While the MTA is awaiting its day in court as it tries to appeal a binding arbitration ruling in favor of the TWU members, the union’s rank-and-file have taken to the streets in protest. According to Pete Donohue, more than 350 union members picketed outside of MTA headquarters this morning in advance of the monthly board meeting. According to union sources, their main targets were Mayor Bloomberg’s four board appointees. TWU officials believe the Mayor has urged the MTA to appeal the decision to secure an 11 percent raise for union workers over the next three years. “He’s the mayor of the city. He always has a say,” Curtis Tate, Local 100’s acting president, said. While workers will not shut down the system any time soon, labor relations between the MTA and its union are icy at best right now.
Two MTA Board members, one with close ties to labor, have come out against the agency’s decision to appeal the binding TWU arbitration win. Mitchell Pally and Norman Seabrook, the head of the New York City Correction Officers’ Benevolent Association, urged the transit authority to drop its suit challenging the arbitration award. The MTA is attempting to appeal the guaranteed 11 percent raises over three years on the grounds that it would be a financial hardship to pay them. Seabrook said that the MTA’s legal maneuverings present a “clear message to all municipal workers in the city and state that managers want to have their cake and eat it, too – that if a decision comes down they don’t like, they’ll take you to court and strip you of it.” He also presented a Board motion to halt the challenge, and the Board will discuss the motion at its meeting on Wednesday.
As the MTA attempts to avoid an arbitration ruling that guaranteed TWU workers 11 percent raises over the next three years, the agency has plead poverty in its court filings. In its motion to overturn the arbitration decision, filed Tuesday in Manhattan Supreme Court, the transportation authority said it does not have the money to pay its workers and adequately operate its trains at the same time.
For its legal claim, the MTA is alleging that the arbitration panel made egregious fiscal mistakes in evaluating the MTA’s ability to pay the raise. The agency has also threatened to scale back service and raise fares to maker labor ends meet. Pete Donohue has more:
In legal papers filed in Manhattan Supreme Court, transit officials also say the arbitration panel that crafted the contract last month made critical blunders when evaluating the Metropolitan Transportation Authority’s finances.
In one instance, the panel said the MTA has a $75 million rainy-day fund, which the authority says has been drained. “The MTA simply does not have the money to pay for the ramped-up, out-of-scale unbudgeted costs…without foisting upon the public some very unpleasant choices regarding fares, service levels…and maintenance of the system,” the MTA argues.
While I haven’t yet secured the filings, The Post has more:
The suit said the raises would waste millions of dollars of a new payroll tax — 34 cents of every $100 of a business’ income — on “out-of-scale compensation increases for employees who, by all accounts, already are well paid.”
… [Arbitrator John] Zuccotti and [TWU President Roger] Toussaint both agreed the MTA can take money from its capital programs — the same budget that funds the Second Avenue Subway, the purchase of new buses and station rehabilitation — to pay the raises.
I certainly don’t agree that the MTA should be removing capital funds to cover labor costs. That represents a backwards investment in moving transit in New York City forward.
No matter the outcome though this appeal could turn labor relations toward an acrimonious stalemate. The case is set to be heard on Tuesday, and both the MTA and TWU have a lot at stake.
In a piece critical of New York City’s mayor, The Post’s David Seifman calls Michael Bloomberg’s noise on the MTA/TWU flap just politics. While the mayor has expressed his displeasure with the arbitration finding in favor of the TWU and while he is currently engaging in what I’ve termed a faux-populist takedown of the MTA, he won’t join the MTA in appealing the TWU decision. While a city spokesman says that the Mayor’s Office will be “vigorously supporting” the MTA in its appeal, the city won’t join the suit because its lawyers do not believe it is a “affected party.” Support by any other name…
According to a report in the Daily News, the MTA plans to ask a judge to toss the TWU arbitration decision and overturn the 11 percent salary hikes. Pete Donohue reports, “A court battle, including appeals, could drag on for more than a year with wages potentially frozen at current levels, lawyers familiar with such litigation said.” The TWU’s public relations firm issued a fairly out-there statement criticizing the MTA for hiring lawyers to take care of their legal business, and the MTA declined to comment. In the end, all of these labor machinations are bound to create ill will between the MTA and its unions, and this story could just drag on for a while.
