EDITORIAL
State Workers and N.Y.'s Fiscal Crisis
Published: March 5, 2011
At a time when public school students are being forced into ever more crowded classrooms, and poor families will lose state medical benefits, New York State is paying 10 times more for state employees' pensions than it did just a decade ago.
Editorial Series
That huge increase is largely because of Albany's outsized generosity to the state's powerful employees' unions in the early years of the last decade, made worse when the recession pushed down pension fund earnings, forcing the state to make up the difference.
Although taxpayers are on the hook for the recession's costs, most state employees pay only 3 percent of their salaries to their pensions, half the level of most state employees elsewhere. Their health insurance payments are about half those in the private sector.
In all, the salaries and benefits of state employees add up to $18.5 billion, or a fifth of New York's operating budget. Unless those costs are reined in, New York will find itself unable to provide even essential services.
To point out these alarming facts is not to be anti- union, or anti-worker. In recent weeks, Republican politicians in the Midwest have distorted what should be a serious discussion about state employees' benefits, cynically using it as a pretext to crush unions.
New York does not need that sort of destructive game playing. What it needs is a sober examination of the high costs of wages and benefits, and some serious proposals to rein them in while remaining fair to hard-working government employees.
Gov. Andrew Cuomo has pursued a reasonable course, making it clear that he expects public unions to make sacrifices, starting with a salary freeze. He wants to require greater employee contributions to pensions and health benefits, with a goal of saving $450 million.
Negotiations begin this month, but so far union leaders have publicly resisted Mr. Cuomo's proposals. If they don't budge, Mr. Cuomo says he will have to lay off up to 9,800 workers. That would damage the state's struggling economy. Some compromise must be found.
Here are the three most expensive areas of spending that need to be addressed:
WAGES Last April, in the midst of one of the worst financial crises that New York and the nation have ever faced, the state's unionized workers got a 4 percent pay raise that cost $400 million. It came on top of 3 percent raises in each of the previous three years. These raises were negotiated long before the recession began, by a Legislature that routinely gave in to unions that remain among the biggest political contributors in Albany.
During the same period, many private-sector workers had their pay or hours cut. Private-sector wages in New York dropped nearly 9 percent in 2008. In 2009, Gov. David Paterson pleaded with the unions to give up the raises to help the state out of its crisis. Union leaders attacked him in corrosive television ads, and Mr. Paterson eventually caved, settling for an agreement that reduced pension payments to new employees. The deal wasn't enough to address New York's serious fiscal problems.
The average salary for New York's full-time state employees in 2009 (even before the last round of raises) was $63,382, well above the state's average personal income that year of $46,957. Mr. Cuomo's proposed salary freeze for many of the state's 236,000 employees is an important step to rein in New York's out-of-control payroll. It could save between $200 million and $400 million.
He may need to go further. Even after the current labor contract runs out on April 1, more than 50,000 workers are in line for step increases and longevity pay negotiated in that contract, which will cost about $140 million. A clause in the state labor law known as the Triborough Amendment allows contract provisions for all workers to proceed until a new contract is reached.
This clause, unique to New York, was a well-meaning attempt to give some balance to state unions, which by law are not allowed to strike and had no leverage to draw management to the table in flush years. The problem with the Triborough Amendment is that it gives the unions far less incentive to bargain, as we saw last year.
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A version of this editorial appeared in print on March 6, 2011, on page
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