While news from the transit world has trickled to a crawl during the cold, snowy days of winter, all eyes have shifted to the east where a labor dispute is playing out that could have ramifications that echo from Montauk to Manhattan to Manitou. With the Long Island Rail Road’s largest union creeping toward a strike and MTA CEO Tom Prendergast’s warning of a huge fare hike if the MTA can’t fulfill its net-zero labor dreams, the next few months could be more important for the MTA’s future than most straphangers realize.
When we last saw this tale, Prendergast had just issued his warning. If the MTA has to grant wage increases to all of its unions without any hope of work rule reform, the fares will go up. It’s the only way the MTA can cover these increased costs, the MTA Chairman has stressed. It’s not a new line from the man who sits in that role, but it’s one inching ever closer to reality. Meanwhile, the MTA and the UTU are living in an era in which the first Presidential Emergency Board determined that the MTA could pay for raises with endless Pay-As-You-Go payments and the MTA’s never-ending ability to borrow more money. Welcome to fantasyland.
So this week, the politicking and maneuvering picked up a bit with a bunch of members of Congress urging the MTA to avoid a strike. Their argument relied on the same one put forward by the PEB without a nod to the MTA’s financial reality. Here’s the Daily News’ take:
Twelve members of New York’s Congressional delegation urged the MTA to soften its hard-line wage freeze stance as a March 21 strike date loomed for Long Island Rail Road workers. In a two-page letter Wednesday to Metropolitan Transportation Authority chairman Tom Prendergast, the lawmakers called for MTA officials to rethink their position despite what they called the agency’s “past financial stresses.” “We urge the MTA to reconsider its insistence on a wage freeze or concessions to fully pay for wage increases,” read the letter from the office of Rep. Steve Israel (D-L.I.)…
In the letter, Israel and his fellow lawmakers argued for the MTA to return to the bargaining table by pointing out that the presidential panel found the authority could afford to pay for a rise for LIRR workers. The letter, which was signed by all four Long Island Congress members and most of those from New York City, quoted the panel’s argument that “it simply cannot be concluded that the MTA’s current financial position is one in which it is unable to pay for wage adjustments.”
But in speaking at an Albany hearing last month, Prendergast raised the possibility of a 12% fare hike for 2015 if all contract-less MTA workers received raises like those recommended for LIRR employees. Prendergast predicted “dire consequences” — including the possibility of a $2.75 subway ride, up 25 cents, and a $125 unlimited monthly MetroCard, up from the current $112.
To avoid a strike, the MTA will request a second PEB meditation, and the UTU will not be able to walk off the job until late June. There’s no indication that the MTA will accept anything other than a finding favorable to the agency, and it’s possible that they’ll push the issue until the end. The public wouldn’t be happy with a strike, but the LIRR is one railroad that should be pushing for labor reforms. Meanwhile, I’d dispute the stance that the MTA has a “hard-line wage freeze stance.” They’ll willing to grant a wage increase as long as work-rule reform comes with it.
Still, the larger issue here is the fact that of the MTA’s 60 unions, 59 of them are working without a contract. The TWU is agitating for raises too, and if the UTU earns its contract, the other labor unions will push for a similar resolution. At that point, the increased costs of labor — which do not factor into the MTA’s rather optimistic budgets — will fall on the shoulders of the riders. Should the MTA grant wages if everyone else has to pay more? Should work rule reform follow a bump in salary? The answers to these questions will set the tone for the MTA’s economic structure for the foreseeable future.
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This being an gubernatorial election year, under normal circumstances you’d expect the governor to get his MTA board members to cave to avoid a strike, and then back-load any fare increases after election day (a time-honored tradition going back to the Nelson Rockefeller-William Ronan days). But Andrew Cuomo really has no credible Republican opponent right now, and as a result can direct Prendergast to hold out longer, if he chooses to do so.
It could result in a strike and irate Long Islanders, but they really don’t have a way to vent at the governor if they chose to do so (the union’s best hope might actually be Cuomo’s hopes for a presidential run in 2016 if Hillary opts against a bid. He already ticked off several public sector union leaders right after taking office, and might not want to do so again in 2014, if he’s going to be looking to them for donations by late 2015).
