The Day of Reckoning Fast Approaches in New Jersey

New Jersey residents are about to feel the cold sting of a strike by NJ Transit rail workers. They've been without a contract for years and the matter has gone to federal mediators, who have ruled multiple times in favor of the unions:

Several union representatives and elected officials speaking at the rally urged state leaders to accept recommendations from a Presidential Emergency Board, which sided with the unions. NJ Transit officials rejected those recommendations.

At least one of the remaining sticking points surrounds health benefits, with the unions offering to pay 2.5 percent of their straight time salary for health benefits.

NJ Transit wants employees to pay 10 to 20 percent of premiums, depending on which plan they're covered by.

Transit and rail union officials sat down Friday with federal mediators National Mediation Board in Washington, D.C., where the two sides discussed a new offer from the agency to avert a March 13 strike or lockout.

While the two sides failed to reach a settlement, a release from the National Mediation Board said the discussions were "positive and constructive."

Asked if an agreement is in the offing, coalition spokesman Stephen Burkert declined to discuss details.

"We're closer now than we were months ago," Burkert said following the rally. "We want to settle this, and we want to do it at the bargaining table."

The two sides will meet again Monday in Newark in hope of hammering out a final settlement, Burkett said.

So far, Governor Chris Christie, fresh off kissing Donald Trump's ass in the GOP primaries after dropping out of the race himself because he couldn't generate any traction despite spending more time in New Hampshire than New Jersey, has been uncharacteristically silent about this major issue facing the state.

It could be that Christie doesn't know what NJ Transit is, or that it is a major economic engine for the state. Or, he doesn't know how to deal with the problem. Either way, he's been MIA on transit issues and his GOP allies in the state legislature seem more interested in slashing or abolishing the estate tax than they are making sure that the transportation trust fund and pension fund obligations are met.

Let's also point out that NJ has not raised the motor fuels tax in a generation, while NJ Transit riders have faced repeated increases in fares over the past decade because the state continues to reduce its support for transit. New Jersey is one of the states most heavily dependent on mass transit, and the cuts and fare hikes have combined to leave the agency without wiggle room to deal with contract matters with its employees.

To help close an $80 million budget gap, NJ Transit has proposed to increase its fares an average of 9 percent, effective Oct. 1, 2015. This would be the first fare increase in five years; the last fare increase averaged 22 percent. As part of this proposal, some bus and train service would also be reduced. Meanwhile, the state’s gas taxes, already among the lowest in the nation, have not been raised since 1988.

The motor fuel tax now purchases less than it did a generation ago, so there's even less money to go around.

These workers deserve pay raises and it shouldn't be shouldered entirely by the commuters.

Frankly, there's no easy answers here - but it starts with refocusing attention on how the state budgets transit. Gov. Christie went ahead and pulled money from the Port Authority to rebuild the Pulaski Skyway in a decision that the federal SEC is investigating as a potential violation of bonding with the Port Authority. That's because the state didn't have any money in the trust fund to pay for the work. All across the state, bridges and other infrastructure is crumbling, and there's no money to do all the work.

This affects the ability of residents to get around the state, and affects public safety. After all, we shouldn't have to live in fear of concrete falling off bridges, bridge abutments collapsing, or structures failing entirely. And mass transit is one way in which more people can get around the state reducing congestion and traffic. Gov. Christie has long shown disdain for mass transit and these problems are coming home to roost.

Far from showing leadership, Gov. Christie is all but abdicating his leadership role and instead focused on how his choices can best suit his political future. That's no way to run the state, and it shows.

If this strike or lockout occurs, there is simply no way for hundreds of thousands of workers to get into the City. There isn't any capacity available to add buses to cover all the displaced workers. We're talking about gridlock, lost productivity both in New Jersey and in neighboring New York. Telecommuting is the only option for those fortunate enough to have it, but for those who work in fields where they have to be there in person, this will have serious financial consequences to them, their families, and their employers.

In plain English, the NJ Transit strike contingency plan is a bunch of wishful thinking and prayers, much like their asinine plan in place before Hurricane Sandy struck and severely damaged NJ Transit's rail operations for months.

