New York is the new Rome?
and a County Executive is like a small mayor?
New York's Next Mayor Faces Union Showdown
Some Workers Haven't Had a Contract in Six Years
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Kevin Hagen for The Wall Street Journal
Mayoral candidate Bill de Blasio
New York's 152 employee-bargaining units—representing the equivalent of almost 300,000 full-time workers—have been working under expired contracts for up to six years, unable to reach agreements with Mayor Michael Bloomberg and his negotiators. The unions, whose members include teachers, firefighters and police, among others, hope the next mayor will offer a deal more to their liking.
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Just as some of the initiatives of the billionaire Republican-turned-independent leader were copied elsewhere, how the new mayor navigates the complex union negotiations has implications not only for the nation's most populous city, but for state and local governments around the country.
Labor experts say New York could be a model if unions work with the new mayor to find cost savings and avoid the protracted battles that have stymied Chicago, Los Angeles and other cities—just as the money-saving deals unions worked out with New York in the 1970s changed the labor landscape.
"New York can be a glimmer of hope or it may not be," said Gary Chaison, a professor of industrial relations at Clark University. "This is more than the future of American cities or the economic recovery. This is the future of public-sector unions."
Critics say the city's Democratic mayoral candidates so far have said little of substance about how they would handle the looming negotiations. That could change Tuesday night, when—just one week from the Sept. 10 primary—they are expected to face questions about key issues facing the city during a debate. The locally televised forum is co-sponsored by The Wall Street Journal.
Kevin Hagen for The Wall Street Journal
Mayoral candidate Bill Thompson
(in white shirt), with United Federation of Teachers President Michael
Mulgrew, campaigned in Brooklyn at a parade on Monday.
Kevin Hagen for The Wall Street Journal
City Council Speaker and mayoral candidate Christine Quinn.
Republican candidates have taken a tough line on the union talks. Joe Lhota, a former top aide to former Mayor Rudy Giuliani who has led his GOP challengers in recent polls, wants to move toward 401(k)-style retirement plans and has said the city can't afford retroactive raises.
For a city that is enjoying relative health compared to some other big cities, figuring out how to maintain labor peace without busting the budget is likely to consume months of the new mayor's tenure.
The big question, said Ed Ott, the former director of the New York City Central Labor Council, is, "How are you fair to your employees and still maintain affordable services for the taxpayers? Every municipality in the country is going to have to face that."
A mayor who signs costly contracts would face the politically fraught prospect of raising taxes, budget experts say. Pushing for big concessions risks a continued stalemate, which isn't a palatable alternative for the Democratic candidates—one of whom is likely to be the next mayor in the overwhelmingly Democratic city—who depend on union support.
The unions want any new deal to include raises for the years since their contracts ran out. The city calculates that retroactive raises plus future raises at the rate of inflation would cost $3 billion a year—more than the annual $2.4 billion budget of the city's sanitation department.
Mr. Bloomberg's union offer didn't include retroactive raises and would have provided future pay increases of just over 1% a year. He also wanted workers to pay 10% of the cost of their health plans for individual coverage and 20% for family coverage.
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Currently, 95% of city employees pay nothing for basic health plans—a rarity even among public employees.
"I don't think there's any chance that they can resolve this without employee contributions to health care," said Kathy Wylde, the president of the Partnership for New York City, a business group that opposes raising taxes. "The numbers just don't work."
New York largely has avoided the labor strife that has beset other governments since the recession, in part because unions have been willing to wait out Mr. Bloomberg's third and final four-year term. A state law bars public-employee unions from striking, while it also keeps expired contracts in force, which means some workers continue to get pay increases for seniority or promotions.
Pension contributions consume over 10% of the city's $70 billion annual budget, but are leveling off. In 2011, pension contributions made up an average of 6.5% of the budgets of a sample of state and local governments around the country surveyed by the Center for Retirement Research at Boston College.
At the end of the 2009 fiscal year, New York's pensions were 70% funded—a higher percentage than in cities including Chicago and Providence, R.I., according to a recent study by the Pew Charitable Trusts.
Still, New York faces wide gaps in other budgetary areas. The city's actuaries estimate that the city's promise of free health insurance for certain retirees and their dependents—including the payment of supplemental Medicare premiums—will cost more than $85 billion to cover current employees and those already retired.
The city's health-care costs have surged 140% since 2002 and are projected to rise 39% more by 2016, according to the Citizens Budget Commission, a nonpartisan group that studies New York's budget. City officials say these rising costs threaten to crowd out spending on infrastructure and services.
Harry Nespoli, the head of the sanitation-workers union who also is president of an umbrella municipal-union group, said union leaders decided they are likely to get a better deal from a new mayor than from Mr. Bloomberg's team. "The way they came in to all the unions was: That's it. That's all we're offering," Mr. Nespoli said of the Bloomberg administration.
Deputy Mayor for Operations Cas Holloway, the mayor's aide overseeing labor talks, said it is unions that don't want to negotiate and that "they think they are going to get something for nothing from the next mayor, and that's dangerous and people ought to pay attention."
Mr. Nespoli said workers want to help the city find health-care savings, but they don't want to contribute to premiums. He said, for example, the unions would be willing to help the city negotiate savings from vendors of services like health insurance. But unions recently sued to stop a Bloomberg administration attempt to shop for a new provider for the city's $6 billion health plan.
Two of the four leading Democratic candidates for mayor—Ms. Quinn, who has the support of Mr. Nespoli's sanitation workers, and Mr. Weiner—have said employee health-care costs should be on the table.
Another, Mr. de Blasio, who has been endorsed by the health-care workers union, wants to reduce costs by creating 20 city-run clinics to provide basic care at job sites. Mr. Thompson—who is backed by the teachers and firefighters unions—has been less specific, saying he doesn't want to negotiate in public.
There are other opportunities for savings, candidates and city budget-watchers say. Some point to the thicket of work rules and other contract provisions that they say cost the city money and serve little purpose.
More than 3,000 hourly administrative workers at the Department of Education get 20 minutes of paid break time every two weeks to go to the bank, costing the city $1 million a year despite the proliferation of automatic teller machines, according to the city's Independent Budget Office.
The budget office says that police are paid for 35 minutes extra at the end of each eight hour shift to give them time to wash up and debrief the next set of officers. Cutting that to 15 minutes would save $131 million annually by getting more shifts per year out of officers.
Changing any of those would require wrangling with unions. But it is in such savings that Ms. Quinn said she might find room for retroactive raises.
"If in the course of negotiations we find the concessions, changes, savings, whatever to help us find the money for it, then there could be something," she said. "If we don't, that's a different equation."
Write to Andrew Grossman at andrew.grossman@wsj.com
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