PEF takes budget case to lawmakers, public

By SHERRY HALBROOK
PEF members were not singled out for any layoffs or other direct hits in the agreement reached between the governor and state legislative leaders to close the $1.6 billion budget deficit for the current fiscal year that ends March 31.

“That package of new taxes, fees and SUNY tuition hikes will hit PEF members to the same extent as other New Yorkers,” said PEF President Ken Brynien. “Our members are ready to shoulder that common burden.

“What we object to very strongly,” he said, “are the unfair proposals to make state employees pay for a much bigger part than anyone else of the $13 billion state budget deficit for the 2009-10 fiscal year that starts April 1.”

The governor expects PEF members to give up their 3 percent pay raise for this year, forgo a week’s pay, pay more for health care and shoulder heavier work loads. He also intends to lay off some of them.

The proposed salary and benefit cuts would cost the average state employee and many retirees in excess of $2,800 this year, equivalent to a 65 percent tax hike for the average state worker.

“These are huge sacrifices on a level that no one else is being asked to make,” Brynien said. “The unfairness is staggering.

“The proposals to withhold employees’ pay and take away raises guaranteed in contracts are clearly illegal,” Brynien said. “The courts ruled similar actions taken by Gov. Mario Cuomo were illegal.”

So far, PEF has grieved the governor’s proposals to violate the contract. If the state reneges on its contractual commitments, PEF is ready to take its case to the courts.

Telling truth to power
In February, Brynien and other state employee unions took their call for budget fairness directly to the state legislative committees hearing public comment on the budget.

Brynien testified at hearings on the budget tax proposals, workforce issues and an agency merger.

Dozens of PEF activists met with the legislative leaders of key committees to discuss budget issues. Members also confronted the governor at local public meetings on the budget. And PEF ran TV and newspaper ads spotlighting the most short-sighted and unfair budget proposals. The union built coalitions with many other labor and community organizations around budget issues. (See related articles and photos.)

Rich, powerful, privileged
“No one disputes the state has an enormous deficit to overcome,” Brynien said. “Unfortunately, the governor’s choosing to ignore the two elephants in the room: tax inequity and costly consultants.

“The governor refuses to make millionaires and big businesses pay their fair share of state taxes,” Brynien said. “Tax justice is not only an obvious fiscal necessity, it’s obviously the right thing to do.”

Currently, households with incomes of more than $600,000 pay about 6.5 percent of their income in state and local taxes, while the middle class pays about 12 percent.

Recently, 120 economists from throughout the state wrote to the governor, making a clear argument for a more progressive tax policy.

Raising the income tax rate on those with high incomes would raise between $3 billion and $7 billion a year to help plug the state deficit.

Not only has the governor pulled his tax punches against the richest and most powerful New Yorkers, he also would continue awarding wasteful private consulting contracts that stuff the pockets of many of those same well-heeled interests.

The state spends nearly $3 billion a year on consultant contracts. It pays an average of 54 percent more per individual consultant than it pays per state employee to do the same work, even including the cost of state employee benefits.

Many contracts require the state to pay annual 5 percent raises for those consultants.

“Why is it OK to break a state employee union contract with 3 percent raises,” Brynien asked, “but it is not OK to break high-priced consultant contracts with 5 percent raises?”

Solve the real problem
“The budget deficit “isn’t primarily a spending problem,” Brynien told lawmakers. It’s revenue that’s lagging.

“The tax cuts enacted since 1994 have reduced state revenues by $20 billion and have primarily benefited the wealthy,” Brynien said.

Nevertheless, “the proposed budget puts a greater burden on low- and middle-income families, whose incomes have not grown compared to the cost of living over the last seven years, and asks relatively little sacrifice from the wealthiest New Yorkers whose incomes doubled.”

Meanwhile, total state spending (as a percentage of the state’s total personal income) is about the same as it was in the mid-1990s, a little more than 7 percent.

Since 1990, spending for state employee wages has declined in real terms by nearly a billion dollars, a 7 percent decrease. The number of state employees per capita in New York is one of the lowest in the U.S.

Unfair to attack retirees
Brynien did not stop at debunking myths about the state work force and taxes. He also deflated hyperbole surrounding state retirees and their pensions.

“The proposal to reduce state payments for retiree health insurance will cost retirees up to $5,435 a year in additional costs,” Brynien told state lawmakers. “That’s about a third of the average state employee pension.

“In 2008, the average NYS and Local Government Employee Retirement System pension benefit was $16,909,” Brynien said.

What’s more, the cost to the state and local governments for their employer contributions to the pensions “have gone down as a percentage of payroll for the past four years and are expected to drop again next year to 7.6 percent of payroll,” Brynien added.

“The Executive Budget’s proposed appropriation for pension contributions in 2009-10 is $100 million less than the prior year. In fact, New York State’s 2010 contribution to the pension system as a percentage of payroll is less than it was in 1972.

Take a closer look
Brynien showed lawmakers how some of the proposed state spending cuts, mergers and facility closings could end up costing more than they save.

“PEF opposes closing facilities operated by the state Office of Children and Family Services (OCFS), because it will result in placing troubled youths in private facilities or community-based programs that are ill-prepared to provide the extensive services these youths need,” Brynien said. “This results in greater recidivism and higher costs, as well as the loss of these services to various parts of the state.”

Brynien said no facilities should be closed until the task force, appointed last year by the governor to study OCFS, completes its review and reports its recommendations.

Get it right
Brynien testified the governor’s plan to merge the state’s major economic development programs into a public-benefit corporation would create “the ultimate off-budget shadow agency.”

The proposal is to merge the state Department of Economic Development (DED) and the NYS Foundation for Science, Technology and Innovation (NYSTAR) – into a shadow agency, the Empire State Development Corporation (ESDC).

Brynien said ESDC is padded with about 107 subsidiaries, each with its own board. More than 27 percent of ESDC’s 395 employees are paid more than $100,000 annually, and average pay at ESDC is more than 20 percent higher than at DED.

Employees of ESDC are hired at will and unregulated by the merit and fitness protections applied to DED and NYSTAR.
Worst of all, the DED commissioner holds crucial regulatory powers under NYS law that would pass to the ESDC chairman, who heads a large bank.

Those powers include authority to certify and decertify companies receiving tax credits under the Empire Zones program, and the power to ensure fair access for NYS firms to procurement opportunities in other states and countries.
Other unions and state Assembly Members Richard Brodsky, Susan John and Peter Abbate said they, too, are concerned.

Brynien and the others said it would be far better to reverse the merger so the activities and responsibilities of the private entities are absorbed by the DED.

“Placing DED at the helm of a merged economic development agency would ensure a more cost-effective, accountable and transparent entity,” Brynien said.