Moreover, the strike would also cripple freight movement throughout the state since NJ Transit controls tracks used by freight lines and the freight wouldn't be able to move. This would have a devastating effect across the state.

At Least 300 Killed In Pair of Factory Fires In Pakistan

When you get a chance, take a look at the garments you own. You may see quite a few that are made in Pakistan or places like Vietnam or Bangladesh. Now understand that there are unseen costs for having clothes made on the cheap. Pakistan was wracked by a pair of deadly factory fires at a garment factory and an illegal shoe factory.

The garment factory fire in Karachi killed at least 289 people, while the shoe factory fire killed at least 25 people.

And the death tolls are rising as more bodies are removed from the carnage.

The death toll there rose to 289 people Wednesday, as firefighters battled the flames for hours, said senior government official Roshan Ali Sheikh. It was one of the worst industrial accidents in Pakistan's 65-year history, and Sheikh said the death toll could rise because rescue workers were still pulling bodies out from the site in Karachi.

Most of the deaths were caused by suffocation as people caught in the basement were unable to escape when it filled with smoke, said the top firefighter in Karachi, Ehtisham-ud-Din. There were no fire exits, and at least one of the main doors leading out was locked, he said. It's unclear what caused the fire.

Workers on higher floors of the five-story building struggled to make it out of windows that were covered with metal bars. Many were injured when they jumped from the building, including a 27-year-old pregnant woman who was injured in the fall.

Another injured factory worker, Mohammad Ilyas, speaking from the hospital, said he was working with roughly 50 other men and women on one of the floors when suddenly a fireball came from the staircase.

"I jumped from my seat as did others and rushed toward the windows, but iron bars on the windows barred us from escaping. Some of us quickly took tools and machines to break the iron bars," he said. "That was how we managed to jump out of the windows down to the ground floor."

The eyewitness and victim testimony mirrors those from our own experience in the US and New York City in particular. You could get similar testimony from those who survived the Triangle Shirtwaist Factory fire in 1911, where 146 people, mostly immigrants, were killed because the factory operators locked egress doors and emergency exits and failed to provide a safe working environment. Lint and other flammable materials were allowed to pile up and all it took was a cigarette or match thrown into a scrap pile to cause the conflagration.

In the aftermath of the Triangle fire, New York engaged in a massive overhaul of workplace safety laws, and we are much better off for it.

One can only hope that the Pakistani government takes a similar tact.

What's Really Going On With Camden Police Force

NBC News breathlessly highlights that "one of the most dangerous cities in the nation is ditching its police force". That's not exactly the case in Camden, New Jersey.

The city has decided to cut costs by breaking the police union by calling in the Camden County police force to do the job of the formerly local police department. The county force is not unionized and has lower benefits and compensation than the local unionized police force did.

Camden is broke for all intents and purposes. It can't afford to maintain even its current paltry level of services. It has to look for ways to reduce those costs. One of the ways is to cut duplicative services. The county police force has the potential to do the same job as the existing police department - at a fraction of the cost.

Camden city officials have touted the move as necessary to combat the city’s growing financial and safety problems. The entire 267-member police department will be laid off and replaced with a newly reformatted metro division, which is projected to have some 400 members. It will serve only the city of Camden starting in early 2013.

“It’s not a money-saver, it’s living within the budget you’ve got to get more boots on the ground,” Camden County spokesperson Joyce Gabriel told NBC News. “There has been an uptick in violence this year, and the city decided to go with the county’s police department.”

Camden isn’t the first cash-strapped city to be faced with the decision to eliminate or merge its police department.

Bernard Melekian, director of the Justice Department’s Community Oriented Policing Services (COPS) office, told NBC News that as communities around the country recover from the recession, police mergers are part of a new reality that will likely continue through the next decade.

San Bernardino, Calif., files for bankruptcy with over $1 billion in debts
“This really reflects a much broader issue, which is that the economy is changing the delivery of police services profoundly,” Melekian said, “and those agencies undergoing regionalization and consolidation – in particular, smaller ones that are financially distressed – are going to have to find another way of delivering those core services.”

Despite Gabriel's comments, it is intended to save the taxpayers money. It's part of a larger effort across New Jersey to work with shared services or to combine municipalities and their services to reduce costs to taxpayers.

