finally, the LRB analysis of the BRB states that “unless a referendum authorizes a greater increase, any general employee who is part of a collective bargaining unit is limited to bargaining over a percentage of total base wages increase that is no greater than the percentage change in the consumer price index.” (Emphasis added).
3. What Other Compensation Is Allowed Under The BRB?
The BRB prohibits local governments from bargaining with general municipal employees on matters other than base wages. However, the BRB does not prohibit a local government from unilaterally implementing other compensation measures such as performance bonuses or merit increases. In essence, under the BRB, represented employees are treated the same as non-represented employees regarding “other compensation” (compensation other than base wages). Local governments will have discretion over how much or how little to award as “other compensation” to general municipal employees. Moreover, local governments may award “other compensation” to employees differently based upon the performance of the employee or any other measure the employer deems relevant.
The ABRB (After Budget Repair Bill) world for local governments will look a lot more like the private sector in terms of how employees are compensated. Market forces and individual merit will play a larger role in how much each employee receives. While these concepts are not new for the private sector, it represents a drastic departure from the system local governments have been operating under for over the past 30 years.
If you have questions concerning the status of the BRB as it moves through the Legislature, please contact the Wisconsin Counties Association at (608) 663-7188 or John Reinemann. If you have questions related to what the BRB means to your Municipality, County or School District please consult with your attorney or contact us at Andrew T. Phillips or Daniel J. Borowski.