In 1974, the State of New York amended its law on collective bargaining for public employees (the Taylor Law) by imposing compulsory interest arbitration to resolve bargaining impasses in police officer and firefighter bargaining units. This amendment to the Taylor Law was intended to be temporary, and was originally set to expire on July 1, 1977; however, it was extended by state-elected officials time and time again. The interest arbitration provision was set to expire on July 1, 2013, and unlike prior years, Governor Andrew Cuomo announced that he would not renew binding arbitration unless the process was amended. 

With two weeks until section 209(4) of the Civil Service Law was set to expire, the Governor’s office struck a deal on legislation that will extend binding arbitration for police officer and firefighter unions for three more years, until July 1, 2016. This legislation passed the Assembly by a vote of 121 to 16 on June 21, 2013, and passed the Senate by a vote of 59-4 on the same day.  Governor’s Program Bill #21R was signed into law by Governor Cuomo on June 24. 

In addition to extending compulsory interest arbitration, the act creates a permanent Financial Restructuring Board for Local Governments (Board), which is intended to “provide a meaningful, substantive avenue for fiscally eligible municipalities to reform and restructure and provide public services in a cost-effective manner.” The Board is made up of 10 members: the Director of the Budget (Board Chair), State Comptroller, Attorney General, Secretary of State, one recommended by the Assembly Speaker, one recommended by the temporary President of the Senate, one with experience in municipal financial and restructuring matters, and three others appointed by the Governor. The Board, at the request of a “fiscally eligible municipality,” is empowered to seek information; review government operations, finances, management practices, and the economic base; and make recommendations on reforming and restructuring the municipality’s operations. The Board may make loans and issue grants to assist a municipality implement those recommendations. 

Fiscally eligible municipalities, with the consent of the impacted union, may present an impasse in collective bargaining to this new Board for a final and binding determination. 

Finally, the bill amended the binding arbitration procedure in the Taylor Law to provide that in the case of a “fiscally eligible municipality” the “ability to pay” must be the leading factor in an arbitrator’s award.  A local government is fiscally eligible if one of the following tests is met: 

1. the local government’s average full value property tax rate is above the 75 percentile for all municipalities in the state as averaged over five years; or
2. the local government’s five-year average general fund balance equals less than 5 percent of its budget, as certified by the State Comptroller.

For any such local government entering binding interest arbitration, the arbitration panel must, first and foremost, give 70 percent of its weight and consideration to the local government’s “ability to pay.” Additionally, arbitrators must factor in the constraints and limitations imposed by the Property Tax Cap. 

This legislation is a reform in name only. While the Board may provide some meaningful recommendations, in most cases, municipalities will be obligated to bargain with their unions prior to implementing them. It is highly unlikely that any union will consent to submit an impasse to the 10-member Board when it can submit the impasse to a three-member panel, where it selects one member and has a say in the selection of the neutral. The requirement for the panel to give the ability to pay 70 percent weight only applies to distressed municipalities and places no hard limitation on the neutral. It will be extremely difficult for a court to review an award to determine if the panel members really gave the ability to pay factor 70 percent weight.

The result is that New York public employers will have interest arbitration for its police officer and firefighter units for the next three years, and the binding arbitration process will remain fundamentally flawed. Municipalities are encouraged for the next three years to come together to propose and lobby for meaningful reforms to compulsory interest arbitration prior to July 1, 2016.

An additional note: Section 209-a (4) and (5) of the Taylor Law, which authorizes the Public Employment Relations Board to seek and obtain an injunction in connection with an Improper Practice Charge, was set to expire on June 30, 2013; however, at the last minute, Governor Andrew Cuomo signed legislation extending the injunction provisions of the Taylor Law for two additional years. This bill became Chapter 73 of the Session Laws of 2013.

For more information about the impact of these developments, contact:

• Sean P. Beiter (716.566.5409; sbeiter@goldbergsegalla.com)
• Caroline J. Berdzik (609.986.1314; cberdzik@goldbergsegalla.com)
• Matthew C. Van Vessem (716.566.5476; mvanvessem@goldbergsegalla.com)
• Or another member of the Goldberg Segalla Labor and Employment Practice Group.