And it's not like the Camden police have done a tremendous job in reducing crime in the city. The city's crime rates exceed those of most other areas of New Jersey and are well ahead of national rates. Violent crimes have been increasing while property crime has declined.

The city needs to change how it deals with quality of life and public safety; this may be how it starts. The county police patrolling the city will end up being about 50% larger at a comparable cost to the current force. More manpower on the street means more officers around to patrol city streets and make their presence felt in high crime neighborhoods. If the city further adopts a CompStat system of policing, the new effort may see even more benefits as manpower is more focused on high crime areas and criminals are taken off the streets with greater effectiveness.

Dealing with the costs of policing aren't confined to high crime areas. Here in Bergen County, the fight is whether to merge the Bergen County Police with the Bergen County sheriff's office. Some opposed to the idea claim that it would politicize the functions previously done by the police since the sheriff is an elected official (whose job includes running the county jail). Bergen county is only one of two counties in the state to still have a county police department - in addition to the sheriff and all the local police departments. Those services should be merged, since it would save the county hundreds of thousands of dollars a year in salaries, plus benefits.

Tappan Zee Bridge Replacement Project Gets Labor Agreement

The Tappan Zee Bridge, which is operated by the New York State Thruway Authority, is scheduled to be replaced. Part of the costs associated with the project are labor costs, and the state just signed a Project Labor Agreement with a number of unions that are supposed to save nearly $500 million in costs over the life of the project.

Replacing the Tappan Zee Bridge represents one of the largest public infrastructure project in the nation, and the agreement reached today will allow thousands of New York’s working men and women to secure good jobs building a new, safer bridge,” Governor Cuomo said. “This agreement will save taxpayers hundreds of millions of dollars, while putting in place important protections for our workers. For too long we have talked about replacing the Tappan Zee, and we cannot wait any longer. Now is the time for action.”

Key provisions contained in the PLA include:

• A standardized 40 hour straight time work week for all trades and the flexibility to schedule four 10 hour work days to optimize construction for a combined estimated savings of $122,956,095 million;
• A higher ratio of apprentices to journeypersons than typically allowed in collective bargaining agreements, saving an estimated $59 million;
• Giving workers that arrive one hour prior to their shift $25 a day rather than an hour of overtime, saving an estimated $59 million;
• Standardized holidays that eliminates overtime for service trades saves an approximate $2.6 million.

The PLA also creates employment opportunities for union members across the Hudson Valley and New York Metropolitan Region, assures payment of fringe benefits, and acts as a mechanism to settle jurisdictional disputes through an organized grievance process. A stipulation of the agreement states that lock-out or other work disruptions, including renegotiations of area Collective Bargaining Agreements, is not permitted.

The project is still expected to cost $5.2 billion, which makes the agreement a considerable effort to contain costs. The final design has yet to be agreed upon, and while it is supposed to provide for mass transit options, it will not be built with either light or heavy rail or bus rapid transit. That means that the cost will be lower at the outset but it also means that commuters through the Lower Hudson Valley will have no new cross-river mass transit options.

Work is already underway to ascertain riverbed conditions and the kind of piling and foundations that will need to be built across the river.

However, bond ratings agencies have downgraded the Thruway Authority's rating on the outlook for revenues to cover the construction. That affects the Authority's costs for bonding the new bridge work, and suggests the need for higher tolls systemwide to cover the construction.

Members of the state's Congressional delegation are hoping to get federal funding for the bridge replacement but with Congress essentially deadlocked on any kind of new/additional funding, that's a tough task. Infrastructure spending has long lasting benefits to economic development, including more safer and more efficient transportation, reduced congestion, and the immediate benefit of jobs for construction and associated trades.

Wisconsin Gov. Walker Holds On To Job In Recall Election

Governor Scott Walker, a Republican, held on to his job in yesterday's recall election. His win has more to do with how people view a proper use of recall elections than any of the policy choices he made or getting out the vote.

