ANCHORAGE, Alaska – The city of Anchorage is confronted with the same type of financial challenges that many communities and schools are dealing with today – how to stay afloat with decreasing revenue and increasing costs.

That already tough situation threatened to get worse this year with the approach of scheduled collective bargaining with the city’s nine employee labor unions.

Nine new labor contracts would certainly have meant higher labor costs for a city that can barely afford current costs.

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In early February, Mayor Dan Sullivan took a bold step to counter that threat.

He introduced Ordinance 37, otherwise known as the “Responsible Labor Act,” which, among other things, limits union pay raises to a maximum of one percent over the five-year average of Alaska’s inflation rate, takes away the unions’ ability to strike, eliminates binding arbitration for financial disputes, ends bonuses based on seniority or performance, and establishes standardized health coverage for workers in all unions.

It also introduces “managed competition” that will allow the city to outsource some services currently performed by union workers to private contractors, and limits the length of union collective bargaining agreements to three years.

The controversial ordinance was approved by the Anchorage City Assembly by a 6-5 vote in March.

While the new law makes a lot of sense for the city and its taxpayers, officials from the employee unions are determined to wipe it from the books.

Last month they convinced a judge to suspend the law while they circulated petitions to force a public referendum on the issue. They are clearly hoping voters will set aside the best interests of the community and defeat this common sense effort to rein in local government costs.

The unions reportedly gathered 22,136 voter signatures, more than triple the number required to put the issue on the public ballot, according to the Anchorage Daily News and Associated Press. The city clerk plans to start reviewing the petitions immediately and complete the task by Sept. 25.

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If the proper number of signatures are confirmed, the state would either schedule a special election – which would cost the city an estimated $280,000 – or put it on the April municipal election ballot, news reports said.

“Quite frankly, we don’t mind it going to the ballot,” Sullivan told the Juneau Empire last month. “I think the people will agree with us.”

‘Time to streamline things’

The ordinance is a lot like Act 10, Wisconsin’s new law that curbs union collective bargaining power statewide. While such a law is unusual for municipalities, it’s not unprecedented. Other cities in Alaska and across the nation – like Juneau, Indianapolis and Seattle – have similar laws.

While this measure is predictably unpopular with the local labor unions, Sullivan’s actions are clearly necessary for the fiscal health of the community.

Last year Sullivan proposed a city budget that called for deep spending cuts to avoid a potential $30 million budget deficit. Suggested cuts at the time included the elimination of nearly 190 city jobs including 40 positions with the police department.

As in most states and communities, union labor costs have been driving up the cost of government at a time when taxpayers can least afford it.

As ADN.com summed it up earlier this year, “When Sullivan came into office in 2009, he regularly complained that the previous administration of then-Mayor Mark Begich and the Assembly had approved overly generous and overly long contracts, especially considering the national recession.”

“Just before Begich left the mayor’s job to become a U.S. senator, the Assembly approved new five-year contracts with four of the city’s nine labor unions.”

City Assemblywoman Jennifer Johnston agreed with the mayor’s dark assessment of labor costs.

“I really do feel we got ourselves into an unsustainable position for five years,” she told ADN.com. “Because of that I’ve had the fun of cutting budgets for the entire time I’ve been on the Assembly. I think it’s time to streamline things.”

This is not David versus Goliath

The bold new law reflects the current economic landscape in the nation. Many citizens have either lost jobs or accepted lesser-paying employment. Hence, city revenue has fallen and spending adjustments must be made.

The ordinance is not a dire threat to the well-being of union members. An approved amendment to the ordinance says “no municipal employee will suffer a loss of base pay or benefits as a result of changes to this chapter.”

The forced control of labor costs will probably allow more city employees – including union members – to keep their jobs. You don’t have to look far to find a former employee of a closed union shop who would leap at the chance to have their old job back at a reduced salary.

Removing the unions’ ability to strike gives the city some much-needed latitude in dealing with the unions. While the unions are currently allowed to strike, and unionized employees have a right to seek other employment, the city currently has a very limited ability to seek other employees, or outsource jobs, if they fail to come to terms with the unions.

In the world most Americans live in, when you stop showing up for work, you lose your job. In most cases this happens very quickly. A strike by a public union is in essence a claim of exemption from the realities faced every day by most working citizens.

Most American employees have no guarantee of future raises. In most instances, raises are secured by strong employee performance which provides employers more revenue to share with employees. Public unions should not be immune to this fundamental law of economics.

While it’s romantic to view unions through the lens of David versus Big Business Goliath, the fact is that Sullivan is not the CEO of Exxon or Microsoft. He represents the interests of the average taxpaying citizens of Anchorage who are enduring difficult economic circumstances.

The unions function exclusively for the benefit of their management and members, to the peril of everyone else. But elected officials like Sullivan have a responsibility to all constituents, and the interests of a few thousand privileged employees should not trump the financial health of an entire city.

Sullivan believes the voters will see it that way. Only time will tell if he’s correct.

Authored by Josef Johnson