There’s an interesting report at Outside Lansing and research at Labor Pains scrutinizing the UAW’s numbers on its Black Lake black hole golf course. (You’ll recall that I pointed to the union’s LM-2 forms in my column from last week.)
Taking a closer look at the ledgers, Chetly at Outside Lansing writes:
The question becomes – what is the real value of the property? We don’t begrudge anyone the right to challenge taxes when the government overvalues a property – but here the union itself has asserted the higher value. As County drain commissioner Lennox pointed out – these taxes fund local roads and education – and as LaborPains calculated, the taxes on the $19 million difference translate to $770,000. That’s a big chunk of money.
Discrepancy in Pension/medical insurance ratios between golf subsidiary and education center.
Here’s where our eyebrows really go up.
The International United Auto Workers is a 501c3, non-profit. Such entities are allowed to organize separate c2 (chapter 2) “title holding companies”. UAW has had a title holding company since 1949, called Union Building Corporation (UBC). In addition to the $33 million in Black Lake property, it has another $90 million in property (see here for the UBC 990 form utilizing Guidestar.com). It is UBC that filed the petition against the township in the Michigan Tax Tribunal. Neither UAW or UBC have filed “unrelated business income tax” (UBIT) forms (990-Ts), but UBC has formed two for-profit subsidiaries (a valid alternative to the 990-T). One is UBG (think G for golf course) and one is UBE (education center). Naturally, if you’re running for-profit business and don’t make a profit, you won’t pay taxes. Both organizations have “carryover” losses now exceeding $25 million, not including the losses on this year’s LM-2s.
Laborpains.org notices that the “biggie” in terms of UBE’s losses is pensions (again, photo from laborpains.org). The two key documents, already published by laborpains.org here and here, contain a clip.
Yes, its clear that pensions are the largest reason for the losses, which laborpains.org suggests (paraphrasing) “isn’t unusual for UAW pensions” which have been in “disarray” even for the larger union itself and with GM and Chrysler, which recently went through a pension buyout among the rank-and-file.
But its not JUST that the pension fund above is the largest part of the UBE losses – that in itself isn’t a surprise. Pensions are a big cost any large business – particularly when they are the old defined-benefit pensions which are not funded on a pay-as-you-go basis.
It’s that the pension fund expenses appear to be really out-of-line with overall wages. So far out of line that you have to wonder exactly who is doing the work to get pension fund contributions. There’s a key piece of context here – the $5.91 million in pension fund contributions compares $3.25 million in wages (above the page not pictured by laborpains.org’s graphic). Normally, you’d expect the wages to be much higher than the pension contribution – 10 times or perhaps as little as 5-6 times. But not the other direction. And of the 3.25 million, 2.6 million is “general labor” – there is no way the room custodians and general labor are getting that gold-plated of a pension deal. The other half million is “administrative” wages – but even the hotel administrators are unlikely to be able to get away with such a self-dealing (unless they are something more than that to the union leadership).
The only explanation in my mind for this kind of pension fund investment is that the pension contributions are for SOMEONE ELSE other than the workers at the hotel. Just who might be receiving the long-term benefit of those contributions? It’s not big enough to pay the pension debt of any serious number of rank-and-file union members – but it is big enough to sauce up a few individual’s or union leadership. Or perhaps the UAW is using multiple vehicles like this one to cover larger pension fund problems.
Read the whole thing.