The results had nothing to do with the GOP or President Obama (which exit polls found to still be favored over Romney in November, even as both aren't seen as getting the job done on the economy), but rather that most Wisconsin voters didn't think that a recall was warranted over policy differences/preferences. 60% saw recalls as warranted only in cases of official misconduct. That was the real issue here. Walker came into office saying that he'd change how things were done - and while ending union collective bargaining was a huge change, it's a policy position - not official misconduct.

Sixty percent of Wisconsin voters in today's recall election say recall elections are only appropriate for official misconduct, according to early CBS News exit polls. Twenty-eight percent said they think they are suitable for any reason, while nine percent think they are never appropriate.
Today's recall election in Wisconsin pits Republican Gov. Scott Walker versus Democratic Milwaukee Mayor Tom Barrett, in a rematch of their 2010 race. According to the early exit polls, 6 percent say they decided on their candidate in the last few days, with 93 percent saying they made up their minds before that.

The recall effort was brought about mainly in response to Walker's plan that restricted collective bargaining rights for public union workers. Today, 52 percent of Wisconsin voters in the early exit polls said they have a favorable view of unions for government workers, while 43 percent have an unfavorable opinion of these unions. Among voters in unions households (public or not), 69 percent view these unions favorably.

On the issue of collective bargaining, 50 percent of Wisconsin voters say they approved of the recent changes to state law that limits collective bargaining for government workers, but 48 percent disapproved of these changes.

Other exit polls break down the consequences going into November further, and it only reinforces the fact that it will be a money battle all the way to the end.

The Flawed NYC Teacher Ratings Released

Local media outlets had been pressing for the release of teacher evaluations collected and evaluated according to criteria that the Department of Education had admitted were incomplete, inaccurate, and would lead to incorrect conclusions. They succeeded in getting the evaluations released over the weekend, and the most striking thing that hits at the utility of the grading system is the margin of error associated with many of the teachers.

Consider a teacher with a grade of 50. That grade may be accompanied by a margin of error of 35. That means that the teacher may have either flunked (needing serious remedial assistance) or was a very good teacher. Sadly, a margin of error wasn't uncommon. In fact, it's on the low end of the margin of error. Quite a few teachers had margins of error of 50 or higher, which means that the teacher either flunked or was excellent.

How exactly can anyone glean anything of worth from a measure like that?

It's something that the media outlets themselves aren't exactly delving into. The criteria that went into the scoring was flawed, and the teachers union themselves admit that there are good teachers and bad teachers - but this evaluation does nothing to indicate which teachers are or aren't good.

Based on the margin of error alone, it would make the data dump to be useless as an educational tool, but quite inflammatory if one wants to use talking points to undermine the UFT's ability to negotiate a new contract with the City.

This doesn't mean that teachers shouldn't be graded - they should. The measures that the Department put together don't take into account whether a teacher does a satisfactory job or not. Basing a teacher rating on the ability of a class to pass a standardized test doesn't mean the student is necessarily prepared for future employment or academic achievement - only that they're teaching to the test. When a significant number of students are learning English as a second language, those teachers are at a major disadvantage.

A better approach would involve much more screening of teachers through in-class assessments and evaluations on a regular basis. New teachers would get more support from the Department so that they can get up to speed. After all, many professions need years before the given person can claim competency in the nuances of their given profession. The same goes with teaching - learning how to teach and reach out to even the problem students to get them to learn (often when many students don't want to learn, let alone be in class).

That's something that could be accomplished by reducing the number of administrators in the bureaucracy and increasing the number of teacher-mentor positions who can assist teachers with fewer years of service.

Not only would this reduce pension costs over the long run (where administrators have higher pensions than teachers whose pensions are largely capped to their actual salary and required coverages), but it would likely result in more teachers in the classroom. Adding bureaucrats does nothing to improve the in-class experience for the students (or customer if you're going with a business-centric model).

Labor Action Ends; Concrete Workers Resume Work At Ground Zero and NYC Projects

Work at Ground Zero and other high profile projects around the city are underway once again as a work action by the concrete union has ended after a arbitrator ruled that the union violated Project Labor Agreements and both the union and developers agreed to continue negotiating through August 16 and operating under the terms of the contract that expired on July 1.

The deal restarts work stalled at the Freedom Tower and World Trade Center transit hub after the Cement and Concrete Workers District Council walked off the job Monday in a dispute over wages and the use of nonunion labor.