As the MTA and TWU officials continue the battle over last week’s arbitration decision, the Daily News reports that the transit agency may appeal the ruling. According to Pete Donohue, “a state judge can throw out a contract after concluding arbitrators didn’t properly apply the criteria mandated by the legislation, including an employer’s ability to pay wages and benefits.” The MTA will, of course, argue that it cannot afford the raises over the next three years. While the News article quickly devolves into mud-slinging by unnamed union and MTA officials, it seems clear that this saga is far from over.
Submitted without comment, for now, is the document that has unleashed a labor war on these pages. The MTA/TWU arbitration decision has been a topic of discussion for much of the last two days, and below is a Scribd copy of the document. You can find the PDF of it right here on the Public Employment Relations Board website.
The opinion contains two parts: the majority order and a dissent by Dall W. Forsythe, the MTA’s selection to serve on the three-member arbitration panel. Check it out.
As July came to a close two weeks ago, the MTA released a bit of good budgetary news. According to their early projections, the agency would require no fare hikes to keep their books in order for 2010. Considering the back-to-back fare increases over the last two years, this announcement was a good one indeed.
As this week has unfolded with news of an arbitrator-awarded pay increase for New York City Transit’s TWU workers, the MTA has backtracked on that promise. As Newsday reports today, this increase — four percent in both 2010 and 2011 and three percent in 2012 — may may require future fare hikes as the MTA looks to cover an unexpected gap of $350-$400 million.
For most New York straphangers — myself included — the initial reaction was one of outrage. How could the arbitrator, in bad economic times, be so blind to the MTA’s fiscal reality? How could the TWU be so callous in its hunt for higher wages? We pointed fingers firmly at organized labor.
But after a series of conversations I’ve had with union officials over the last 24 hours, I have to reassess my position. In this case, I have come to believe that the TWU is not to blame for any future fare hikes the MTA may have to enact in 2010 to cover these unexpected labor expenditures. Rather, poor planning, even in the face of an impending increase, has yet again put the MTA in a hole.
According to union spokesmen and leaders, this whole arbitration process went something like this: Last year, after the economic downtown, the city of New York guaranteed raises of four percent to many unions, including teachers, sanitation and corrections workers. As the MTA and the TWU headed toward arbitration and as the process continued, TWU officials and their MTA counterparts seemed to recognized that a four-percent wage increase for 2010 would not be out of the ordinary.
Now, generally, faced with this reality, an agency would budget in enough money to cover any potential increase. Therefore, when the MTA released its preliminary 2010 budget two weeks ago, it should have factored in wage increases of four percent for its workers. Instead — and inexplicably — the MTA assumed it would have to dole out increases of just over 1.5 percent to its workers. According to TWU officials privy to the arbitration process, when the end of July rolled out, it was clear that the MTA would most likely be on the hook for that four percent increase next year.
So where does this leave us? As the finger-pointing continues on into the week, it appears as though any potential fare increase in 2010 due to rising labor costs would come about because the MTA did not adequately prepare its budget. Maybe this happened because MTA officials were overly confident of the arbitration outcomes. After all, that attitude has seemingly killed one-person train operations for now. Maybe the MTA was truly blind-sided by the arbitration result. Either way, I no longer feel it is fair to blame the TWU for this turn of events. This one may very well be on the MTA — and our wallets.
As I reported late last night, a labor arbitrator yesterday sided with the transit union in its contract dispute with the MTA. Because of this decision, transit union workers will earn raises totaling 11 percent over the next three years, and the MTA will be scrambling to cover another $350-$400 million in unanticipated costs.
As other city unions have earned similar raises in recent months, it may have been foolish for the MTA to omit consideration of possible union raises. The MTA, however, is in a far different economic situation than the rest of the city. The agency is struggling to stay afloat and shouldn’t have been required to give its workers raises if it can’t afford to. After all, I, as a private sector employee, don’t expect substantial raises over the next few years if my company is struggling financially.
Meanwhile, the fallout from this arbitration decision extends well beyond economics and potential fare hikes. As The Times’ Michael Grynbaum reports, because of a bad negotiating tactic, the MTA won’t be able to implement one-person train operations until at least 2012. He writes:
During contract talks, the agency dropped its demand for one-person train operation, instead of two, thinking that Transport Workers Union Local 100 would make health care concessions in return. But an arbitration panel has found there had been “no evidence” of a quid pro quo — handing a victory to the workers, who had been seeking to limit their health care contributions.
Establishing one-person train operation has been a major goal of New York City Transit for more than a decade. Using one-person crews would save millions in labor costs, and the agency, which wanted to start the program on the No. 7 and L lines, has already invested in new compatible subway cars.
