Bloomberg News

Cuomo May Face New York Worker Pay Fight After Legislative Wins

July 15, 2011

July 15 (Bloomberg) -- Minutes after the New York Senate voted to legalize same-sex marriage just before midnight June 24, Governor Andrew Cuomo turned to an ally on the floor and said, “We got it all done.”

In his first six months, the 53-year old Democrat led the divided Legislature to produce the state’s first on-time budget in five years, a property-tax cap, an ethics law for public officials and the marriage-equality bill. Gerald Benjamin, a professor at the State University of New York-New Paltz, said Cuomo’s “extraordinary success” is unmatched since Democrat Hugh Carey helped New York City avert bankruptcy in the 1970s.

Cuomo, the son of three-term Governor Mario Cuomo, may face a tougher time in his quest to cut public-employee wage and pension costs, said Benjamin, who teaches political science. He also will meet opposition from Republicans on his call for legislative redistricting by an independent commission.

“Wind at his back as a new governor, he’s delivered on the public image, and people believe he’s done a good job,” said Senator Martin Golden, 60, a Brooklyn Republican and retired New York City police officer.

“Going into next year, he’s going to have a tougher job,” he said in an interview. “We’ll be down on jobs, down on revenue and we’ll have the actual gridlock of trying to get something done with the unions.”

Union Stalemate

The Civil Service Employees Association, the state’s biggest public union, reached a tentative deal with Cuomo’s administration on June 22 to achieve $450 million in savings. Members will vote starting next week to approve the accord, which includes wage freezes and unpaid days off.

If adopted by the state’s other unions, the deal will avert almost 10,000 firings. Negotiations remain at a stalemate with the Public Employees Federation, the state’s second-largest government union. Dismissal notices have already been sent to about 700 PEF workers, with firings scheduled to take effect July 22 if an accord isn’t reached, said Darcy Wells, a union spokeswoman.

Even after agreeing to concessions, the CSEA is among labor groups vowing to fight the governor’s proposed changes to pensions for future workers. The new system, which Cuomo unveiled last month and the Legislature didn’t take up before adjourning, would increase the retirement age for new employees to 65 from 62 and boost worker contributions. It would save taxpayers $93 billion over 30 years, the governor said.

The $146.5 billion pension plan, the third-biggest in the U.S., is 101 percent funded, according to its 2010 annual report.

Not ‘a Bully’

“We’re not softening our opposition to the pension overhaul,” Steve Madarasz, a CSEA spokesman, said by telephone. “Where we agree with governors, we will stand up and praise them. Where we disagree, we will fight tooth and nail.”

Cuomo may be well-positioned for the challenge because he hasn’t created enmity like Republican Governors Chris Christie of New Jersey and Wisconsin’s Scott Walker, said Doug Muzzio, professor of public affairs at Baruch College in New York. More than 60 percent of New Jersey residents called Christie a bully in a Bloomberg Poll, and thousands marched in Wisconsin against Walker’s curbs on collective bargaining.

A Siena Research Institute poll released yesterday found Cuomo had a 71 percent favorability rating, up from 68 percent last month. His job-performance rating rose to 58 percent from 55 last month. The poll of 813 registered voters had a margin of error of 3.4 percentage points.

Wall Street View

Wall Street also gives Cuomo high marks. Investors have driven down the cost of protecting New York bonds against default by almost half since Cuomo took office the first week in January, according to data compiled by Bloomberg.

By contrast, the cost of the same protection on bonds issued by Connecticut, a neighboring state with the same rating, has dropped by 24 percent. Governor Dannel Malloy, a Democrat, had his plan for pay and benefit concessions rejected by union workers.

The cost of protecting $10 million of New York’s debt against default for 10 years fell to $113,000 this week from $213,000 on Jan. 3, according to credit-default prices from CMA, which is owned by CME Group Inc. Protection on the debt of Connecticut dropped to $123,000 from $162,000 in the same span.

One reason for Cuomo’s success is that his negotiating style has become more controlled and measured since his time as state attorney general from 2007 to 2010 and as secretary of the Department of Housing and Urban Development in the Clinton administration, said Golden. Cuomo persuaded four Republicans, though not Golden, to support the gay-marriage bill.

‘He’s Changed’

“He brings you into his office, sits you down, he’s gregarious, he knows how to keep a conversation going, the needs of your community and finds an avenue to get to you and persuade you to go to his direction,” Golden said. “He’s changed. He’s closer to the vest. He’s more organized. He’s got a well- organized working machine and has talented people who are close to him.”

Cuomo told reporters this week in Manhattan that phase two of his term would be about “economic development and focusing on jobs.” Josh Vlasto, a spokesman for the governor, declined to provide details on the specific initiatives.

Cuomo’s $132.5 billion budget, passed by lawmakers in March, cut total spending by 2 percent and closed a $10 billion gap with no new taxes. It was the first drop in spending since at least 1995.

Next Fight

The next big fight in Albany, the state capital, will be over the redrawing of districts, said Ken Shapiro, former chief counsel to three Assembly speakers and a 30-year veteran of New York government. That may end cooperation between the governor and the Republican-led Senate, whose majority may be threatened, he said.

Cuomo has said for months that he will veto lawmakers’ drawing of new district lines protecting incumbents or favoring one party.

It helps to have “a strong governor in place to command discussions,” said Howard Cure, director of municipal research for Evercore Wealth Management LLC in New York, which has $2.8 billion in assets. “I am more comfortable with the state of New York than I’ve been in a while.”

--With assistance from Sarah Frier and Henry Goldman in New York, Editors: Mark Schoifet, Stephen Merelman

To contact the reporter on this story: Esmé E. Deprez in New York at edeprez@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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