As far as the government unions were concerned, the budget repair bill was the end of the world – and they acted like it. For a month, they coordinated the occupation of the hallowed halls of the Wisconsin State Capitol by juggling clowns, college potheads, exploited children, out-of-state communists, card-carrying socialist state employees, malingering public school teachers, derelict doctors, and thousands of other protesters.
Anyway, they lost. Gov. Scott Walker signed Act 10 into law on March 11, 2011.
The fight was so epic and the consequences so far reaching, we’re still celebrating this achievement nine years later. Given the truly astonishing level of taxpayer savings – $12 billion dollars – Wisconsinites are certain to celebrate former Gov. Scott Walker, Act 10 and Wisconsin Taxpayer Appreciation Day for years, maybe decades to come.
At the time of Act 10, Wisconsin was at a crossroads. The state was facing an immediate $145 million budget deficit when Gov. Walker took office in 2011. It was about to get much worse. Within six months, the new fiscal year would begin with a $3.6 billion deficit – unless radical changes could be made.
Walker warned that up to 6,000 state employees plus another 6,000 local government workers could lose their jobs that summer.
“Good faith negotiations require give and take. We are broke in this state. We’ve been broke for years. People have ignored that for years, and it’s about time somebody stood up and told the truth. The truth is we don’t have money to offer, we don’t have finances to offer, and if you’re going to negotiate you have to have something to offer. We don’t have something,” Walker matter-of-factly stated.
Scott Walker’s solution required public employees to pay 12.6 percent of their health insurance premiums and half of the annual contribution to their pension. Scott Walker’s solution gave local units of government the ability to realize substantial savings and balance their budgets in a tough financial environment without raising taxes.
The Wisconsin Department of Employee Trust Funds tracks pension fund contributions. Before 2011, the vast majority of government employees in Wisconsin did not contribute towards their pension. Since Act 10 was implemented, state, local, university, tech college, and school district government employees have contributed $8 billion to their own pensions.
That’s $8 billion in taxpayer savings over nine years – just for the pension piece alone.
Tracking health insurance savings throughout the state is more complicated. There are thousands of local units of government and some Act 10 savings at the local level go unnoticed and unpublicized. Using the same methodology that has always been used and the same public data sources, our new analysis shows that local governments have saved $2 billion, the state and university system have saved $1 billion, and school districts have saved $1.2 billion over the past nine years on health insurance.
That puts the total Act 10 taxpayer savings at $12.4 billion over nine years. $12.4 billion. Let that sink in for a second.
Before 2011, most school districts purchased health insurance through WEA Trust, a health insurance company created by WEAC, even though there were better alternatives available. Act 10 finally allowed school districts to shop around for a better price and a better product. Just last year, WEA Trust notified the Kenosha Unified School Board that the cost of their health insurance would increase by $10 million to $70 million. Thanks to Act 10, the Board shopped around for a better deal and picked United Healthcare’s bid of $41.8 million. That is $30 million in savings in just one year for just one school district in Wisconsin.
The law also gave public employees the freedom to leave their unions if they wanted to. Before Act 10, it was a requirement for employment. Most workers embraced this opportunity, and the state teachers union has lost 67 percent of its members since Act 10 became law.
Ultimately, Act 10 finally put the State of Wisconsin, local governments and school districts back on a solid financial footing. More importantly, Act 10 ultimately put Wisconsin taxpayers back in charge of our government and back in control of our future.
Thank you to the Republican Legislators who voted for Act 10, especially those who lost their job over the vote. Thank you Speaker Jeff Fitzgerald and Senate Majority Leader Scott Fitzgerald for your leadership.
Thank you Scott Walker for having the courage to stand up to the status quo and Big Labor. Thank you Scott Walker for finally looking out for us, the taxpayers.
Happy Wisconsin Taxpayer Appreciation Day!
The John K. MacIver Institute for Public Policy is a Wisconsin-based think tank that promotes free markets, individual freedom, personal responsibility and limited government. Reposted with permission.