Commentary

Oregon Introduces Taxpayer-Funded Union Subsidy, Undercuts SCOTUS Public Union Decision

Trey Kovacs
By Trey Kovacs | January 25, 2019 | 12:24 PM EST

U.S. Supreme Court building (Screenshot)

Earlier this week, I took a look at legislation that has been enacted to undercut the Supreme Court’s decision last year in Janus v. AFSCME. Unfortunately, state legislatures are just getting started. Today, I’ll examine a bill introduced in Oregon.

This month, Oregon state Rep. Paul Holvey (D-Eugene) filed pre-session House Bill 2643. As highlighted at the beginning of the bill, Holvey crafted this legislation at the request of the education union Oregon School Employees Association. Since the bill was introduced at the behest of a government union, it should come as no surprise that the only beneficiaries of the legislation are government unions.

The Freedom Foundation summarizes:

“The bill — a wolf in sheep’s clothing — first recognizes the newly affirmed rights given to workers in the Janus decision. Later, however, it creates a slush fund from which the state would pay the unions directly rather than deducting dues from workers’ paychecks.”

Simply, the bill—a first of its kind—represents a direct taxpayer subsidy to government unions. Besides acting as a blatant Janus workaround, the bill is potentially in conflict with Oregon’s constitution and statutes.

Article XI, Sections 7 and 9 of the Oregon constitution were meant to act as a wall of separation between public funds and private entities. As Dale Rubin, a professor at the Appalachian School of Law, asserts, the constitutional provisions “prohibit the State and its political subdivisions from pledging their credit in aid of any public or private person, company or corporation, or making any donation or grant to such persons or entities.”

HB 2643, which simply provides government unions with a taxpayer-funded subsidy, appears to be in conflict with the unambiguous language of the Oregon constitution. The bill, if passed, will impose a not-yet determined assessment on all public employers with employees represented by a union. These assessments will be paid to the Employment Relations Board, which would then distribute the funds to government unions. The bill does not require government unions to perform any tasks for the public in return for receiving the public’s money, nor does subsidizing government unions serve any kind of public purpose. According to the bill, permitted uses of these funds include collective bargaining and representing employees during grievances. This activity only benefits government unions to pursue the private goals of the association—negotiate higher pay and represent members.

Oregon adopted Sections 7 and 9 of the state constitution to prevent these types of schemes that use taxpayer money to fund private enterprise. In 1962 the Oregon attorney general’s office stated that Article XI, [section] 9 “was intended to prevent the union of public and private capital in any enterprise whatever.” Passing HB 2643 contradicts this reading of the Oregon constitution.

The bill appears to justify such an expenditure by citing ORS 243.656, which discusses the Legislative Assembly finding that “Recognition by public employers of the right of public employees to organize and full acceptance of the principle and procedure of collective negotiation between public employers and public employee organizations can alleviate various forms of strife and unrest.”

But this justification does not cut it. Oregon public employees, even after the Janus decision, are free to organize and collectively bargain with public employers. A taxpayer subsidy is unnecessary to accomplish the objective of this statute.

The bill also runs into another issue. Oregon statutes (ORS 243.668, 243.670, and ORS 243.672) make clear that public employers may not use public funds to assist or deter union organizing. This policy was enacted in order to “maintain the neutrality of public bodies in labor organizing by forbidding the use of public funds for unintended purposes and to conserve public resources by ensuring that public funds are used as intended.”

HB 2643 does not repeal these statutes, but simply states that “The payment of an assessment under this section is not a violation” of these laws. It will be interesting to see if such a statement, without any reasonable explanation of why the bill is not in violation, will pass judicial muster.

With states across the country seeking to aid government unions in the aftermath of Janus, it is important for legislators to keep this mind: government unions are private organizations that operate to benefit their members and do not provide any service to the public. As such, they should not receive taxpayer subsidies to bargain on behalf of their members or represent them during grievances.

For what it’s worth, Rep. Holvey is on record claiming “State government should support the essential services that Oregonians need: Education, Healthcare, Public Services and Public Safety. This can be accomplished with fiscal responsibility, a fair tax system, and by eliminating the corporate kicker and tax loopholes that give away billions of dollars to large corporations and the wealthy.”

Subsidizing well-financed labor unions is no different than when state governments “give away billions of dollars to large corporations.” If Holvey actually stands by his word, then he should withdraw HB 2643 because it contradicts his principles.

Trey Kovacs is a policy analyst with the Competitive Enterprise Institute, a public policy non-profit group in Washington, D.C.

Editor's Note: This piece was originally published by the Competitive Enterprise Institute.

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