Is there a Transit healthcare problem?

We spent much of last week concerned about the most recent round of Second Ave. Subway delays, and in doing so, a potentially explosive story concerning New York City Transit slipped through the tracks. According to a report in the Daily News last week, Transit took a $1 million hit and jeopardized a strong position vis-a-vis its labor relations when it allowed potential worker health care contributions to lapse.

Pete Donohue broke the story last week:

The transit workers contract reached after the December 2005 bus and subway strike allowed management for the first time to make paycheck deductions to help defray soaring expenses. The rate – 1.5% of earnings – went into effect retroactively for 2006. It could be increased annually and was bumped up to 1.53% for 2007.

While health care expenses continued to escalate for the agency, NYC Transit managers opted not to hike the contribution rate for 2008. Instead, transit brass agreed with Transport Workers Union Local 100’s interpretation of the contract on how to determine if contributions should be increased or kept flat.

The decision has raised eyebrows inside and outside the Metropolitan Transportation Authority. Interim MTA Chief Executive Officer Helena Williams was concerned last month after learning NYC Transit, the main subway and bus division, didn’t increase the contribution rate, a statement released by MTA spokesman Jeremy Soffin said. Williams asked the MTA auditor to do a “full review.”

“Ballooning health care costs are putting enormous pressure on the MTA’s budget, and escalating employee contributions are critical to defraying these costs,” Williams said.

According to union leaders, Transit officials were concerned that they would lose on the issue in arbitration. With relations between the union and the MTA so tenuous as late, Transit reportedly did not want to risk pushing the issue.

The next day, former MTA Chair Peter Kalikow expressed his outrage over the news. “What did we go through a strike for?” he said to Donohue. “So we could give it back to them? It’s outrageous.”

On Friday, the Daily News editorial board called Transit President Howard Roberts a subway sellout. “He must be held accountable,” they wrote while Kalikow chimed in with his own op-ed. He called it a “shady deal” and claimed that the union “has wormed its way out of paying anything for health care.”

I’m not so sure I can get that worked up about this announcement. Roberts’ decision will probably cost the MTA around $1 million and may cost them up to $4 million, if everything goes wrong. Meanwhile, any improvement in labor relations could save the MTA far more than that.

As I’ve written about this year, the MTA has some serious labor problems. They are beholden to a very generous pension plan with escalating costs threatening to get out of hand. This health care story is hardly worth the trouble. Maybe another contractual interpretation would have bolstered the MTA’s position, but maybe it wouldn’t have. Perhaps I don’t see why ex-MTA officials are so up in arms, and as interim MTA head Helena Williams looks into this issue, I doubt she’ll find much.