The union agreed to return to work this morning under the conditions of a contract that expired June 30 and to extend contract talks until Aug. 16, the sources said.

Industry analysts had feared if the strike continued it could bring work to a halt at the Trade Center and result in the layoff of more than 1,000 workers.

The strike did not affect the 9/11 Memorial, which is on target to open on the 10th anniversary of the Sept. 11 attacks.

The 2,700-member union also walked off several other high-profile construction projects on Monday, but they returned to work yesterday after an independent arbitrator ruled they were violating no-strike provisions in their labor agreements.

Work Stoppage Threatens Construction Projects Throughout NYC, Including Ground Zero

The ongoing labor dispute between concrete union workers and developers has meant that work at Ground Zero is slowly grinding to a halt; on the day that the Freedom Tower officially became the tallest building in Lower Manhattan, carpenters walked out in solidarity with the concrete union workers.

Carpenters are refusing to work at a World Trade Center project and other sites in solidarity with cement laborers who have staged a work stoppage as they negotiate a new contract.

More than two-dozen carpenters have joined hundreds of cement workers in a job action at One World Trade Center that began Monday. The cement worker stoppage has slowed construction there and on the World Trade Center's new transit hub, both being built by the Port Authority of New York and New Jersey

I understand that developers feel that they're being squeezed on profits for construction projects and that the level of new construction isn't where anyone wants it to be, but they're spiting themselves to go after the unions seeking serious cuts in salaries for these folks. Depending on who you ask, the unions are being asked to cut salaries by 20%.

But at the same time, several of the job actions have occurred at sites where the unions promised no walkouts or union actions to disrupt construction. Those job actions will mean that the court actions pending against them will not go well for the unions.

Moreover, it affects the bottom lines on several key projects around the city, especially at Ground Zero. The Port Authority and Silverstein Properties can ill afford more delays and more costs resulting from work actions.

Groups that are pushing for the elimination of Project Labor Agreements (which were signed by the parties involved and ostensibly prevent strikes and work actions) are using the ongoing disputes to further their own agenda that they should free developers from having to work with the unionized trades.

NYC Concrete Union Workers Walk Out Hampers Ground Zero Jobs

Ground Zero is alive with all kinds of construction trades and work proceeds on the signature Freedom Tower (1WTC), 4WTC, and the WTC memorial, museum, and PATH transit hub.

A work stoppage would put a crimp into the construction schedules throughout the site. Yet, that's exactly what may happen since concrete workers have been without a contract deal since July 1.

The Concrete Workers District Council, whose members have been without a contract since July 1, declined to comment. But some of the workers who stood or sat in a large group around a plaza agreed to discuss their concerns.

"We were willing to take a freeze but we are not going to take a 20 percent pay cut," said concrete worker Lorenzo Mineo. He said he realized people around the country have a connection to the building formerly known as the Freedom Tower and they would want the work to go on. But "we're here in the elements risking our lives and building this building and they don't want to pay their workers."

The workers say they are the lowest paid of the trades. They make $37.80 an hour and while a job like this involves some overtime, many don't.

The Port Authority and the September 11th Memorial organizers say that the memorial will still be able to open to the public on schedule, but the work stoppage is going to affect the construction schedules throughout the site, particularly the towers and the transit hub. Work can't proceed on pouring the core for the Freedom Tower, which means that the steel can't rise much beyond its current height more than 800 feet above street level. The same goes for the construction at 4WTC.

Delays will not only throw off the expected completion dates, but will unnecessarily add to the costs of completing the various projects. The work stoppage threatens to stop construction jobs throughout the City, affecting up to 10,000 construction workers.

Talks are scheduled for this afternoon to try and resolve the contract situation.

Talks between Laborers' Locals 6a, 18a and 20 of the Cement and Concrete Workers of New York and the Cement League, an industry association, have been extended several times past deadlines. There's been progress on most issues, but management's demand for a 20% wage reduction on residential and hotel projects has been a sticking point, an industry source said.

