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Fiscal summit first step toward crisis relief

Thursday, April 25, 2013
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Local officials from financially distressed cities and school districts have finally gotten Gov. Andrew Cuomo’s attention. After months of insisting they must solve their own problems, he now says he’s willing to meet with them at what Syracuse Mayor Stephanie Miner, co-chairwoman of the state Democratic Party, has repeatedly called for: a “fiscal summit.” That’s exactly what is needed.

Dealing with the locals’ fiscal crisis is similar to cleaning up the corruption in state government. One or two reforms isn’t enough: A comprehensive package is necessary if local governments and school districts with low reserves, low tax bases and high taxes are to avoid bankruptcy, something the state comptroller has said is a real possibility for many of them, especially in upstate cities.

Not only hasn’t Cuomo helped, he has added to the locals’ revenue problems by reducing aid and pushing through the 2 percent property tax cap. He did offer some short-term relief when pension costs skyrocketed recently, with a plan to let municipalities and school districts smooth out their contributions over time. But their savings will be relatively small, and they could wind up paying substantially more down the road.

Of greater significance is a proposal the governor made in his budget and for which he had support from a group of upstate mayors, including Schenectady’s Gary McCarthy, Amsterdam’s Ann Thane and Albany’s Gerald Jennings, at a press conference Monday. Cuomo wants to change the binding arbitration law — which serves to run up police and firefighters’ salaries, and, consequently, municipalities’ pension costs — by requiring mediators to consider taxpayers’ ability to pay when making awards after contract-talk impasses. For distressed municipalities, the raises would be limited to no more than 2 percent. That would help, but not as much as doing away with binding arbitration altogether and letting contract negotiations be based on fiscal reality.

Other changes that should be discussed at the summit are an end to the Triborough Amendment, which removes unions’ incentive to negotiate by keeping a lapsed contract in force, and with it automatic raises for teachers and some municipal employees. Serious health and pension reforms, including a mandatory 401k-type plan with a generous employer contribution, also need to be on the table.

Cuomo is right that the state can’t just keep giving local governments and school districts more money, but he has to give them something. An ear is a start, but it has to lead to real action.

 
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April 25, 2013
7:48 p.m.
birmy says...

The Taylor Law was enacted in the 1960s while the Triborough Amendment didn't get created until 1982. Many states have provisions that forbid public employee strikes which is the most often stated aspect of the Taylor Law. I think there are interesting arguments on each side about Triborough. Many unions believe it levels the playing field with employers whereas municipalities and school districts think it gives an advantage to the unions. The former in an environment of 2% tax caps and state aid levels that are at lower levels than 4 years ago does not seem very plausible that Unions are raking it in when a contract expires. Even less believable if you look at the last few years of contracts being settled in the Capital Region. My personal belief is when we hear advocates discuss the modification of Triborough we are listening to code words that will lead to frozen salaries of public employees when the contract expires. I think the debate becomes more honest if that would come to the forefront. If a contract expires many years can go by before a settlement is reached. Think Mechanicvile... No retroactive pay is ever given. So I am unsure how we can prescribe to the philosophy that the Unions rake it in when Triborough is in effect when in reality no new money is added to the contract. If Triborough is modified then strikes may become a possibility such as what we have seen in Vermont. In sum, the contracts being settled in Capital Region in the last few years have been close to zeros. Getting rid of Triborough will allow for frozen salaries of public workers which is why I believe there is discussion about it. Not because Unions have a lot of power in this fiscal environment because as we have seen that is not the case.

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