With the disability scandal, you really wondered who these people’s sugar daddies were. Now we know.
As I noted here:
http://larrylittlefield.wordpr.....7-to-2012/
LIRR operating costs, which are mostly operating costs, have soared far beyond both inflation and the wage gains of ordinary private sector workers for the past half decade or so. They have gotten richer, mostly in retirement benefits, by making everyone else poorer.
Basically, the people should be going on strike against the LIRR, and shutting it down. Perhaps until East Side Access is finished. If they strike, all the better.
Given the LIRR’s disability fraud scandals and its antiquated work rules, I have little to no sympathy for the corrupt LIRR unions.
As a UK citizen resident in London I am struck by how cheap ticket prices are in New York compared with London. Admittedly as I am over 60 I get a Freedom pass which gives me free travel but our pricing structure is punitive compared with New York. Interestingly the London Underground recovers over 80% of its operational costs via the fare box and Transport for London (TfL) are confident that the Underground or Tube network will be in profit within the next 5 years as regards operational costs. Infrastructure improvements however generally come out of the public purse.
We also have all the train operating companies which provide intercity and commuter services into London. The companies perhaps provide services which are more equivalent to those offered by Metro North, LIRR, PATH etc. What I don’t understand is that in other posts it seems MTA employ over 40000 staff compared with 19000 employed by the London Underground. On the surface MTA are excessively overmanned but does that figure include all employees engaged by LIRR, Metro North and the bus services? If so then the apparent disparity with London would shrink as each train company has its own workforce and all the bus contractors have their own work forces which are not included in the 19000 total for the Underground.
By the way whilst we have own problems you have my sympathy as London’s mayor has real power over Transport for London and in the main the incumbent is judged by the electorate by the quality of the transport services in London. In contrast Albany appears to have too much of an oversight.
“Does that figure include all employees engaged by LIRR, Metro North and the bus services?”
It includes the bus services, but not the commuter rail services.
The subway employment level is probably roughly proportional, given that the NYC subway system is somewhat larger.
You sound like my relatives across the pond. The diff btwn ny and London is that London I in Europe. The whole continent is expensive to own a car basically. Most places in the US makeup cheap to own and maintain a car. Everything from gas taxes to list price on the car – with everything in between… So although transit is more expensive in London compared to NYC it’s still a “good deal”. Raising fares too much in NYC would cause a revolt. Ppl already complain (well native born)
Nitpick: it’s not cheaper to own a car in the USA. If anything, it’s more expensive because the cars are bigger and we are more dependent on them. Government(s) in the USA just covers more of the cost.
The LIRR itself has a workforce of about 7,500 employes. (and MCNR has about the same.)
As I understand it, the electeds were urging the MTA to drop its “hard line” both against wage increases AND for work rule changes in the event of wage increases – basically, it seemed they wanted the MTA to capitulate, but didn’t quite say it.
Basically, it seemed they wanted the MTA to capitulate, but didn’t quite say it.
To me it sounds like politics as usual.
They want the MTA to capitulate, and the payroll tax to be eliminated. Perhaps with the NYC subway shut down to pay for it.
I’d rather see the LIRR shut down. For years, if need be.
They want to keep borrowing to no end probably.
They want to keep borrowing until they are dead and gone.
How about a movement of everyone under age 55 in favor of defaulting on all the debts and unfunded liabilities? Let the members of the state legislature, those over 55, and the Congress pay it off personally.
Probably the best that could be hoped for is some steady inflation.
Steady inflation might work if the MTA were to pay off the existing debt without having to refinance any of it. Then there are new projects or further financing to continue ongoing projects, which would, of course be based on the higher rates (and perhaps even expectation of still higher rates to come). Clearly, inflation equals a higher percentage of financing costs for any capital project.
I would also not be particularly surprised if their existing debt includes some element of creative financing, given the proximity of Wall Street. Who knows what kind of terms and what not might be involved.
I think that the present rate environment is about as good as could ever be expected. Even though rates are not quite as low as they had been, this seems to be a period of historic lows, and it is hard to imagine terms getting any better than this.