Workers were not striking at the World Trade Center Memorial, which is scheduled to be completed in time for the upcoming tenth anniversary of the 9/11 attacks. But they did walk off their jobs at the new Weill Cornell Medical Center research building on East 69th Street, the industry source said, even though that project is covered by a labor agreement that includes a no-strike clause. An arbitration hearing on that walkout could come as soon as Wednesday.

“We don't believe they have any standing to strike PLA sites,” said Louis Coletti, referring to the agreements the industry reached with unions to help jumpstart construction in the face of the downturn. “There's a very specific no-strike provision in them.”

No Fiscal Reponsibility In FAA Tax Showdown

There's no fiscal responsibility to be seen in the showdown over FAA programs that has resulted in the expiration of a tax that funds FAA operations other than critical security, air safety, and traffic control functions. The tax, which adds $10-15 per ticket, isn't being collected and that's costing the FAA $125 million a week.

The financial picture makes no sense if you're a fiscal conservative and want to see the agency properly funded (which I do).

Lawmakers risk losing more than $1 billion in revenue from uncollected airline ticket taxes in a quarrel between Senate Democrats and House Republicans who are demanding a $16.5 million cut in rural air service subsidies.The shutdown is less than two weeks old and already the government has lost more than $250 million in revenue because airlines’ authority to collect ticket taxes has expired. The entire annual budget of the rural air services program is about $200 million.

“I’m a fiscal conservative,” Sen. Kay Bailey Hutchison, R-Texas, told the Senate on Monday. “I’m trying to make the cuts that are necessary, trying to do the things that are right, but ... that just doesn’t add up.”

The feds are losing $125 million a week in revenues because the GOP wants to eliminate the rural air program and opposes changes to the union election rules. With a recess looming, they could be looking at $1.2 billion in lost revenues by the time they get around to a vote.

So, it means that the FAA capital program is on hold. This increases the costs of those projects already underway due to idle construction sites and lengthening construction times add costs.

For example, this is what the tax conflict is doing to New Mexico's airports:


There's no fiscal responsibility in this stance.

This is the GOP holding its collective face until it turns blue in the face to get its way. It's a temper tantrum.

Oh, and some of the airlines (Delta) are having a chance of heart - and will begin refunding the tax that it had been collecting even though it was no longer authorized.

A Long Overdue Admission On Unsustainable Pensions In New Jersey

New Jersey Senate President Stephen M. Sweeney, a Democrat, has admitted what many have assumed for quite some time - pensions and health benefits were simply unsustainable at the levels promised by union officials and legislators who signed off on deal after deal. It comes as he's working on a deal with Gov. Chris Christie, a Republican to change union benefits and require workers to contribute a greater percentage towards their health and pension benefits:

To his mind, he’s exposed a family secret in Trenton: The pensions and health care plans are unsustainable, and union leaders have known it for years and said nothing.

“They lied to their members,” Mr. Sweeney said. “When I say lied, I mean it. They lied.”

That is only a slight overstatement. The labor movement has many laments and many wounds, more than a few self-inflicted. Some pension provisions were undoubtedly piled too high. And union leaders wheedled special deals and remained silent as governors, Republican and Democrat, declined to pay into the pension system.

Labor leaders and politicians, no less than arbitragers and Goldman Sachs partners, relied on magic bubbles to keep it all afloat. The line between illusion and lie grew indistinct.

But Monday offered a through-the-looking-glass moment of a sort, seen across the nation, as middle-class union members became improbable symbols of a recessionary era brought on by Wall Street financiers.

It's also quite troubling when no one who will actually be voting on these measures has any idea of what the costs are to the union members, or the taxpayers who have been bearing the ever higher costs.

The dealing on the pensions and benefits has revealed the shady side of politics in Trenton - it has kicked over a hornet's nest of conflicting interests within both parties, but particularly the Democrats who are closer to unions than the Republicans.

In the end, taxpayers - including these same union members who will be required to make higher contributions - will begin to see tax relief. For far too long, legislators in Trenton have made promises they couldn't afford, hoping that financial alchemy would solve the solvency issue. That all came crashing down when the economy faltered and the assumptions about growth simply didn't materialize.

