Empire Center for New York State Policy | PO Box 7113 | Albany | NY | 12224
Local governments need help
- By E.J. McMAHON
- Last Updated: 9:51 AM, October 29, 2012
- Posted: 10:37 PM, October 28, 2012
By capping property taxes, Gov. Cuomo has tapped the brakes on local government and school spending outside New York City. He’s also taken steps to limit the growth in the local share of Medicaid over the next few years, and to curb public pension expenses further down the road.
But the governor hasn’t provided the kind of mandate relief local officials want and need most — more flexibility to control their still-spiraling employee-compensation costs.
New York’s second-largest county, Nassau, is already a state-certified basket case, and several others might not far behind. Buffalo is just emerging from a state fiscal-control period, while the next three largest cities — Yonkers, Rochester and Syracuse — face big and growing problems of their own.
It’s not that easy: Cuomo wants local governments to balance their budgets — but will he address the state laws that drive up local costs?
Asked about such problems, the governor last week pointed to his own success in closing the state’s $10 billion budget gap in his first year. "It’s very hard to do, I know it," he said. "But we did it . . . and the local governments have to do it, because raising local property taxes is not an option."
Yes, both the state and its local governments had raised spending to unsustainable levels before the financial crisis and recession hit in 2008. But there are some significant differences between the challenges Cuomo confronted and the budget gaps now facing counties, municipalities and school districts.
While two-thirds of the state budget consists of local aid, an even larger share of the typical municipal or school budget is spent directly on salaries and benefits — for teachers, cops, firefighters, sanitation workers and other employees who deliver basic services directly to the public.
Once they trim away the fat accumulated in flush economic times, local officials caught in a budget pinch ultimately face two choices: Cut services by laying off workers, or reduce the growth in salaries and benefits — which requires bargaining with entrenched public employee unions.
And there’s the rub: The collective-bargaining rules are set by Albany, mainly in the state Taylor Law, which tilts the bargaining table toward unions in at least two key respects.
The first problem for the locals is the Triborough amendment, which requires employers to continue giving "step" raises even after a contract has expired.
At this point, localities desperately need to break completely with the outmoded automatic pay-hike model, but that’d be nearly impossible without repeal of Triborough.
Another Taylor Law provision gives police and fire unions the right to seek compulsory binding arbitration of contract impasses. Enacted as a supposedly temporary experiment in the early 1970s, and renewed ever since, binding arbitration has been a bonanza for unions, driving average police pay well over $100,000 — plus lavish benefit packages — in many downstate departments.
Cuomo has dismissed Triborough reform as a "political nonstarter," since it requires changes to a permanent law— but he can’t dodge the arbitration issue, since that provision is due to expire in the middle of next year.
A straight extender of the law is virtually certain to end up on his desk within the next eight months. Will he bold enough to say no?
If he is, recent history suggests he can make it stick. The renewal of "temporary" laws benefitting unions was long treated as routine in Albany — until Gov. David Paterson broke with the pattern in 2009, refusing to rubber-stamp a continuation of the then-default pension plan for New York City police officers. The Legislature never tried to override Paterson’s veto, and the city can now look forward to significant pensions savings as a result.
Mulling his options on arbitration, Cuomo might also look to New Jersey, which has a similar law (and similarly high police and firefighter pay levels). In 2010, Republican Gov. Chris Christie and Democratic majorities in his Legislature followed up on their own 2 percent property-tax cap by enacting arbitration reforms, including a 2 percent cap on arbitration pay awards. It’s far from perfect — but New York’s local officials would probably welcome it as better than nothing.
So far, Cuomo hasn’t said what he’ll do about arbitration, although he’ll no doubt keep pointing to his own example. "I had to go back and balance my budget myself . . . that’s called life," he said last week.
But as New York’s chief executive, Cuomo also has a responsibility to recognize when the state’s collective-bargaining laws are working against the public interest — and to do something about it. That’s called leadership.
E.J. McMahon is a senior fellow at the Manhattan Institute’s Empire Center for New York State Policy.