Governor Cuomo is invoking his “emergency” powers to unilaterally defer a 2 percent pay hike otherwise scheduled for most unionized state government workers during the new fiscal year. ** UPDATED
According to news reports and to social media posts by some union members, the Governor’s Office of Employee Relations (GOER) informed unions of the deferral last night, saying it will apply only to base pay hikes and not to longevity-based “step” increases that many workers receive in addition to pay.
This is an installment in a special series of #NYCoronavirus chronicles by Empire Center analysts, focused on New York’s state and local policy response to the Coronavirus pandemic.
Under current union contracts, about 65,000 state workers represented by the Civil Service Employees Association (CSEA), as well as more than 20,000 corrections officers and other smaller employee categories, were due to see their pay rise effective April 1.
Two percent pay hikes are also scheduled for other state workers, including 30,000 SUNY employees due for 2 percent raises in July, and more than 20,000 City University of New York (CUNY) faculty due for raises in November. The remaining one-third of state workers, including agency police officers, corrections supervisors, and about 52,000 white-collar workers represented by the Public Employees Federation, are working under expired contracts. Those unions traditionally would be in line for the same raises granted to other workers.
Applied to the entire state government workforce, 2 percent raises would add $359 million to state agency spending at a time when tax revenues are down at least $10 billion due to social distancing shutdowns imposed last month.
As I wrote here last month, the Governor and Legislature have the power to pass laws freezing public-sector pay:
Article 1 of the U.S. Constitution prohibits laws impairing contracts, including union collective bargaining agreements. However, a series of federal court precedents have upheld temporary pay freezes to deal with fiscal emergencies in New York, provided they are supported by detailed legislative findings demonstrating that a freeze is needed to protect the public, as explained in this 2010 legal opinion commissioned by the Empire Center. [emphasis added]
By flattening the curve of rising payroll costs, a wage freeze also would minimize the amounts of staff cuts and layoffs that will surely be necessary to balance the state budget during the coming fiscal crisis.
New York governors have extensive discretionary power to cut spending by executive agencies directly under their control—but in the absence of legislation freezing pay, layoffs (such as those planned under Mario Cuomo in 1991) have been their only avenue for reducing staff costs. And as noted, federal courts have held that a freeze of pay raises otherwise promised by union contracts must be imposed under a carefully drafted statute, passed by the Legislature and signed by the governor.
However, with scheduled state pay hikes due to begin April 1, Cuomo did not propose statutory freeze language in the budget passed last month. Instead, he now apparently intends to assert authority to impose a pay freeze under the state of emergency executive order he issued in early March—**and by invoking existing union pay laws that include “withhold” clauses (below).
The new freeze
A member of the New York State Corrections Officers Benevolent Association (NYSCOBA) shared the following on social media last night:
The Union was informed tonight at 7:00 p.m. by GOER that the State would be deferring the 2% raises (effective 4/1/2020) for State employees entitled to such pay increases. The deferral relates only to base pay and not to additional pay increases such as hazardous duty or longevity. This deferral not only impacts members of NYSCOPBA, but affects members of all other unions in New York entitled to this 2% increase. We were informed that the State is taking these actions due to the financial impact of COVID-19 on the State. According to GOER, the situation will be reassessed in the next few months and, assuming an economic improvement, the State will reinstitute the 2% raises retroactive to April 2020. However, there is no guarantee that the State’s economy will have rebounded by then so GOER is refusing to guarantee that this situation will be rectified in a few months. This situation is very fluid and we have deployed our legal team to assess all possible legal avenues to fight this, but we can assure the members that we will not stand for this action without fighting tooth and nail for fair treatment of NYSCOPBA’s membership. There will be much more information to follow in the next few days.
This is legally uncharted territory, and the precedents aren’t entirely promising for the governor. In 2010, then-Governor David Paterson’s attempt to furlough state workers via an interim budget extender bill was blocked by a federal court injunction sought by state unions.
Citing the precedent set in Buffalo, where a state-authorized fiscal control board froze pay for teachers, Judge Lawrence E. Kahn wrote: “Broadly speaking, a state government’s interest in addressing a fiscal emergency constitutes a legitimate public interest.”
But Kahn said Paterson’s tactic amounted to something different, essentially seeking to compel an unwilling legislative body to impair a contract. He wrote:
In the present circumstances, the Governor’s assertion of a legitimate public purpose for the challenged provisions in the bill differs dramatically from the expressed view of the Senate, which denies the legitimacy of the contractual impairments that the bill creates.
In the current pay deferral, of course, the Legislature wasn’t directly involved at all.**
This much seems clear: Cuomo’s action will do nothing to help local governments and school districts now on the hook for at least $1.5 billion in base and incremental pay increases during the coming fiscal year. A broad freeze in local government pay would still require passage of state legislation including a clear justification of the need for such an action.
With a severe multi-year fiscal crisis ahead, the need for a broad wage freeze at every level of government is clear. What’s lacking is the political will on the part of the governor and the Legislature to actually impose one.
** Asked at today’s Cuomo press conference, Budget Director Robert Mujica said “within the pay bills for each of these contracts when the legislature passes them there are provisions in there to allow for withholds of these payments.”
The provisions are as follows:
15. Notwithstanding any of the foregoing provisions of this section or of any law to the contrary, any increase in compensation may be withheld in whole or in part from any employee to whom the provisions of this section are applicable when, in the opinion of the director of the budget and the director of employee relations, such increase is not warranted or is not appropriate for any reason.
§ 11. 1. Notwithstanding the provisions of any other section of this act or any other provision of law to the contrary, any increase in compensation provided: (a) in this act, or (b) as a result of a promotion, appointment, or advancement to a position in a higher salary grade, or (c) pursuant to paragraph (c) of subdivision 6 of section 131 of the civil service law, or (d) pursuant to paragraph (b) of subdivision 8 of section 130 of the civil service law, or (e) pursuant to paragraph (a) of subdivision 3 of section 13 of chapter 732 of the laws of 1988, as amended, may be withheld in whole or in part from any officer or employee when, in the opinion of the director of the budget, such withholding is necessary to reflect the job performance of such officer or employee, or to maintain appropriate salary relationships among officers or employees of the state, or to reduce state expenditures to acceptable levels or when, in the opinion of the director of the budget, such increase is not warranted or is not appropriate. As a result of an exercise of the director’s authority under this act to withhold any increase, such salary schedules as defined in section one of this act shall be implemented and/or modified by the director of the budget, as necessary, consistent with the provision or withholding of such increases pursuant to this section.
5. Notwithstanding any of the foregoing provisions of this section or any law to the contrary, any increase in compensation may be withheld in whole or in part from any employee to whom the provision of this section apply pursuant to section fourteen of this act.
18. Notwithstanding any of the foregoing provisions of this section, any increase in compensation may be withheld in whole or in part from any employee to whom the provisions of this section are applicable when, in the opinion of the chancellor of the state university of New York and the director of employee relations, such increase is not warranted or is not appropriate.
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