Syracuse Mayor Stephanie Miner has drawn attention for a New York Times op-ed criticizing Governor Cuomo’s failure to deliver meaningful mandate relief to troubled localities. The mayor, who is also co-chair of the state Democratic Committee, challenged Cuomo to “use his substantial, hard-earned political capital to convene the Legislature, the state comptroller, and union and business leaders for an honest conversation about the multiple fiscal pressures confronting our cities.”
Miner’s lead point: “our labor costs are too high — less because of salaries, more because of the rising costs of pensions and health care.” Meanwhile, revenues have plunged and the cities are losing middle-class residents to suburbs. Etc.
Howard Glaser, Cuomo’s director of state operations, had this reaction to Miner in a Talk 1300 radio interview (as quoted in the Albany Times Union blog):
“What I believe she [Miner] said was, look, Syracuse has been plagued by financial mismanagement for a long time: labor costs that are out of control, pension costs that are out of control. And my city has been unable to manage that fiscal problem — which, by he way, is not unique to state government or other city government. Her answer, as far as I can see in the piece as well as from other discussions, is the state should give me money to solve a financial problem that we created in Syracuse because we didn’t exert fiscal discipline. No specific proposals other than that.”
Fair enough. Miner’s op-ed lacked specific proposals. While the mayor’s public criticism of the governor’s pension smoothing plan has been refreshingly straightforward — in the Times article, as in her earlier state budget testimony, she correctly compared it to borrowing — she hasn’t made a point of identifying alternative state policies that would help localities save money.
But her real agenda is hardly a secret; indeed, it was laid out in this December 2010 report by a Conference of Mayors (NYCOM) task force, of which Miner was a member. What mayors across the state have called for, among other things, is repeal of the Triborough Amendment and reform of the Taylor Law provision allowing police and firefighters to demand binding arbitration of contract impasses. County executives want the same thing. School districts, in particular, need relief from Triborough and its requirement for automatic “step” pay increases even after contracts expire.
Cuomo refuses to go near Triborough. His latest budget bills offer, at best, a quarter loaf of arbitration reform, proposing to cap arbitration awards at 2 percent for “distressed” counties and municipalities only. But the problem arbitration poses to Miner and other mayors (such as Mike Spano of Yonkers) is not just the size of arbitrated pay hikes — it’s the way the arbitration process prevents substantial restructuring of contracts, including work rules as well as benefit co-pays. And that won’t change under Cuomo’s proposal.
A huge additional needed reform, also unmentioned by Miner and ignored by Cuomo, would be enactment of a law setting a floor under all local public employee health insurance premium contributions, as recommended in 2008 by the Lundine Commission. That could save New York taxpayers $1 billion a year, ultimately rising to $1.7 billion, according to this 2010 Rockefeller Institute report.
Miner certainly could more effectively put Cuomo on the spot by reiterating the specific recommendations in that NYCOM report. Meanwhile, contrary to Glaser’s implication, she’s not merely seeking a bailout (not publicly, at least). It’s hard to find evidence of a public “give me money” request from any New York mayor, in fact. After all, it’s no secret the state is short of cash. Indeed, in another part of her op-ed, Miner criticized the Legislature’s past proclivity for offering bailouts in the form of “fiscal gimmicks like borrowing money or using one-time revenue to pay for operating expenses.”
Glaser’s implication that local officials should simply do as Cuomo did, extracting important concessions from state unions, is disingenuous. Cuomo, like any governor, has considerably more leverage over state unions than county, municipal or school officials have over local unions. The state budget process gives the governor considerably more leeway to impose tough terms on recalcitrant unions — by, for example, repealing Triborough in appropriations bill language. State unions also know a governor is more likely to follow up on big layoff threats, if only because most state workers do not provide direct public services and thus are less likely to be missed than, say, local cops or teachers. Cuomo deserves credit for his own contract deals, but he had a much stronger hand to play than a typical county executive, mayor or school board.
Defending Cuomo’s pension proposal against Miner’s criticism, Glaser compared it to converting an adjustable-rate mortgage (ARM) to a fixed rate mortgage. The comparison is inaccurate.
Unlike the money borrowed to buy a house, a pension contribution reflects an employer’s continuing obligation to fund public retirement systems, which in turn must finance constitutionally guaranteed retired benefits whose discounted net present value is variable. Under Cuomo’s proposal, if pension funds fail to hit their investment return targets, the “fixed” term of the “smoothed” employer pension contribution rate could stretch beyond the advertised 25 years, and the rate itself could rise by a full one-third. This is not the equivalent of exchanging an ARM for a fixed-rate mortgage; it’s more like exchanging one ARM for another ARM.
It appears we’ll have to keep waiting for that “honest conversation.”