It’s never much fun to begin a new year on an ominous note, but unfortunately, turning the calendar page to January did not fix New York State’s or the MTA’s fiscal problems. With a new governor — one who is, for now, scandal-free — ready to take on Albany with some strong rhetoric, labor costs are in the crosshairs, and unavoidably, Andrew Cuomo’s stance toward the state’s powerful public unions will ensnare the MTA too.
As The Times reports today, in his first State of the State address, Gov. Cuomo will uphold one of his major campaign promises as he will attempt to freeze state wages for at least a year. Considering the state’s $9 billion deficit, a wage freeze would be more symbolic than anything else, but as one anonymous Cuomo official said, the new governor, a labor-endorsed one at that, has to start his tenure off on the right foot.
“The governor said during his campaign that the difficult financial times call for shared sacrifice,” the official said to The Times. “A salary freeze is obviously a difficult thing for many government workers, but it’s necessary if the state is going to live within its means.”
Nicholas Confessore of The Times offers up a bit more:
[B]ecause such a step would not require legislative approval, Mr. Cuomo could achieve it while bypassing the Assembly speaker, Sheldon Silver, and the Democratic-controlled State Assembly, labor’s most powerful allies in Albany.
Of course, a freeze — which Mr. Cuomo promised he would seek during his campaign — would be subject to negotiation with the unions. But labor contracts for the vast majority of the state’s 190,000 employees expire on March 31, giving Mr. Cuomo an opening to seek changes at a time of public unease toward government workers’ benefits.
Salaries, health care and pension benefits for state workers represent one of the largest and fastest-growing areas of spending, accounting for about one-fifth of all state dollars.
Budget advocates have been quick to embrace Cuomo’s pledge. Elizabeth Lynam, a vice president at the Citizens Budget Commission, is looking forward to the brewing labor fight. “It’s a shot across the bow at organized labor, which has to date been uncompromising,” she said. “Hopefully it will lead to broad-based changes in the way state employees are compensated.”
Now, enter the MTA. At the end of 2010 and for the third year in a row, the MTA had to raise fares, and in 2011, for the third year in a row, many of its unionized workers — those belonging to the Transport Workers Union — will enjoy a raise for the third year in a row. MTA CEO and Chairman Jay Walder has already vowed to work toward a net-zero increase in labor spending, and if the workers are earning more, that simply means there will be fewer of them on the MTA’s payrolls.
Meanwhile, later this year, the MTA and the TWU will head to the bargaining table to hammer out another labor pact, and you can bet that Cuomo and his team will watch these negotiations far more carefully than Gov. Paterson did in 2009. Under the microscope will be the MTA’s pension and benefits obligations. In 2010, 19 percent of MTA expenditures went to fund pensions (nine percent) and health & welfare benefits (10 percent). Total expenditures in those categories topped $2.1 billion, and by 2014, that number is expected to raise to at least $2.7 billion. It’s certainly a plus today for the MTA’s bottom line that the TWU wasn’t successful in its 2005 effort to lower its retirement age from 55 to 50.
Essentially, we’re sitting on the edge of a dangerous game. If Cuomo is successful in instituting this wage freeze, the TWU will be firmly in his crosshairs, and he will apply tremendous pressure on the MTA to give up no ground. Another strike would likely result in the end of the TWU as a viable union but giving up ground to the authority will lead current president John Samuelsen exposed to an already-disgruntled rank-and-file.
For better or worse, labor pressures will be one of the top transit storylines for 2011. If workers’ salaries and benefits keep going up, riders will be outraged. If the unions are battered or broken by Albany, the workers will be very unhappy. No matter what, this story will be have a bumpy ride and an ending that can’t be happy for everyone.