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Five years later, Act 10 saves taxpayers $5 billion, study finds

By   /   February 11, 2016  /   News  /   No Comments

MADISON, Wis. – Five years ago, Gov. Scott Walker introduced a bill promising to reform public-sector collective bargaining in Wisconsin. The legislation would help fix the state’s massive budget shortfall while shifting the balance of power in public employee contract negotiations back to taxpayers, the Republican governor and the GOP-controlled Legislature pledged.

Within days, all hell would break loose at the state Capitol.

Not long after Walker introduced what would become Act 10 on Feb. 11, 2011, protesters took over the people’s house, Democrat senators fled across the border and holed up in Illinois, and Wisconsin became a spectacle on the nightly news.

Despite all the hysteria, Act 10 eventually passed, Walker signed it into law, and the law survived multiple court challenges.

AP file photo

ACT 10 TENSION: Five years ago, on Feb. 11, 2011, Republican Gov. Scott Walker introduced what would become Act 10. The proposal called for reforming Wisconsin’s public employee collective-bargaining law and it set off massive protests from unions nationwide.

Walker, too, survived an unprecedented recall campaign driven by big labor and their Democratic Party allies – the first governor in U.S. history to do so. A couple of Republican senators who cast crucial ballots for Act 10 were not so fortunate, but five years later, Walker remains in power and the state Legislature is dominated by Republicans.

And despite all the dire predictions, Act 10 has proved a smashing success for Wisconsin taxpayers, according to a new analysis by the MacIver Institute.

The Madison-based free-market think tank’s report estimates taxpayers have saved $5.24 billion over the past five years, thanks to the law.

The analysis found that the state has saved $3.36 billion by requiring government employees to contribute to their government-backed pensions, and another $404.8 million by opening up employees’ health insurance to competitive bidding, among other cost controls. The savings have been widespread, across state and local governments.

Milwaukee Public Schools, for instance, saved a whopping $1.3 billion in long-term pension liabilities, according to the MacIver report. The University of Wisconsin System saved $527 million in retirement costs, the study found. And Medford School District recently realized an 11 percent decrease in the cost of its health insurance plan by opening it to competitive bidding.

The savings due to Act 10 breaks down to $2,291 for every household in Wisconsin, according to the analysis.

“When you take a step back and look at over $5 billion in savings for taxpayers, it cannot be argued that Act 10 has been a huge success,” Brett Healy, president of the MacIver Institute, told Wisconsin Watchdog on Thursday.

He noted the savings Act 10 delivered allowed Walker and the Republican-led Legislature to provide $2 billion in direct tax relief to taxpayers.

“I would argue that Act 10 is one of the most successful public policy ideas in recent memory and from a financial standpoint, the direct impact on taxpayers, it is by far the most important public policy change we’ve seen in Wisconsin in decades,” Healy said.

Plenty of public employees and the unions who have seen their ranks dwindle because of Act 10 have a different take. And mainstream media publications have fed the sky-has-fallen narrative in retrospectives on the collective-bargaining reform law.

Wisconsin State Journal reporter Matthew DeFour wrote some of the more teeth-clenching pieces in the newspaper’s series on Act 10. He argues the lost income public employees faced from having to pay more – or anything – for their benefits took a big bite out of spending in Wisconsin’s economy.

DeFour includes the story of UW-Madison economist Steven Deller, who said after the law’s implementation that he and his wife, also a university employee, took an $800 monthly hit in take-home pay. The university employees were forced to cancel their weekly cleaning and lawn care services, DeFour reports.

“Deller had projected that more than 21,000 jobs would be lost as a result of Act 10 due to reducing the spending power of public workers, but he hasn’t done a follow-up study,” the story notes.

Wisconsin Taxpayers Alliance president Todd Berry told the newspaper what others have pointed out along the way, that Wisconsin confronted a $3 billion budget shortfall when Walker took office. The budget fixes at the time helped save untold public-sector jobs and led to lower taxes, ultimately allowing many more taxpayers to keep and spend more of their hard-earned money.

Act 10’s most profound impacts, however, may be the courage it steeled in conservatives across the country to take on the once all-powerful public employee unions. The law also was a huge boost to individual liberty, giving employees the right to choose whether they wanted to be in a union and submit to compulsory dues.

Healy said Walker and the Republican legislators who stood up for Act 10 deserve a huge thank-you from Wisconsin taxpayers.

“Given the reaction of the far left and the professional protesters, the boorish behavior, the obnoxious protests, the fact that our legislators stood up to that behavior and despite all of the threats went ahead and did what was right for Wisconsin, it is a true profile in courage for those legislators,” he said.

“It put taxpayers back in control of our government,” Healy added. “I think it sends a signal across the country that you could do the fiscally responsible thing, you could make the prudent decision, and you could be reelected and rewarded by your constituents.”

Act 10 did a number on public employee union strength in the Badger State. No longer can unions automatically deduct dues from employees’ paychecks, and the law requires public-sector labor groups to hold annual recertification votes.

As a result, the Wisconsin Education Association Council has seen its membership numbers drop 50 percent, from about 98,000 members in 2011 to around 40,000 in the most recent reports.

“What a novel concept here in America: we’d actually give people a choice as to whether or not they wanted to join an organization,” Healy said. “I do think in the long-term that was a major victory for liberty and personal freedom.”

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M.D. Kittle is national First Amendment reporter at Watchdog.org. Contact him at mkittle@watchdog.org.