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Fiscal Watch Memos
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March 6, 2014
Despite the not-rosy fiscal status of the county, the Suffolk County Legislature approved the last outstanding contract for county police officers. (In January, Moody’s listed Suffolk County among the municipal bond issuers facing a credit rating downgrade.)
The newly minted contract with the Superior Officers Association will cost taxpayers $55.4 million through 2018. The three police union contracts negotiated by County Executive Steve Bellone since 2012 will come to $372 million — equivalent to about 18 percent of the county’s own-source revenues at the start of the contract period.
February 21, 2014
Gov. Cuomo today signed a bill that further distances him from the longstanding state policy of tying strong oversight strings to deficit bonding requests from fiscally troubled local governments.
The bill in question allows the Long Island city of Long Beach to borrow up to $12 million to deal with its budget deficits — no strings attached.
Legislation allowing the city to borrow was vetoed late last year by Cuomo, who didn’t express any reservations about borrowing, but noted that the deadline for issuing bonds had come and gone. The state Legislature saw this problem coming, though, reintroduced the borrowing bill with a new deadline and no strings attached.
Cuomo already has given a rubber stamp to $96 million of deficit bonding for Rockland County and on this second time around, without any technical errors to hide behind, he broke out the rubber stamp for Long Beach. The governor’s approval message is not yet available, so we don’t know his reasoning for going along with this plan.
January 16, 2014
Rising debts and liabilities for pensions and retiree health care could soon translate into higher borrowing costs for at least nine New York local governments, including a half dozen of the largest counties and towns in the state. They’re facing possible bond rating downgrades as part of a nationwide review of local ratings by Moody’s Investors Service.
Moody’s announced yesterday that it was reviewing ratings for a total of 256 bond issuers nationwide based on a new methodology that puts a greater weight on pensions and debt and less on economic factors. The reviews, which could result in either no ratings change or “one or two notch movements” in either direction, will be completed within the next 90 to 180 days, the ratings agency said. Unfunded health insurance promises to retired public employees, estimated to total a quarter-trillion dollars in New York, will also be considered in the pension category when they “appear to be particularly large relative to budget and tax base and management has not demonstrated a willingness to address related costs,” according to the new Moody’s methodology.
January 15, 2014
Public subsidies of sports arenas, stadiums and ballparks “cannot be justified on the grounds of local economic development, income growth or job creation, those arguments most frequently used by subsidy advocates.” That’s the solid consensus view of economists, based on decades of evidence from scores of projects, as summarized in this 2008 paper. For a more recent take on the issue, see this April 2013 report presented to officials in Milwaukee, Wi., where the usual suspects are pushing for a new downtown arena.
All economic analyses aside, taxpayer-funded subsidies for sports facilities are just plain unfair, chiefly benefiting wealthy owners, sponsors and boosters of the teams that play in them, while diverting scarce resources from more basic public services and infrastructure needs.
But many politicians across the country remain suckers for the “if we build it, they will come” premise behind proposed sports developments, especially in struggling cities. Until yesterday, at least, New York State’s latest local sports facility subsidy scam had been taking shape in Syracuse, where Onondaga County Executive Joanie Mahoney reportedly had Governor Cuomo’s pledge of state support for a partially county-funded $500 million arena that would serve mainly as a new showcase for the Orange of Syracuse University.
November 22, 2013
In 2011, Suffolk County passed a local law (Article I, Section 77-4) barring county elected officials from collecting two public-sector salaries. Now, however, County Executive Steve Bellone wants to change the law to make an exception for Monica Martinez, a newly elected county legislator who also is an assistant principal at the Brentwood School District’s East Middle School.
Ms. Martinez is the sister of the Babylon deputy town supervisor, who is close to Bellone, and she won a primary challenge against another Democrat who was not a loyal soldier. Local political considerations aside, the situation raises interesting questions about the nature of public employment and elective office.
