The business-backed Citizens Budget Commission is recommending that lawmakers tweak the state’s binding arbitration law, which expires July 1, rather than “renewing the statute as a matter of routine, as has occurred for decades.” The law permits police, firefighters and other unionized law enforcement officials to resolve labor contract disputes through binding arbitration, an option not available to most other public employees.
Gov. Andrew Cuomo has proposed placing a 2 percent cap on binding arbitration awards.
Government officials have long complained about binding arbitration, claiming it favors unions and leads to salary increases that are unaffordable and the continuation of costly work rules and benefits, according to the fiscally conservative Empire Center for New York State Policy.
But New York State Professional Fire Fighters Association President Michael McManus, whose organization represents 18,000 uniformed firefighters outside New York City, says binding arbitration must be extended. “Rather than exacerbating a problem, it preserves the public trust and spirit of good will necessary in any negotiation, and offers the opportunity for resolution by an independent third party,” he wrote on the group’s website last month.
State leaders should change the law to allow consideration for the fiscal condition of state and local governments, Maria Doulis of the Citizens Budget Commission wrote in a blog post today. Governments are required to pay awards set by arbitrators. One of the criteria they are required to consider is “ability to pay,” but the law doesn’t provide guidance on how this should be evaluated and arbitrators historically has not given this “sufficient priority” in decisions, she wrote.
“It is rarely evaluated in terms of economic competitiveness or the impact that a relatively generous award will have on governments’ ability to provide services to their citizens without raising taxes,” she said in the post. “Arbitrators frequently cite the capacity to tax and borrow as indicative of an ability to pay for an award, regardless of the overall tax or debt burden.”
CBC referenced a recent study by the Empire Center for New York State Policy, which found that binding arbitration awards filed with the state between 2003 and 2012 involved 104 different bargaining units, about 25 percent of the total eligible during that period. Salary increases averaged 3.6 percent a year from 2003 to 2007 and 3.3 percent annually from 2008 to 2012, excluding step increments and longevity pay, the Empire Center found. Four of 136 arbitrations included a pay freeze in any year. Less than half included cost savings for employers on health insurance benefits.
Doulis said frequent arbitration processes and the “relatively large awards” that have resulted “have heightened fiscal pressures” in large cities like Syracuse, Rochester and New York City, and large counties, like Westchester and Suffolk.
“At a minimum, the statute should be revised to define ‘ability to pay’ as the capacity to pay all costs — including related fringe benefits — of the imposed contract from recurring resources without increasing taxes, making service cuts or employing fiscal gimmicks,” she wrote.