Unions Kvetch Over Gov. Cuomo's Proposals To Change NYS Pension System

Once again, the state unions in New York are up in arms over Gov. Andrew Cuomo's proposals to revise the state pension system, including increasing the retirement age, increasing the percentage that workers must contribute to their future pensions and medical benefits, and eliminate the way that overtime is calculated as part of pension benefits:

The changes would affect newly hired workers in a pension system that covers 175,000 state employees and hundreds of thousands of employees of local government and teachers, as well as 300,000 New York City employees.

Labor officials immediately expressed strong opposition.

“Congratulations to Governor Cuomo for another grandstand play for the attention of his millionaire friends at the expense of the real working people of New York,” Danny Donohue, president of the largest union of state workers, the Civil Service Employees Association, said in a statement.

“Governor Cuomo’s proposal can only be viewed as an attack on working people to score some cheap political points.”

The president of the New York State Public Employees Federation, Kenneth Brynien, attacked the proposal as “draconian pension cuts that would inflict permanent damage on middle-class workers such as nurses, parole officers, bridge inspectors and cancer researchers for what is a transient problem.”

“This is about politics and placating big-business special interests, plain and simple,” Mr. Brynien added.

Pensions for new workers would still be enviable by the standards of the private sector, and Mr. Cuomo is not going as far as he has talked about in the past, when he raised the idea of shifting from a traditional pension to a defined contribution plan, similar to the 401(k)’s that have proliferated in the private sector.

But Mr. Cuomo’s proposal would still cause significant changes to worker retirement plans.

New York taxpayers face one of the highest tax burdens in the nation, and it isn't just the rich who are paying for the state's massive annual budget.

63.2% of the state's tax collections come from the personal income tax in 2008. That amounts to $36.5 billion dollars (Table 1). Only 5.5% of taxpayers file returns with an AGI of $200,000 or more, but that comprises of 54% of the total tax liability (meaning that 5.5% of filers are paying 54% of the $36.5 billion in income tax collections- $19.71 billion). That leaves $16.79 billion to be picked up by all other income tax payers. That's 94.5% of taxpayers.

The pension problem in New York isn't going to be solved by increasing the taxes on the rich - and the downturn showed that when Wall Street was hammered hard, the receipts from the richest percentage dropped the furthest and increased the burden on other taxpayers. The problem must be solved by reworking the pension system to make it more sustainable and to eliminate profitable paydays resulting from banking overtime in the final year of w36ork to max out pensions that would be significantly lower otherwise. It also makes sense to bring the retirement age in line with the private sector considering that most people work past 65 - and most people can expect to live into their 80s.

The pension problem hits all taxpayers, including the 94.5% who aren't rich. Fixing the pension problem would help all taxpayers, especially the 80.7% who make less than $100,000 AGI.

Unions are doing what the unions always do - refuse to recognize the fiscal realities and instead hope to protect their already overexpansive benefits at the cost to all taxpayers.

Gov. Cuomo Proposes Pension Reform; Unions In Uproar

New York Governor Andrew Cuomo is proposing significant pension reform for the state, including creating a new tier of workers that are entering the state workforce that would not be entitled to the kind of pension perks that prior employees had. The state simply can't afford the gold-plated pension system it has in place, and benefits are going to increasingly drag on the state budgets in coming years.

Cuomo's proposals would change benefits and require employee contributions as follows:

Double the employee contribution to 6 percent for new hires.
- Raise the minimum age of retirement to 65. Retirement age is now 62 for most employees and 57 for teachers. Early retirement, now allowed at age 55 with a 38 percent penalty, would end.
- Require workers to put in 12 years before they qualify for a pension. Employees are now "vested" after 10 years.
- End the practice of "padding" a pension by factoring in overtime pay late in service, unused vacation and certain types of sick leave.
- Cap pensions for the highest-paid state employees -- physicians at state teaching hospitals, CEOs of public authorities and utilities among them -- based on the governor's $179,000 salary. Many of those employees earn far more.
- Eliminate a "multiplier" that boosts a pension after 20 years and 25 years of service.

Needless to say, the unions aren't happy at all but some are cautious in what is being proposed. Moreover, this comes just as the governor is negotiating with unions over a new deal.

