Idaho at a Crossroads: Will the Gem State Follow Wisconsin or Illinois?

October 03, 2012 J

By: Casey Given

While the national limelight shone on Wisconsin’s last spring, a similar drama unfolded more quietly to the west. After decades of fiscal recklessness, Idaho decided to make a dent in the state’s $2.78 billion unfunded public pension and health care liabilities — an amount almost double that of Wisconsin’s. The state legislature in Boise passed three bills, collectively called “Students Come First,” that could salvage the Gem State’s unsustainable teacher contracts by requiring school districts to publish fiscal report cards and limiting collective bargaining to negotiations of compensation and benefits in open sessions. The reforms also introduced greater accountability to Idaho schools by phasing out the state’s lax tenure system, eliminating seniority as a criterion in workforce reduction, and instituting pay-for-performance to reward good teachers for effectively impacting student learning.

Unsurprisingly, the teachers union threw a fit for losing their stranglehold on the state’s finances. As a result, Idahoans now hold their state and schoolchildren’s future in their hands. The choice could not be clearer, especially since similar battles have already been fought in Illinois and Wisconsin that give Idahoans a birds-eye view of the two courses their state can choose to take.

The first path, trailblazed by Wisconsin last spring, leads to fiscal responsibility. Similar to Students Come First, Gov. Scott Walker’s Act 10 limited collective bargaining for public unions in the Badger State to negotiations of salary to help close a $3.6 billion state budget deficit. The economic effects have been enormous, with Wisconsin saving approximately $1.2 billion annually as a result according to a recent study by the Beacon Hill Institute. The study also estimates that the reforms spared between 15,400 and 20,500 public and private jobs that would have been lost because of emergency tax raises and budget cuts. Thanks to Gov. Walker’s willingness to stand up to the unions’ fiscal insanity, Wisconsin’s fiscal future is looking bright, especially since the state has fully funded its public sector pensions.

Unfortunately, things are not so rosy south of the Badger State, with Illinois following a darker path. Whereas Wisconsin has one of the lowest liabilities in the nation, its wayward neighbor has one of the highest at $120 billion in unfunded public pensions and health benefits. For years, the Illinois’ labor shop laws have created this colossus crisis that is less likely to be paid off than the Chicago Cubs winning the World Series. Because collective bargaining in the state is not limited to wages and benefits, teachers unions have been able to leverage the laws to negotiate cushy contracts at the expense of the taxpayer, as seen in Chicago Teachers Union’s recent strike. Because of the state’s irresponsible spending fueled by public pensions, Illinois’ legislature has raised income taxes by 66% and corporate taxes by 50%, encouraging citizens and commerce to move their money out of the Land of Lincoln.

Idaho finds itself at a crossroads. Gem Staters can choose to follow Wisconsin’s road to responsibility by supporting Students Come First and regaining control of its finances. Or, it could sidetrack onto Illinois’ path to fiscal recklessness by giving into the teachers’ unions unreasonable demands that will break its piggy bank. Which will it be?

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