Paterson Wants State Pacts Re-Opened But Unions Close Door; Says Budget Hole So Deep That Without Givebacks, May Need Layoffs

Governor Paterson Nov. 12 proposed reopening state union contracts to avoid layoffs in the face of a widening $5.2 billion budget gap over the next two years, drawing an immediate rebuff from the leaders of the two largest state-employee unions.

The Chief-Leader/Michel Friang 'THE WELL HAS RUN DRY': Governor Paterson, in an attempt to avoid the need for layoffs, urged state unions to adjust their current wage contracts while stating, 'All areas of government are going to have to suffer cuts, and it will be painful.'

"All areas of government are going to have to suffer cuts and it will be painful," Mr. Paterson told reporters gathered at his Third Avenue office. "The well has run dry."

The Governor's proposal to the State Legislature includes reducing personnel costs by $137 million this fiscal year and $167 million next year by asking state unions to withhold the 3-percent salary increase already agreed to in their current contracts that is scheduled to take effect next April 1. In addition, he called for withholding salary payments for five days of work during the current fiscal year until an employee leaves state service. Such a change is subject to collective bargaining, as is restructuring contracts.

DANNY DONOHUE: 'An assault on state services.'

Paying More for Health Care?

Mr. Paterson said he would not need unions' consent for other cost-cutting measures like requiring state employee retirees to pay for a greater portion of their health-care costs, requiring state employees to contribute to their Medicare Part B premiums and rescinding a vacation exchange program for management/confidential employees.

If his plan is successful, the Governor said there would be no layoffs in the near future. He acknowledged, however, that he does not have total control of the outcome because of state union prerogatives. "We cannot do this without their cooperation," said Mr. Paterson, who floated the idea through the media without first talking to the unions. "We are asking them to cooperate."

The two largest unions for state workers, the Civil Service Employees Association and the Public Employee Federation, said they opposed reopening their contracts.

KENNETH BRYNIEN: Curtail contractors for savings.

"Governor Paterson's proposal is an assault on services at every level and will unnecessarily cause great harm," said CSEA President Danny Donohue in a statement. "The Governor keeps saying that 'everything is on the table,' but his proposals have only been about cutting back essential services and shifting more burden to working New Yorkers."

Stephen Madarasz, a spokesman for CSEA, said the Governor did not have the authority to unilaterally alter terms of contracts pertaining to health benefits. "We beat Mario Cuomo in court on that in the 1990s, and he knows that," the spokesman said of Mr. Paterson.

'Better Ways to Save Money'

PEF President Kenneth Brynien, asked whether he would agree to re-open contracts, replied, "No, not at this time. We think there are better ways to save money than taking money out of state employees' paychecks."

He said the Governor should tap the "rainy day fund," an idea also supported by the CSEA. But Mr. Paterson said at the press conference that the fund was not sufficient to close the deficit.

Both unions for some time have been making money-saving suggestions to the Governor's Office, some of which have been heeded. CSEA has suggested improved collection of cigarette taxes and pursuing a prescription drug purchasing agreement through Canada.

Mr. Brynien, however, believed the bulk of the savings the Governor is looking for can come from hiring fewer contractors while increasing the size of the state workforce, even though "it looks good to keep the size down." He said the Governor recently hired 26 contractors in the Office of General Services to do work state employees could be doing. "If you are going to lay off somebody, it should be the contractors," Mr. Brynien said.

Soak the Rich, Cut Patronage

Mr. Donohue once again renewed his call to reinstitute the "millionaire's tax" on those making more than $1 million a year. Another suggestion by the union leader was to revoke patronage jobs and holdover appointments granted by former Governors. "The Paterson administration has yet to clean house," the union stated.

Mr. Brynien said there was little the Governor could offer the unions as an incentive to reopen contracts because he would not be able to promise no layoffs if the stock market, which the state relied on for 20 percent of its revenue, continues to plummet. He added that the union had identified $160 million in savings the Governor should try first, such as reducing contractors and eliminating overtime. "If they took all those suggestions we proposed and it still wasn't enough, if there was still a hole, then you can come talk to us," he said.

Mr. Paterson acknowledged that this latest round of cuts would not be easy. "We know that union concessions are very difficult and reopening contracts are very difficult, but we are hoping they can work with us to close this deficit," he said.

Mayor: Benefit Costs Killing Us

Mayor Bloomberg Nov. 13 said deferring any part of the recent 4-percent increases for city workers was not a part of his budget cuts, but he would consider restructuring pension plans for future employees and health benefit plans for all. "We're certainly going to be talking to them about health-care costs and pensions that are burdening us," he said at Borough of Manhattan Community College. "They have gone up 60-odd percent in the seven years I've been in office. They were in the $7-odd billion; they'll hit $13 billion soon. We can't keep doing this."

He echoed previous statements that he would like to have well-paid workers, even if that meant having fewer of them.

The unions "understand if they want to have their members stay on and have more members, we're going to have to find a ways to make those members affordable," the Mayor said.