Murphy and Public Sector Unions: Imperfect Together?

Unions and Phil Murphy—they should be peas in a pod, but after the State Health Benefits Commission voted 3-1-1 to raise health insurance rates for New Jersey’s public workers, one may wonder if the governor has a political motivation, or simply dropped the ball for the people, arguably, who delivered him to Trenton in the first place? 

Ahead of the vote, Connor Shaw said on behalf of the United Service Workers Union, “While we recognize that Governor Murphy and his administration have been strong advocates for the men and women of labor across our state, the impact of such a steep increase in the cost for union members and their families to access healthcare, would be very harmful.”  Shaw added that the proposed rates increase “could elevate health insurance premiums on state health plans by 21%, and for local government plans by 24%.  The union believes the best option is to delay a vote on the increases, to explore alternatives.” 

Shaw’s voice was one of many in labor urging the Commission to find another way forward.  These voices were, in turn, joined by Republicans as well. 

Senator Holly Schepisi said in a statement that she implored the Commission to “think outside the box,” adding “we must insist on responsible fiscal management of state contracts like the one that would have allowed New Jersey to claw back millions of dollars from Horizon that the Administration refuses to enforce.”

The Bergen County Republican senator said she and others signed onto a piece of legislation sponsored to “create a special legislative committee with subpoena power to investigate the Governor’s efforts to stop treasury’s enforcement of the contract with Horizon and review the proposed rate increases.”

On Tuesday, September 13, demonstrations by unions to oppose the rate hikes did not go without notice, but they were unheeded.  But Murphy’s allies on the Commission disappointed the “brothers and sisters” of labor, although state-level workers were able to work down a rate hike.  County and municipal workers were not so lucky. 

The “yes” votes came from Deidre Webster Cobb from the Civil Service Commission, Danielle Schimmel, representing the Treasury Department, and Gale Simon of the Banking and Insurance Department.  Jennifer Higgins is treasurer of AFT New Jersey, a freshman on the Commission, and voted no.  Dudley Burge, a senior CWA staff representative and a representative of the New Jersey AFL-CIO Public Employee Committee, abstained and objected to the way in which the vote was presented.  Schimmel defended the commission and said that their vendors had been “intimately involved” throughout. 

The response was immediate. 

“We’re disappointed that the State Health Benefits Commission voted to support unprecedented health benefit rate increases as a matter of routine business at its meeting by telephone conference earlier today,” John Donnadio, Executive Director of the New Jersey Association of Counties, said in a statement.  The vote, he said, was taken “without due consideration for local governments, property taxpayers, or public employees already struggling to make ends meet. As such, NJAC is recommending that participating members leave the State Health Benefits Program if feasible as the rate approval process demonstrated the Commission’s lack of transparency, accountability, and foresight to accurately project substantial rate increases with such far reaching consequences.” 

Executive Director of the New Jersey State League of Municipalities Michael Cerra also blasted the decision.  “The unprecedented health benefit rate increase approved today by the SHBC will have a staggering impact on municipalities, local government employees, and property taxpayers. This was avoidable and there were options that could and should have been taken, including delaying the vote today and engage an open and transparent process. Local governments will now do their due diligence and explore more cost-effective alternatives. Now we call on the Administration and Legislature to act immediately, engage local stakeholders and focus on cost savings solutions that will benefit employers, employees and taxpayers.”

Jennifer Higgins, the sole “no” vote, has yet to complete a full year on the Commission.  Nevertheless, she felt that it was surprising that Murphy allies voted as they did.

“I do not understand why labor was not alerted about the trends of the high increases that were coming down the pipe by the state,” Higgins said.  “I find that surprising. I am surprised based on my experience about the lack of information that the state could or would not give to either the plan design committee or the commission. I was surprised by a lot of the process.”

Higgins explained why she voted against the increases.  “I feel that all the public employee unions, whether they were statewide workers, or county or municipal, should have been bargained with before any vote was taken. If we’re going to have a stronger and fairer New Jersey, that should have happened before rates were set and voted on.”

A “stronger and fairer New Jersey” was one of Governor Murphy’s slogans.

