Gov. Cuomo said last week that he’ll propose a “financial restructuring group” to help fiscally distressed local governments pursue options that would include “consolidation, mergers, shared services, reduced workforces, fewer elected officials.”

But until Cuomo pushes meaningful, permanent reform of the state Taylor Law, which regulates collective bargaining in New York’s public sector, “restructuring” of local governments will simply amount to rearranging the deck chairs on a fleet of sinking ships.

To be sure, many localities created their own problems, and some local officials probably lack the guts or smarts to attack their problems effectively. But others find their hands tied by the Taylor Law’s Triborough amendment, which locks in all labor-contract provisions even after a contract has expired, making it easier for unions to resist needed concessions.

Cuomo has tentatively called for modest reform of a separate provision that compounds the Triborough problem — a provision that grants police and firefighter unions the right to compulsory binding arbitration of contract impasses.

This process, in place under a “temporary” law that’s been repeatedly extended over the past 39 years, essentially has allowed unelected arbitration panels to impose costly contract settlements on a generation of taxpayers.

The impact of arbitration is huge. The average salaries of the members of the state Police and Fire Retirement System is $102,850 a year; other government workers belonging to the state Employee Retirement System, who aren’t eligible for arbitration, earn less than half as much. And since arbitration as first enacted in 1974, PFRS members’ pay has risen three times faster than that of ERS members.

County, city, town and village officials in both parties have lobbied for reform of the arbitration law for years now, saying it unduly favors these unions while perpetuating costly work rules and increasingly unaffordable health-insurance benefits.

Yet the arbitration provision is set to expire on June 30 — which effectively means the Legislature can’t extend it without the governor’s cooperation. And earlier this year, Cuomo signaled his willingness to use that leverage: He unveiled budget-bill language to impose a 2 percent cap on compensation increases (including benefits as well as base salaries) resulting from arbitration awards.

The bill’s major shortcoming: It excluded step and longevity pay, and was confined to “distressed” municipalities, although arbitration drives up police and firefighters costs everywhere.

In any case, Senate Republicans and Assembly Democrats were predictably unwilling to touch the subject as part of the budget, so the fate of arbitration remains unresolved as June 30 gets closer.

Cuomo said last week he wouldn’t agree to renew the arbitration law “without a deeper resolution” — whatever that means. He also said his proposed restructuring task force could serve as “an alternative binding arbitration panel” — which, in the absence of further details, made little sense.

“A union’s inability to come to contract terms with a fiscally distressed city is a symptom of the illness — fiscal distress — that we must resolve,” the governor said. But that diagnosis gets it backward. The state’s inflexible collective-bargaining rules are the main obstacle to curbing high local taxes and chronic deficits.

It’s time for the governor to return to Square One and build on his original arbitration-reform proposal. He can draw some inspiration from a state similarly afflicted from high, arbitration-driven police and fire pay — New Jersey.

Like New York, Jersey has capped local property-tax levies at 2 percent. To help local governments live within their tax caps, Gov. Chris Christie and the Democratic-controlled Legislature agreed in December 2010 to impose a 2 percent limit on salary increases awarded through arbitration.

The first year that cap was in effect, the number of cases brought to arbitration dropped by 81 percent.

Cuomo, like Christie, should offer arbitration relief to all municipalities — not just those already qualified as “distressed.” New York arbitration reform would be further strengthened by including steps and longevity pay under the cap, by accelerating the arbitration process and by requiring the state’s Public Employment Relations Board to collect more data from employers on the financial impacts of both negotiated and arbitrated settlements.

Or he could just let the arbitration law lapse — so that police and firefighters have to bargain under the same rules as other government unions.

Local fiscal problems have festered, Cuomo suggested last week, because “politicians in general don’t like to make tough choices.” But Cuomo’s fellow pols on the local level can’t be blamed for avoiding tough choices if the governor won’t give them the tools they need.

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

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