Arbitration Questions Stand In Way Of Change

At first blush, Gov. Andrew Cuomo’s proposal to help financially struggling cities sounds good.

Cities will have the option to ask the state’s Financial Restructuring Board for its suggestions on how cities should restructure before a control board is necessary. The state is setting aside money to help municipalities pay for the restructuring studies and to implement the plans and the restructuring board can serve as an alternative to binding arbitration, a system that has long been the bane of mayors across the state.

Cuomo’s proposal, which was revealed Tuesday, is an acknowledgement that government in New York state is unsustainable and a statement that restructuring is needed. There has never been such a concrete move from the state, and we are pleased the state knows it has a role to play in helping free taxpayers from their ever-increasing tax burden.

Still, we wonder what type of advice the Financial Restructuring Board will give. Cuomo is right when he says “growing retirement costs, declining populations, decreasing property values, and the recent fiscal crisis have all contributed to the difficult financial issues facing localities today” Cuomo doesn’t mention employee contracts – both agreed upon and imposed by state arbitrators – that make it difficult to downsize a municipal workforce.

Mayor Sam Teresi knows what needs to happen to further restore Jamestown’s financial stability – downsize the workforce further in areas where it is overstaffed; hope pension contribution rates stabilize or, even better, decrease; and then be able to lower taxes to the point it is worth a business’ time and effort to locate in Jamestown. Increasing the number of taxpaying businesses increases the city’s tax base, lessening the amount of taxes paid by everyone.

In Teresi’s case, downsizing the workforce is incredibly difficult because of contracts the city agreed to in good times that set minimum staffing levels within departments or contracts imposed by state arbitrators that penalize the city for falling below a certain number of employees. Jamestown’s population can decrease another 10,000 people, and the number of employees will remain the same because the city is bound by those contracts.

How will the financial restructuring board deal with this situation?

Cuomo hasn’t yet said how he will deal with the possible end of existing binding arbitration. It would be good if the governor let binding arbitration fade into the sunset and used the Financial Restructuring Board to resolve disputes between cities and bargaining units.

There could be problems if binding arbitration is renewed because both a municipality and the union must agree to go before the Financial Restructuring Board. Cuomo must have a pretty big incentive for unions to use the Financial Restructuring Board in place of a system that is already tilted in the union’s favor.

Until the arbitration questions are resolved, we reiterate a familiar sentiment. Unless financial restructuring includes allowing financially distressed cities to save money by cutting employees and services and offering some relief from retirement benefits for past employees, all the pretty words and good intentions will mean nothing.