Governor Murphy has long defined himself as a champion for organized labor.  Labor, in fact, was at the center of the battle that his rival, former Senate President Steve Sweeney, was forced to expend so much treasure on.  Former governor Chris Christie also famously (or infamously) clashed with labor during his tenure.  Murphy owes much of his political fortune to the goodwill, support, and hard work of organized labor.  So, where did this come from?  When asked if she felt the administration itself had any influence on the outcome of the vote, Higgins responded with a cold but clear observation.  “Given that the commission is made up of three people from the state side and only two labor union representatives, I think those facts speak for themselves. I am not going to speculate as to motive for anybody, but I can only speak to the facts as I am aware of them.”

In the lead up to the vote, Higgins said that she and Burge had requested additional information prior to the vote, but that information was not made available.  “One of the things that we had asked for was a discussion with Horizon as to why the establishment of 175% of Medicare cap on out-of-network payments for the CWA Unity in New Jersey Direct plan led to an increase in in-network costs? We’ve not received to date, to the best of my knowledge, any thorough analysis of how that has occurred, and what has occurred. We don’t have any analysis on whether or not Horizon was able to control any in-network costs, no information on how Horizon might be trying to lower in network costs.”  She did not speculate as to why the request was not met, nor did she speculate as to why the request by Burge and herself for Horizon representation during the commission meeting did not materialize.

The governor, according to a senior Democratic source, has been demonstrating a more detached behavior with respect to old allies and partners since winning re-election.  In New Jersey, a governor can only be elected to two terms, so the second term at once releases the governor from having to appease the original power structures and interests which established the grounds for his victory.  It is worth mentioning that a complete divorce would seriously handicap advancing an agenda for the remaining time.

But Phil Murphy has been a successful governor, whether or not his critics would want to admit as much, because he has been able to advance legislation, he steered the state through the COVID pandemic without a playbook or precedent to go on, and he broke the Democratic governors’ curse of only winning single terms.  In short, Murphy can coast if he wants to.  The argument that a second term is a mandate can be tempered with a more short-term, if cynical, interpretation that it is merely a referendum on the popularity of the previous term.  In that case, since Governor Murphy did not beat Jack Ciattarelli in the way he overwhelmed Kim Guadagno, Murphy can reflect on past mistakes, but be confident enough that, on the whole, Murphyism is more welcome in New Jersey than not.

Leaving the unions with a sour taste in their mouths as their public sector workers now scramble to cope with higher costs will not have much bearing on Murphy’s disposition towards New Jersey one way or the other.  The governor, in short, may be entering a political chrysalis from which to emerge as a new, slightly more Right-leaning “nationalized” character.

Consider: as the chairman of the National Governors Association, Phil Murphy has a national platform.  In April, he went to Ireland to champion New Jersey as a place for foreign business and investment.  In September of 2019, he left Drumthwacket for New Delhi to encourage Indian business ties with the state.  As a former ambassador to Germany and frequent vacationer in Italy where he owns a villa, Murphy has an international footprint.

Domestically, Murphy has never shied away from calling out other governors, most notably and recently Ron DeSantis of Florida for the latter dropping migrants off in Martha’s Vineyard in a political publicity stunt.  He even lent support to California’s governor, Gavin Newsom, in his own clash with the Tallahassee executive.

During his re-election campaign, Murphy even enlisted—to the surprise and consternation of some Democratic bosses—Bernie Sanders to stump for him.

All of this points to a governor who is not looking to jet off into the Italian sunset once his final term in Trenton is complete.  

By leaving the public sector unions holding increased rates to contend with, Murphy may simply have not been able to deliver for this critical sector of his base.  If, however, the governor is looking to make a case for joining his predecessor by making a bid for another, more southerly executive mansion, this could be a demonstration of a centrist shift and a willingness to break the mold that made him.

As Murphy stands now, his carefully constructed image to become the progressive hero makes him a coastal elitist pariah in the eyes of much of the “flyover” country.  Even among national Democrats, Murphy represents the more leftward, Sanderseque branch than the national party as a whole.  Any attempt to leave the Garden State for a higher office—an achievement not accomplished in a century since Woodrow Wilson was sworn in—will require something more than just a new hairstyle.  The impact of last week’s vote might be representative of the new, national Murphy yet to come.

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