I assume that the pension costs are indexed to inflation somehow, so there wouldn’t be a break there either.
As for the union issues, it would be nice to see some actual turkey being talked, instead of broad positions being taken. Quite possibly, there are some interesting discussions to be had. For example, not all work rules equal featherbedding; there could be some negotiating wholly within that category. There are health care and retirement elements that could trade off against wages; some benefits could sunset with current employees; rank and file could have some input into the “suits” world like employee evaluation of managers. Let’s air out some actual issues instead of jumping straight to the bottom line.
I wasn’t talking (only) about the MTA. But yeah, variables rate interest and swapping stand out in my memory. Some of their unfavorable swaps caused a mild scandal with the HURRR!!DEBT!1!1 crowd a few years ago, but then I supposed the same people ought to be pleased the variable rate interest has worked out so well. Obviously they hedge too.
I’m not sure if pensions are indexed to inflation (Larry?).
“I would also not be particularly surprised if their existing debt includes some element of creative financing, given the proximity of Wall Street. Who knows what kind of terms and what not might be involved.”
Yes there has been, and yes we have already been hosed.
But that fact is under Omerta. Kind of like the results of all those hedge fund investments by the pension funds, because (unlike in Rhode Island where the unions are making an issue of it) the unions sit on the pension boards and backed the damn Comptrollers who did the deeds.
Note that in addition to the 50 percent increase in pension benefit payments (inflation adjusted) after the 2000 pension deal and taxpayer underfunding from the mid-1990s to the early 2000s (remember those fare cuts?), the NYC general pension fund (which also includes NYC transit) has had subpar investment returns.
http://larrylittlefield.wordpr.....york-city/
“I assume that the pension costs are indexed to inflation somehow, so there wouldn’t be a break there either.”
Partially, not completely, as a result of the 2000 pension deal. It would take a whole lot of inflation for the pensioners to get screwed and the serfs to catch a break. As it is, we are more likely for the pensioners to get increases in excess of inflation (minimum 1 percent increase even if there is deflation).
And the reason that the public, much of which makes less than the lirr employees, should pay for them to continue to be inefficient is what, exactly?
Other than that the ruling class pols are in the pocket of the unions, of course.
PS — I hope that nobody is surprised that hussein’s Presidential Emergency Board ruled for the unions.
This is not true at all
then what is true?
Still wrong
Rob: Bush’s Presidential Emergency Boards also routinely ruled for the unions in ridiculous cases where the unions were asking for blatantly unreasonable things.
The common element here is obviously not support for unions
Rather, the common element is an attempt to sabotage bus, rail & subway service in favor of roads & cars.
Thia is very bad
This is very bad.
http://www.newsday.com/long-is.....-1.7174901
“The head of the federal agency that has paid disability benefits at an alarmingly high rate to Long Island Rail Road retirees defended the system from a scathing report by the board’s watchdog, saying the LIRR’s own pension setup proved easy to “exploit.”
“Dickman wrote Feb. 10 that even after the board attempted to increase oversight for LIRR disability applicants the rate of LIRR applicants being approved for occupational disability benefits “remains essentially unchanged” at nearly 96 percent.”
“Dickman noted that even some retirees who had their disability annuities revoked after being indicted on fraud charges, and who later pleaded guilty, reapplied for the benefits and were approved.”
“So far, 33 people have been charged and convicted in connection with a massive LIRR disability fraud scheme, including two doctors.”
“In his response, Schwartz wrote that Dickman’s report “fails to acknowledge the circumstances surrounding the fraudulent scheme and the elements which made this fraud possible.”
“That includes a now-closed LIRR pension program “unlike any other in the nationwide rail community” that allowed workers to retire at 50 with 20 years on the job. Investigators have said the generous program gave retirees an incentive to apply for federal disability benefits, which they could also collect at 50.”
The 20/50 pension plan wrecked the subways. And even though the TWU strike did not achieve its goal of 20/50 for subway workers, it appears 20/50 is wrecking the subway again — and MTA resources are drained to the LIRR.