Cuomo extends costly arbitration law

by E.J. McMahon |  | NY Torch

Nassaucops-120x150Three years ago, Governor Andrew Cuomo blew a rare opportunity to fundamentally reform one of the most costly provisions of the New York State law regulating public-sector collective bargaining.

Now he’s about to blow it again.

The provision in question (Section 209.4 of the state Civil Service Law, better known as the Taylor Law) provides for compulsory binding “interest arbitration” of contract disputes involving police and firefighter unions. County and municipal government leaders have long complained that arbitration unduly favors unions, resulting in unaffordable salary increases while perpetuating costly work rules and benefits.

First enacted as a temporary measure in 1974, the arbitration provision was routinely renewed without a hitch every years up until 2013, when Cuomo’s Executive Budget included Article 7 bill language imposing a 2 percent cap on compensation cost increases resulting from arbitration, including health benefits while excluding annual automatic step and longevity pay increments. A similar cap had been imposed in New Jersey the previous year.

Both houses of the Legislature predictably rejected the proposed arbitration cap—but the reform proposal need not have been an empty gesture on the governor’s part. With the provision set to sunset at the end of June 2013, Cuomo could have threatened to veto any straight extender lacking a limit on awards. As Governor David Paterson showed when he surprisingly vetoed a previously routine extension of long-standing police and fire pension plans in 2009, even a politically shaky executive can make a veto stick when it involves standing up to unions.

Cuomo, however, began back-peddling from his original arbitration proposal as soon as it met with serious union resistance.  In the end, arbitration was extended with minor modifications as part of a local government financial restructuring bill.  The most significant change required arbitrators to more heavily weigh an employer’s ability to pay higher salary and benefits among factors used to determine arbitration awards. Even this change was limited to disputes involving “fiscally eligible” municipalities—defined as those with relatively high property tax burdens or fund balances of less than 5 percent. In other words, localities might get a break from an arbitrator only if they’re well on the way to being broke.

While Cuomo insisted he had achieved significant arbitration “reform,” a more telling reaction came from Michael McManus, the head of the New York State Professional Firefighters Association. In an online message to his members, McManus declared victory—pointing out that the changes to the arbitration law “largely mirror existing provisions and considerations that have been in practice for many years.”

The arbitration provision is next set to expire in June, roughly three months from now. But the future of the law isn’t really in doubt. Cuomo’s budget —specifically, Part L of the Article 7 bill for Public Protection and General Government—calls for a straight extender of the current law as amended in 2013. The Senate Republican majority’s one-house budget bill accepted the governor’s extension language, but the Assembly Democrats’ budget would go a step further in wrong direction—effectively erasing the 2013 modification and restoring the old law for three more years.

Cuomo presumably will at least insist on extending the current law.  As in 2013, this does not need to be resolved as part of the state budget, though. Given the June 30 expiration date, if the wording of an arbitration extender seems to be a sticking point, the issue could be put off until separate action before the scheduled end of session in late June.

Unfortunately, because the governor hasn’t set the table for more meaningful reform, the result seems to be a foregone conclusion. Looks like the next opening for real reform of the police and fire arbitration law will come in 2019—first year of the next gubernatorial term.



- E.J. McMahon is the Research Director at the Empire Center for Public Policy.