The program has been held up by objections from the union, which stood to lose jobs and wages, and from rider advocates concerned about security.
That is a prime example of the union standing in the way of both technological progress and economic trimming. The MTA is a bloated agency, but as long as the union refuses to compromise on staffing levels, upper management will as well. This is a stand-off that won’t end well for straphangers.
Meanwhile, as long-time SAS reader Larry Littlefield noted in the comments earlier today, the arbitrator’s ruling may have a bigger impact on the MTA than we realize. As Grynbaum reported, “The arbitration panel said the authority could use federal stimulus funds and money from its capital program to make up any shortfall in its operating budget.”
Littlefield believes that this could be damaging to the MTA’s future capital plans and its need and ability to separate the operating budget from its capital expenditures. “If the capital program can be diverted to operating costs, and it is borrowed money, therefore, the operating budget is unlimited with no effect on taxpayers,” he wrote. “Anyone here going to be thrilled with all the innovative studies by consultants over the next couple of decade, as the system decays and no improvements are built? Anyone even mentioning proposals for improved service shows they are willing to go along, and be unpleasantly surprised down the road, blaming future leaders.”
The Daily News’ editorial board slammed arbitrator John Zuccotti for siding with the union in a time of grave economic troubles for the MTA. The Post blames Bloomberg for overly generous payouts to other city unions. I’m still waiting on a comment from the TWU’s spokespeople, but in the end, the fare-paying public will have to pay. Higher fares and unnecessary employees will mar the forward progress of the subway system. The MTA is to blame; the TWU is to blame. What a mess.
The last few weeks had been going, well, mostly smoothly for the MTA. At the end of July, the agency announced that its preliminary 2010 budget would contain no fare hikes, and on Monday, the authority released a preliminary five-year capital program for 2010-2014. Expansion and sound economics were the key phrases.
All of that planning and good will were dealt a fiscal blow yesterday when an arbitration panel granted transit union workers a series of raises and benefits that will leave the cash-starved agency searching for even more money. After a lengthy arbitration process, the panel granted transit workers, according to NY1’s Bobby Cuza, “four percent raises in each of the first two years of their contract [and] three percent in the third year.” This victory for the union far exceeded the amount allocated by the MTA in its preliminary budget proposals.
MTA officials were livid. Helena Williams, the current interim executive director and MTA CEO, issued a tersely-worded statement about the ruling. She said:
“This award is extremely disappointing and fails to recognize the economic recession in the region and the impact of this downturn on the MTA. There will be a significant impact on the MTA’s bottom line. The award suggests that the MTA raid its underfunded capital program and rely on one-shot federal stimulus funds to pay for raises. As a further disappointment, the award also rolls back a portion of the employee health care contribution that the MTA won following the 2005 TWU strike. Over the three years of the contract, the award will cost the MTA approximately $350 million more than budgeted: $10 million in 2009, $100 million in 2010 and $240 million in 2011.”
For now, according to Williams, the MTA Board will not recommend raising the fares again this year, but those promises of a 2010 without a fare hike are off the table.
Following the arbitration ruling, Mayor Bloomberg and TWU President Roger Toussaint continued their war of words. Earlier this week, Bloomberg warned that riders would suffer if the union workers received a generous package from the arbitrator. “The straphangers of today are going to pay for this increase if, in fact, the arbitration comes out that way,” he said. “I don’t see how the arbitrators can rule that way if they have to look at the ability to pay, because the straphangers don’t have the ability to pay more.”
Toussaint later pointed out that numerous city unions had received similar four percent raises and issued a statement heavy on the rhetoric. “The last time,” he said, “we saw a Mayor champion such unfair, unequal treatment of a specific group of workers was Memphis, Tennessee, and the year was 1968.” This, of course, was the sanitation workers strike that ended only after Martin Luther King, Jr. was assassinated. That’s some comparison.
Bloomberg’s response was far more level-headed. “The city’s finances are different than the MTA’s finances,” the mayor said. “The city’s workforce is different. So there’s no reason to think that if one does something, the others automatically have to get it.”
And so here we are. The MTA has to find $10 billion to cover a gap in its capital budget. It has to find a way to keep fares low and keep the trains moving. And now it has to find a way to cover an additional $350 million in labor expenses. No wonder New Yorkers are so skeptical of the city’s transit unions.