Local governments had hoped for an overhaul this year to the controversial binding arbitration process, including a 2 percent cap in the awards.

But what they got were small changes in the 39-year-old system for resolving disputes in local police and firefighter contract negotiations.

The new law requires that arbitrators give more weight to a government’s ability to pay, but only if it is in fiscal trouble, as measured by tax levels or budget reserves. It also creates a Financial Restructuring Board to provide assistance and recommendations, and up to $5 million in government efficiency grants, to fiscally eligible municipalities.

“I would characterize the changes as minor modifications to the current system, and in terms of what impact they may have, we don’t know and we won’t know for some time,” said Peter Baynes, executive director of the New York State Conference of Mayors.

Unions say the binding arbitration system, under which strikes are prohibited, has worked well for four decades and didn’t need to be changed.

Richard Wells, president of the Police Conference of New York, said a cap “would have been truly devastating.” Fewer than 10 percent of police and firefighter contracts have been settled through arbitration in the past few years, he said.

“We never encourage our members to go to arbitration,” he said. “The best deal is always the negotiated deal.”

According to a preliminary, unofficial list generated this year by Gov. Andrew Cuomo’s Budget Division, Mount Vernon, Peekskill and Yonkers would be eligible for the modified arbitration process, as would Rockland County, Harrison, Lewisboro, Philipstown and 15 villages. State Comptroller Thomas DiNapoli’s office is charged with creating an eligibility list.

New Rochelle, where the Superior Officers Association filed for an impasse this spring, is not on the list. The union has not had a contract since the end of 2009 and is in mediation, the step before arbitration. The city and its rank-and-file police union recently agreed to a 10-year contract without arbitration.

Sgt. Neil Reynolds, president of the Superior Police Officers Association, said the new law is “a solution looking for a problem.”

“I think the city holds the cards. This particular law strengthens their hand,” he said.

Most, if not all, public-employee unions are willing to be reasonable and understand the financial situation of the municipalities, he said, and the arbitration system “gives us a better opportunity to have the city come to the table and deal fairly and reasonably.”

Yonkers Mayor Mike Spano, whose city would be eligible for the modified arbitration system, has praised the law.

“This agreement provides tools for local governments to better address the structural financial challenges facing municipalities, taking into account taxpayers’ ability to pay in cases of binding arbitration, which is a critical component of this legislation,” he said in a June statement.

Greenburgh Supervisor Paul Feiner said all communities are experiencing fiscal problems because of the recession and the property-tax cap. Public officials should decide how much employees are paid, he said.

“I think arbitration hurts local governments, and I think that the law that was approved is a small step that will eventually lead to the elimination of arbitration,” he said.

E.J. McMahon, president of the fiscally conservative Empire Center for Public Policy, said the law appears to be “set up to affect as few localities as possible.”

“The wording is ambiguous and strange” and doesn’t provide guidelines for defining and determining ability to pay, he said.

An Empire Center study released in May found that arbitration awards filed with the state between 2003 and 2012 involved about 25 percent of eligible bargaining units. Salary hikes averaged 3.6 percent a year from 2003 to 2007 and 3.3 percent annually from 2008 to 2012. Four of 136 arbitrations included a pay freeze in any year.

A 2009 Cornell University report on the system said no strikes have occurred, rates of dependence on arbitration have declined considerably and wage increases awarded matched those the parties negotiated voluntarily. The length of time to complete the process has increased substantially.

©2013 Journal News