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New York Post

 

Tough Love Needed

August 28, 2009

By Nicole Gelinas

PRINTER FRIENDLY

HOW MTA CAN ROLL BACK RAISE

THE MTA this week moved to appeal arbitrators’ re cent giveaway to its union ized workers, including 11.3 percent raises over three years and a health-care present. The authority has a great case -- but it probably won’t win without help from Gov. Paterson and the Legislature.

The deal went to arbitration after the MTA and the union said that they’d reached an “impasse” early this year. Three arbitrators -- one each representing the union, the MTA and the public -- were supposed to figure it out.

But by law, they had to base their decision on clear criteria -- including the MTA’s “ability to pay” and the deal’s impact on the “welfare of the public.”

In court, the MTA will argue that they failed to do that -- so the deal, which soon will cost riders and taxpayers $300 million annually, should be nixed. And it though it botched its labor negotiations utterly (or pretended to, to please Albany), it has the facts on its side here.

First, the arbitrators plainly only considered the MTA’s “ability to pay” in the short term -- they cited the $1.8 billion Albany bailout that the authority just won as making its immediate deficits “manageable.”

Actually, that’s hardly guaranteed: The bailout dedicates certain new tax revenues to the agency, but those taxes won’t produce the cash it desperately needs unless the economy improves fast.

And in the long term, even with the bailout, the MTA faces permanent budget imbalance. Without political leadership, too many of its costs -- pensions, health care, debt -- will rise faster than its revenues.

Even without the raises granted by the arbitrators, the MTA’s labor and debt costs are set to rise 13 percent from 2010 to 2013, while revenues from the bailout are to grow just 12 percent. As each year passes, these little gaps grow bigger.

And one aspect of the arbitrators’ decision makes the situation a lot worse: health care.

After the illegal 2005 strike, the MTA won a big concession from the union: Members would pay 1.5 percent of their earnings, including overtime, toward health premiums. And the 1.5 percent was just the first step. It was supposed to rise with health costs, cutting the MTA’s burden.

That burden is huge: Every year, the MTA racks up a liability of more than $1.5 billion, and growing, for future-retiree health costs, without setting much money aside to pay it. These costs don’t factor into cash deficits, but they’re real.

Yet the arbitrators took overtime out of the 1.5 percent levy and decided that the figure will no longer rise with costs; they even cut it back by the tiny amount that it had increased.

The arbitrators seem dimly aware that they were maintaining untenable costs: They suggested that the MTA cover them by taking money from capital improvements, including the Second Avenue subway, for operating costs.

This is where the arbitrators ignored their duty to public welfare.

If New York is to have a happy future, the city must keep its physical infrastructure in decent shape -- indeed, make those assets competitive by world standards. That can’t happen when money gets diverted from maintenance and improvement to labor.

So what does the MTA need from Paterson and state lawmakers? Clear warnings that the MTA has no “ability to pay,” because they won’t keep bailing it out unless it gets its fiscal house in order -- starting with its out-of-control labor costs.

That is, Albany needs to stop favoring the unions over the welfare of the public.

Paterson, for one, could have avoided this whole ordeal if he’d said months ago that Albany wouldn’t rescue the MTA until it showed it would hold the line on labor costs. (Instead, by credible accounts, he quietly told it to do the opposite.)

It’s not too late for the governor to say publicly that the arbitration-imposed costs are, indeed, untenable, and that the MTA and the state can’t pay anymore.

Moderate lawmakers who might like to emerge from Albany’s corrupt cesspool with some self-respect could help, too. They could make clear that no more cash is coming -- and that pretending otherwise, and so endangering the long-term welfare of the public, is no fair solution.

Original Source: http://www.nypost.com/seven/08282009/postopinion/opedcolumnists/tough_love_needed_186820.htm?page=0

 

 
 
 

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