Time-Off for Union Officials Found To Violate Gift Clause in Arizona but Not Texas

Two recent state supreme court decisions have called into question whether certain types of time-off for union officials violates state constitutional provisions on gifts. The Arizona Supreme Court on July 31, 2024 and the Texas Supreme Court on June 28, 2024 handed down strikingly similar rulings that differed primarily in the specifics of the time-off provisions for union officials.

Because the Texas decision, Borgelt et al v. Austin Firefighters et al, 2024 Tex. LEXIS 549, 67 Tex. Sup. J. 1394 (TX, 2024) pertains to firefighters, we will explore that ruling in detail below. The Arizona decision, Gilmore et al v. Gallego et al, 2024 Ariz. LEXIS 183, 2024 WL 3590669 (AZ, 2024) involved an American Federation of State and Municipal Employees (AFSME) local who represented Phoenix municipal workers. In 2019, the city and local entered into an MOU that allowed four union officials to engage full-time in union activities while continuing to receive full pay and benefits from the city. In addition, various banks of time were created for other union members to engage in lawful union activities.” Released employees were not subject to city control or supervision. The validity of the MOU was challenged by non-union members of the workforce on several grounds. The Arizona Supreme Court concluded that the MOU violated the “gift clause” of the state constitution. A copy of the decision is provided below, but in essence the court said the lack of “the City’s direct control and supervision” over released employees was a key factor.

Compare that to the Austin case. A taxpayer, Roger Borgelt filed suit against Austin Firefighters IAFF Local 975 and the city claiming that provisions the collective bargaining agreement allowing for “Association Business Leave” [ABL]  violates the “Gift Clauses” contained in the Texas Constitution, specifically Article III, §§ 50, 51, 52(a) and Article XVI, § 6(a). After the suit was filed, the state intervened in support of Borgelt.

The case made its way to the Texas Supreme Court. Quoting from the ruling:

