Appeals court upholds Prince George's County furloughs as constitutional
Thursday, June 24, 2010
In a reversal of a lower court decision, the U.S. Court of Appeals for the 4th Circuit unanimously ruled Wednesday that Prince George's County did not violate the U.S. Constitution when it furloughed more than 5,000 workers to help close a multimillion-dollar budget gap during the crippling economic downturn.
The case centers on the Prince George's furlough plan from fiscal 2009, which forced about 5,900 workers to forgo 10 workdays without pay for a savings of $15 million to $17 million, county officials said. The previous opinion, issued by U.S. District Judge Alexander Williams Jr. last summer, argued that the county's decision to furlough union workers without their consent -- in essence cutting their salaries -- violated the contract clause of the Constitution. The county was also ordered to repay millions in lost wages to employees.
August's ruling in favor of the employee unions that filed the suit caught the attention of local government officials and union chiefs across the country at the time, because, some said, it offered a guide to those wishing to challenge what has become a widely used budget balancing technique during the downturn.
But Judge Robert B. King of the 4th Circuit, writing for the three-judge panel that reversed Williams on Wednesday, said the lower court had erred. King wrote that county personnel law gives officials the right to furlough employees in certain fiscal scenarios and that the unions "were free to protect any economic or financial expectancy with regard to wages and hours" by getting a prohibition on furloughs inserted in their collective bargaining agreement, but had not done so. "In essence, therefore, the Unions are simply asking for the benefit of a contract provision that was left on the bargaining table," King wrote.
The decision was hailed Wednesday by County Executive Jack B. Johnson (D), who has faced criticism and protests from employees over the county's policy. "I always felt that the decision was nonsensical -- really, really just didn't have any basis of law," Johnson said of Williams's ruling. "I was just flabbergasted by how a judge could come to the conclusion that he did."
Vince Canales, president of the county's Fraternal Order of Police, one of several unions that sued Prince George's over the furloughs, said the union chiefs are weighing legal options, including whether to appeal to the U.S. Supreme Court. "It's unfortunate," Canales said of the decision. "It was shameful what the county did to its employees. The county was sitting on a substantial amount of reserve money. They did not, in 2009, have to furlough their employees."
The case highlighted a fundamental difference in fiscal philosophy between Johnson and unions officials, who argued that the county should tap its sizeable reserves rather than ask workers to take less pay. Johnson has said that using reserve funds for ongoing expenditures such as salaries was poor fiscal planning and that doing so would harm the county's high bond rating on Wall Street, resulting in millions in future interest payments.
On Wednesday, while in New York meeting with financial ratings agencies, Johnson said in an interview that furloughs helped the county better deal with revenue losses from the recession. Budget cuts, including previous furloughs, helped put the county in a relatively good financial position this year, he said.
In its recently passed budget, Prince George's kept spending basically flat while other localities slashed it. Prince George's also eliminated furloughs altogether for the coming fiscal year.
"We saw it early," Johnson said. "We saw revenues dropping, and we didn't wish that it would come back in the next quarter; we just knew we had to react. We began to do furloughs before Congress came with its big stimulus bill, and the bailouts for the financial institutions. . . . Personally, I got a lot of criticism for that, but we have come through this storm in an amazing way."
Johnson said he is confident the county would not have to repay the lost wages to union workers, saying, "The Supreme Court is not going to take this case."