November 14, 2013
Governor Andrew Cuomo has approved a $96 million deficit bonding bailout for Rockland County — with no strings attached, other than once-a-year review of the county executive’s budget proposal by the state comptroller. The bill sets a terrible precedent, signaling distressed municipalities across New York that they, too, might be able to buy time with borrowed money. And, like Rockland — but unlike New York City, Buffalo, Yonkers, Troy, Erie and Nassau counties–they might do it without having to deal with a temporary state control board takeover of their finances.
September 18, 2013
The Tier 6 pension “reform” enacted by New York last year applies to all state and local employees who join the state Employee Retirement System or the Police and Fire Retirement System after April 1, 2012. However, the law included a big loophole for police and firefighters, in particular—as is only now becoming publicly apparent, thanks to a detail of the proposed contract extension for Nassau County cops.
The loophole in question is Section 80 of the Tier 6 law (Chapter 18 of the Laws of 2012), which reads as follows:
Notwithstanding any provision of law to the contrary, nothing in this act shall limit the rights accruing to employees pursuant to a collective bargaining agreement for the unexpired term of such agreement or the eligibility of any member of an employee organization to join a special retirement plan open to him or her pursuant to a collectively negotiated agreement with any state or local government employer, where such agreement is in effect on the effective date of this act [April 1, 2012] and so long as such agreement remains in effect thereafter …
September 10, 2013
Nassau County Executive Ed Mangano has reached a tentative contract deal with the Nassau Police Benevolent Association (PBA). That’s what Nassau residents have been told via Newsday and the other Long Island news media, at any rate. As of now, based on what’s visible on the county’s website, Mangano’s office hasn’t issued so much as a press release on the deal–much less a copy of the proposed contract.
This is simply the latest, most extreme example of the kind of secrecy that routinely surrounds proposed public-sector collective bargaining agreements throughout the state.
Labor contracts directly shape employee compensation costs, which are the largest single item driving local taxes. And under the Taylor Law, once a contract is ratified, it becomes a basis for future deals, more or less in perpetuity–unless the union is paid dearly to make concessions. That’s why it’s vitally important for details of proposed contracts to be fully aired before they are ratified by local legislative bodies.
June 20, 2013
A pending change to the state’s binding arbitration law covering police and firefighter contract disputes will not cover pending contract impasses involving firefighters in Syracuse thanks to a last-minute tweak of the bill by Governor Andrew Cuomo. As a result, taxpayers in one of the state’s largest cities (and undoubtedly some other cities and towns as well) will not see any benefit at all from Cuomo’s already watered-down modification of the existing arbitration law.*
As explained here yesterday, hours after the draft of the agreed-upon local government “financial restructuring” bill was released by the governor’s office late Tuesday morning, the bill was revised to reflect two changes sought by police and fire unions.
June 19, 2013
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The ink was barely dry on Governor Andrew Cuomo’s local government “restructuring” bill yesterday when the governor made two more concessions to unions on the issue of binding arbitration.
As explained here yesterday, the agreed-upon legislation is weaker and likely to be much less effective than Cuomo’s original proposal for capping police and firefighter pay and benefit increases under an arbitration system that has played a major role in pushing municipal compensation costs to unaffordable and unsustainable levels.
Governor’s Program Bill #21, as posted on his website late yesterday morning, would have expired in 2015 — a political off-year. Legislative sources said the unions were pushing for a later expiration date. The original bill also contained one important loophole for unions in its final paragraph; while the effective date is retroactive to April 1, the new language would not apply to any contract dispute referred to the Public Employment Relations Board for arbitration before June 14 — i.e., last Friday, the last business day before the bill was filed.
Later in the day, however, the governor’s office substituted Program Bill #21R, containing two changes to the original: pushing the expiration date out one more year, to 2016 (which is both a legislative and presidential election year), and adding language that says the law also will not apply to disputes that resulted in a “declaration of impasse” (the step before an arbitration petition) before June 14.