CHICAGO (CN) - Illinois sued AFSCME, the state's largest employee union, challenging an arbitration award that ordered the state to pay $75 million in wage increases for 30,000 employees. The state says 12 of 14 agencies involved - including Human Services, Natural Resources and Public Health - were not appropriated enough money for 2012, and will not make it through the year if workers get the raises.
Illinois is facing a $9 billion budget deficit, and the state says most affected agencies will run out of money before the end of the year. "If these wage increases are paid, however, these agencies will be subject to greater deficits and be forced to suspend or curtail spending sooner than currently anticipated," the state claims in Cook County Court.
The American Federation of State, County and Municipal Employees won the $75 million award after Gov. Pat Quinn canceled scheduled pay increases for thousands of state employees to help cope with the Illinois fiscal crisis.
AFSCME claimed that the pay freeze violated the terms of an agreement it negotiated with the state.
In September 2010, Quinn and AFSCME reached a deal to protect state employees from layoffs and minimize closing of government facilities. In exchange, the union agreed to defer 2 percent of a 4 percent wage increase due on July 1.
Illinois says now that it doesn't have to pay the raises because the state's budget does not include the money for them. It claims that despite Quinn's recommendations, lawmakers reduced the budgets for most agencies and did not provide enough money for the pay hikes.
"The state has taken significant steps to close the budget shortfall. The shortfall in funding for the wage increases comes in the context of a severe economic crisis in the state," the complaint states. "In the past several months, the governor has shown the will to govern through these difficult times by promoting and achieving major reform in the areas of education, workers' compensation, retiree health, and Medicaid, while also boosting revenues for the state in the form of increases in income taxes for individuals and businesses. ... In addition, the governor has consistently and vocally promoted a long-term debt restructuring strategy to allow the state to eliminate its structural deficit and get on even fiscal footing."
(The Illinois Hospital Association and regional superintendents of education recently criticized Quinn for his Medicaid and education cuts.)
But despite budgetary reforms, "the state's current fiscal situation remains dire, as evidenced by the extreme backlog in unpaid bills owed by the state and the current FY12 budget, in which critical services to the residents of the state have been severely curtailed in areas of public health, human services and education, among others," according to the complaint.
Public services will suffer even more if the union pay raises are enforced, the state says: "The payment of the wage increases ordered by Arbitrator Benn will create dire consequences. Twelve of the 14 affected agencies received insufficient budget appropriation, so that these agencies will not have sufficient payroll to last the fiscal year, even if the wage increases are not paid. ... If these wage increases are paid, however, these agencies will be subject to greater deficits and be forced to suspend or curtail spending sooner than currently anticipated."
The state says that if the agencies are forced to pay higher wages, they will run out of money before the end of the fiscal year and will stop providing services to Illinois residents and to "needy and vulnerable populations, including the developmentally disabled and mentally ill."
Illinois also claims that the arbitrator's ruling violated the Illinois Constitution, state laws and public policy.
"The opinion and award does not draw its essence from and is contrary to the CBA [collective bargaining agreement] and/or is contrary to the law, including gross mistakes of fact and/or errors of law, and is against public policy. The opinion and award also improperly denied the state an evidentiary hearing," the state claims.
The state wants the arbitrator's ruling stayed and declared illegal. Its lead counsel is Joseph Gagliardo with Laner, Muchin, Dombrow, Becker, Levin and Tominberg.
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