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Why Stamford’s Board of Representatives is totally ineffectual at restraining city spending (and the

The Board of Representatives just squandered $100,000 to learn an invaluable lesson: democratic (small “d”) municipal self-governance in Connecticut is a farce. An illusion. A sham. Why? The principle of federalism is reversed when it comes to the state of Connecticut and its relationship to its towns and cities. In short, unelected, state-appointed arbitrators decide how much to pay Stamford’s government workers, and then Stamford’s residents pony up property taxes to cover those costs. It is the state of Connecticut, and not its municipalities, which has the final say over municipal employee contracts.

Stamford collective bargaining flow-chart

[Note: if the image is too small, press "Ctrl" & "+" on your keyboard at the same time to enlarge it.]

The tenth Amendment to the U.S. Constitution explains that the federal government is one of limited and enumerated powers, and that the states have plenary powers over all matters not delegated to the federal government. That’s federalism. In Connecticut, looking at the relationship between the state and its municipalities, the opposite is true. The state is one of infinite powers (constrained only by the U.S. Constitution), and Connecticut’s municipalities are entitled only to those powers which the state does not reserve for itself.

So goes the general principle. Let’s apply it.

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The Advocate brings news of Stamford’s latest adventures in negotiating collective bargaining agreements (“CBAs”) with the various public employee unions representing our city’s workers. This time, city attorneys were up for a new contract, covering six assistant corporation counsels working under the city’s director of legal affairs Kathryn Emmett. The city (meaning Mayor Martin and his administration; in this case it seems primarily Michael Handler, Director of Administration) reached an agreement with the lawyers’ union on a new contract. It went to the Board of Reps for a vote on whether to reject the contract.

The Board of Reps thought the contract was too rich.* They rejected the contract, 20-14, sending it to a three-member state arbitration panel pursuant to the Municipal Employees Relations Act, with the city paying the costs for outside counsel to represent it at arbitration, because the Mayor’s office had approved of the deal and was thereby conflicted from representing the city in the proceeding.

The state’s Labor Commissioner--an executive nominated by the governor and confirmed by the state legislature--appoints the members of the state arbitration panel. Connecticut’s Labor Commissioner is Kurt Westby, “a former consultant with the Service Employees International Union who also held leadership roles with both the SEIU and Connecticut AFL-CIO[.]” In short, a former public sector union employee is ultimately responsible for the arbitrators who vote on the appropriateness of public sector union CBAs. To say the deck is stacked against our towns and cities and their financial health is an understatement.

In order to prevail at arbitration, the city has to demonstrate it is financially stressed. In general, arbitrators must consider market compensation for the employee group, and their “interest and welfare[,]” among other equitable considerations. See Conn. Gen. Stat. § 7-473c(c)(9). However, where the city reaches agreement but the Board of Reps rejects it--as was the case here--the adversarial process between the city and the union is not undertaken with full conviction. This is because no city official is going to admit that the city is struggling and entered into an overly generous contract, except under very unusual circumstances.

During the arbitration proceedings, Michael Handler testified that the “financial status of the city is very strong” and “tentative agreement was a fair deal[,]” which is expected, as Handler was influential in negotiating the very CBA up for arbitration. The city is stuck in a catch-22: either admit you were bested in the original negotiation and that Stamford faces serious financial difficulties, or affirm your original belief that the agreement was fair and that the city is in good financial health. Further, if the city and a bargaining unit agreed to a CBA, arbitrators view that as prima facie evidence the city can afford it. Here, in explaining their ruling, the arbitrators noted that “[t]he City has the ability to pay the sick leave cash out. The proposal was already agreed to by both bargaining committees, which indicates the City’s financial capability to afford it.”

Unsurprisingly, the arbitration panel upheld the original contract, based at least in part on rather dubious reasoning (among other findings, they note that the city can afford the contract because it “has the second highest grand list in the state[,]” an evergreen statement which--without accounting for the city’s other financial obligations (mold, anyone?)--has no bearing on the appropriateness of this particular contract). While the Board of Reps could have rejected the contract again by a two-thirds vote, sending it to a different arbitration panel very similar to the original, the result of the original arbitration is almost always going to be upheld, and the Board of Reps was wise to refrain from doing so.

Dubious reasoning or not, the arbitrators’ decision is binding. And the city is stuck with the contract.** As a practical matter, it is extremely difficult to take away benefits that employees already have. Absent a good reason, arbitrators are loathe to take eliminate pre-existing benefits. Generally, the only reforms that are possible are with regard to new hires.

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To summarize, the state of Connecticut has reserved to itself--essentially, to the preferences of the State Commissioner of Labor (and his appointees) serving at the request of the Governor--the ability to bind municipalities to CBAs its own elected representatives do not want to enter. Roughly speaking, about 50% of Stamford’s annual budget goes to pay salaries and benefits of employees covered pursuant to the various CBAs.*** That number is higher when you consider non-salary and benefit spending required by CBAs. And all of this spending is made pursuant to labor agreements for which the BATNA is binding arbitration, and for which the Board of Reps has virtually no say in controlling.

That said, the Board of Reps did just waste $100k of taxpayer money to participate in a sham arbitration process, and deserve a tsk-tsking for doing so. However, it may be a small price to pay to better understand the extent of their fecklessness as a body when it comes to restraining city spending, and what reforms need to occur for them to have a genuine power of the purse. I hope they are furious, and demand to claim democracy for the citizens of Stamford, and not be forced to delegate our ability for self-governance to bureaucrats in Hartford.****


*I don’t have a strong view on whether the contract was in fact too generous. In general, my observation regarding city employees is that the most senior employees are underpaid, but the rank and file are overpaid, at least as compared to what they would receive in the private sector. For example, Kathryn Emmett made $165,132 in base salary in 2018, while her assistant corporation counsels made an average of approximately $140,000, a much narrower spread than I would expect given her relative credentials and breadth of experience.

**The public policy explanation behind granting collective bargaining units binding arbitration is that, in exchange for that benefit, government employees subject to labor agreements are not allowed to strike. While I can somewhat see the necessity of this policy as it regards certain essential employees (think fire and police), I see no reason to extend the entitlement of binding arbitration to all government employee unions. Of course, changing the status quo falls to the state legislature.

***The city notes that 95% of salaries and compensation spending for 2018--roughly $300 million (out of a total $314.5 million)--is for employees covered by the city’s various unions. That same year, the city spent a total of $564 million. So, spending pursuant to CBAs is at least 50%+ of each year’s spend, and that’s not including other spending these CBAs might require (the additions that comes to mind is equipment for our police officers and firefighters, although there may be many more I am overlooking).

****Stamford’s Board of Finance--ironically, given its name--has even less authority than the Board of Reps to influence CBAs. Currently, they are entitled to only an advisory vote on whether or not to reject a contract agreed to by the city and the union. Our next charter revision (does anyone know how that works?) should give the Board of Finance the same authority as the Board of Reps to formally reject a CBA.