• Although the text [of the Texas Constitution] refers to the legislature, all parties here agree that the Gift Clause fully applies not only to legislative enactments but to municipal contracts like the one at issue.
• They differ only in how it applies, and it is that dispute that we resolve. Several points, however, are readily established.
• First, the Gift Clause prohibits gifts to “association[s],” which the Association [IAFF Local 975] is.
• Next, it forbids the City from “lend[ing] its credit” or “grant[ing] public money or thing of value” to the Association; “public money” at least pays for ABL time, which itself may be an (intangible) “thing of value.”
• What the parties contest, in essence, is whether article 10 [of the Collective Bargaining Agreement between the city and Local 975] improperly “grant[s]” City money to the Association.
• We begin with whether article 10 is a “gratuitous” transfer or one that brings a “public benefit.”
• The agreement was negotiated to establish benefits, wages, hours, and other employment terms and conditions for City firefighters who, in exchange, agree to abide by those terms and conditions in providing firefighting services to the City, including risking their lives for the public.
• The agreement is not remotely so one-sided that anyone could perceive a failure of consideration.
• Petitioners ask us, however, to analyze the consideration not for the agreement as a whole but for article 10 by itself.
• For the courts, such an undertaking—particularly as to a contract—is fraught with complication. Contracts, after all, are typically negotiated as a unit.
• Parties routinely make concessions in one provision so that, in another, they might obtain something they value more.
• The Gift Clause does not supplant the basic contract law principle that “we do not read contractual phrases in isolation.”
• On the other hand, if the Gift Clause applies to contracts at all, refusing to assess individual provisions would allow a city to make an otherwise impermissible gift simply by inserting it into a larger contract.
• [A]rticle 10… when viewed through the contextual lens of the agreement’s preamble, provides adequate consideration.
• Article 10 does not authorize “giv[ing] away” anything.
• Specifically, ABL must be used for activities—like collective-bargaining negotiations, adjusting grievances, dispute-resolution proceedings, addressing cadet classes, and attending union conferences—that are presumably proper and provide sufficient return consideration for the City.
• The fire chief must approve all requests to use ABL.
• Article 10’s express delineation of permissible ABL uses (and of some categorically prohibited ones) means that neither the Association’s president nor the fire chief may approve requests that the text does not authorize.
• We conclude, therefore, that neither the agreement as a whole nor article 10 individually authorizes a gratuitous payment or transfer to the Association.
• We next analyze whether the predominant objective is to accomplish a legitimate public purpose, not to provide a private benefit.
• The key question, then, is what “Association business activities” means.
• Article 10 defines “Association business” as “time spent in Collective Bargaining negotiations; adjusting grievances, attending dispute resolution proceedings, addressing cadet classes during cadet training . . .  and attending union conferences and meetings.”
• While some of these examples could be read to reach nonpublic purposes, the text does not “clearly” contemplate such a use. Properly understood, each enumerated example relates to maintaining a stable employment relationship between the City and its firefighters and ensuring that the fire department better serves the public.
• In other words, we read article 10’s authorizations as limited to circumstances that advance the important public purposes of the larger agreement, even if accomplishing those purposes also leads to some collateral private benefit.
• From these recitals there is no “clear” indication that using ABL to conduct “Association business” authorizes improper, private purposes.
• Association business instead contemplates activities that (1) are consistent with the Association’s affirmative pledge to support the City’s Fire Department, (2) “maintain harmonious relations” between the City and its firefighters, and (3) establish “conditions of employment” and provide for the “adjustment of grievances.”
• Put another way, we conclude that these recitals unambiguously reflect the parties’ intent to use ABL in a way that benefits the public.
• We do not dispute that paying for such things could violate the Gift Clause for several reasons.
• Something purely adverse to the public interest would presumably never qualify as predominantly serving the public interest.
• So if a governmental contract had as its goal paying for something whose purpose was solely to oppose the government, it would be quite hard to see any plausible public benefit.
• Suppose that the City chose (unilaterally, not as part of a contract) to pay for political consultants or lobbyists whenever an individual firefighter wanted to attack the department’s policies or positions. Such a blank check might “at best [be] a gratuity, a bonus to the employé.
• Given this construction, we cannot say that the agreement goes beyond a policy decision that the City is authorized to make when engaging in negotiations.
• The bulk of petitioners’ remaining complaint about article 10 is that the Association president and other authorized representatives improperly use ABL for political activities and “other Association business” such as fishing fundraisers, boxing matches, parties, and the like.
• Petitioners invoke these examples to show why article 10 must be unlawful—if it allows such things, then how could it be lawful?
• But even if we were to assume that these examples constituted improper uses of ABL, they could not overcome our textual analysis of article 10.
• Lastly, the City must also “retain public control over the funds to ensure that the public purpose is accomplished and to protect the public’s investment.”
• Put another way, the City cannot make a “no-strings attached” payment to the Association.
• Under the collective-bargaining agreement, the City “retain[s]” at least two direct, contractual controls over article 10.
• First is control over how ABL is used. Article 10 does not authorize ABL for just any purpose.
• Article 10 instead requires that ABL be used for the Association business activities described above—activities that we understand to be far more circumscribed in scope to be authorized under article 10 than petitioners allege.
• The fire chief, a City employee, must approve ABL requests, “subject only to the operational needs of the Department.”
• But the chief retains authority to deny ABL use for unauthorized purposes—that is, he should deny ABL for any activity that does not fit within article 10.
• The chief likewise has the authority—indeed, the duty— to deny even the purest uses of ABL if the department’s operational needs require otherwise.
• Second is managerial control over firefighters using ABL. Under article 4 of the agreement, the City expressly retains the right to manage the fire department and its work force.
• Included is “the right to discipline or discharge in accordance with Chapter 143 and this Agreement.”
• If a firefighter uses ABL for improper purposes, the City may impose discipline, including potentially terminating the firefighter’s employment.
• We hold that article 10 is not invalid under Article III, §52(a).

Here are copies of both decision:

Update August 7, 2024: I fielded a question from a reader about how two cases that reach the exact opposite conclusion can be strikingly similar.

They are strikingly similar in their reasoning:

• If there are insufficient restrictions on the time off granted to union officials… as in the Arizona case… it is a gift and will be struck down as a violation of the Gift Clause.

• If there are sufficient restrictions on the time off granted to union officials – as outlined in the Texas case – the time off allowance will be acceptable and not a violation of the Gift Clause.

The Arizona Supreme Court actually referenced the Texas decision in reaching their conclusion.