What Governor Walkers’ Victory in Wisconsin Means for New York

 What Governor Walkers’ Victory in Wisconsin Means for New York.

Wisconsin’s Governor Scott Walker’s win in the recall election on Tuesday is sending a mixed bag of signals throughout the US.  New Yorkers should pay attention to some of these messages. 

Gov. Walker’s recall was triggered by anger among organized labor for his efforts to curb unsustainable state spending and reform costly and restrictive labor laws. These laws prevented state operations from becoming significantly more efficient in delivering essential services to its citizens. Embedded in these restrictions was voter anger against benefit provisions that were significantly above the state average of non-union employees, if they had benefits at all. Collective bargaining over wages for state workers is a strong irritant to the voters who believed, rightfully, that labor sits on both sides of the negotiating table and the voters have limited or no counter-representation to argue their interests.

The big kicker was when Gov. Walker took away the automatic payroll deduction of union dues and required unions to collect these dues themselves. As a result, an uncomfortable number of union members opted not to pay their dues and withdraw from union membership. These employees felt that they were not getting their money’s worth from their union representation. 

State unions lost the recall because of self-inflicted wounds. 

Labor has blasted through our national obsession with equality with their demands for the security of higher pay guarantees and low cost health benefits.  The taxpayers, who do not have these guarantees, and must pay more for what they can actually get, are rebelling at paying for those who do. The irony is that in the eyes of taxpayers, labor workers, who used to consider themselves oppressed and fighting to participate in the middle class, are now viewed as a privileged class. Something had to give.

According to Ben Wolfgang of the Washington Post, at least a dozen states ended 2011 with a budget surplus.  They did this principally by aggressive tax collection and making painful, but necessary spending cuts.  Gov. Walker erased Wisconsin’s $3.6 billion deficit by making the tough decisions that he promised he would do when first elected.  When budget cuts affect others, it is sound fiscal policy.  When they affect you, it is seen as unfair political posturing.  Labor’s reaction was entirely predictable.

The lessons for Gov. Cuomo are clear.  Sound economic policy for New Yorkers is based upon an Economics 101 principle: Revenue – real and projected - must always exceed expenses.  This principole also applies to my household budget.  With the federal deficit spiraling further out of control, states can no longer expect Washington to indiscriminately hand over stimulus money to improve their revenue streams.  

With New York’s $9+ billion deficit facing him in the eye, Governor Cuomo will have to make some very difficult and costly decisions.  Forcing labor to justify its economic value to the New York economy is just one of his challenges.  If Indiana, Wisconsin, and South Carolina can turn budget deficits into surpluses, with the sound but gutsy political leadership, New York can do it also.  States with budget surpluses often funnel some of the excess money down to the cities and counties for them to spend as they see fit. .  Imagine what a state surplus would mean to Schenectady. It is worth the fight. 



Book KMA Today
Ken Moore Associates specializes in speaking engagements, and will travel anywhere in the world to help companies think more strategically.
Get Started