What would this actually do for the state's long term financial picture? According to Cuomo's team, it would save the state anywhere from $60 to $90 billion or more over 30 years, depending on whether the state shifts from a defined benefit to defined contribution plan setup. The problem begins with the fact that the state's benefits contributions are constitutionally required:

Currently, public employees are liable only for a fixed contribution to their plan, and the benefit is constitutionally guaranteed by the state of New York -- come hell, high water or a catastrophic market failure.

But under a defined contribution, the government's contribution would remain at a fixed level of the employee's salary. Employees of the State University at New York have the option to enroll in this type of plan as opposed to the defined benefit plan, and they, too, are at first required to contribute a portion of their income.

"Without the defined contribution option, it's like Tier V-a," said E.J. McMahon, a senior fellow at the conservative Empire Center think tank, of Cuomo's reported proposal. "The main benefit of a defined contribution model is that it caps and makes certain the employer share, which remains completely uncertain and subject to a great deal of volatility under the traditional model."

At a minimum the state needs to take a closer look at raising the retirement age to obtain pensions from 62 to 65, bringing it closer in line with the retirement age of workers in the private sector. Increasing the vesting period wont have nearly as much impact as raising the retirement age. Eliminating padding would be a good start, although possible compromise on this point could involve changing how the final pension calculation is done.

Mayor Bloomberg Sees the Light On Pension Reform

After doing considerable damage to the stability of the pension system over the past 8 years, Mayor Bloomberg has finally come to the realization that all of those sweeteners to the unions to seal contract deals have long-term implications that are increasingly eating into the city's budget. When Bloomberg took office, $1 out of every $28 went to pay for the pension funds.

It's now $1 out of every $8, and Bloomberg has finally come out calling for a major revision of the pension benefit system. It's sure to rankle the very unions and workers who benefited from the pension expansion, but taxpayers can no longer afford the sweetheart deals.

The mayor wants to require most new municipal workers to work at least 10 years, or double the current amount, to qualify for a pension, and bar them from receiving pension checks until age 65. Now most nonuniformed workers, including teachers, can get pension checks at age 57, and some police officers and firefighters can receive full pension checks after working 20 years, no matter their age.

New employees would also need to contribute more of their own money to their retirement accounts, according to the plan.

And Mr. Bloomberg would forbid all new employees to benefit from a time-honored practice: adding hundreds of hours of overtime at the end of their careers to balloon their final year’s pay and their pensions.

The mayor did not spare current retirees, vowing to eliminate a $12,000 annual stipend that retired police officers and firefighters get on top of their regular pension benefits.

“This reflects the dire fiscal circumstances the city faces, the devastating impact of increasing pension costs and the desperate need for aggressive reforms,” said Marc La Vorgna, a mayoral spokesman.

The mayor’s pension proposal — coming one day after a shrunken state budget from the new governor, Andrew M. Cuomo, with similar tough talk — represents a clear bid to capitalize on growing concerns about pension costs and rising anti-union sentiments, even among traditional labor allies.

Public pensions are being tightened in other states across the country where government employees, as in New York, receive far more generous retirement benefits than most private employees; many companies are eliminating pensions altogether.

But Mr. Bloomberg’s proposal also represents a departure from his own past practices. His administration has been responsible for a significant portion of the growth in city pension costs, offering generous pension sweeteners during contract negotiations and repeatedly missing opportunities to rein in spending.

Indeed, pension costs are now projected to eat up one of every eight city dollars next year, in contrast to 1 in 28 when he took office in 2002.

Mr. Bloomberg’s package could help the city save at least $200 million a year immediately, and billions of dollars more in the future. But his proposal faces a potentially major obstacle because any changes in the city’s pension system must be approved by the Legislature and the governor.

The mayor has potential allies in Mr. Cuomo and the new Senate majority leader, Dean G. Skelos, a Republican. But Sheldon Silver, the Assembly speaker, will most likely be the wild card.

One of the ways that an individual can boost their pension is to work massive amounts of overtime in their final year (or final three years, depending on which contract deal we're talking about), to result in a far higher final salary on which the pension is calculated. Eliminating the overtime from the pension calculation would result in a significant savings to the taxpayers.

That's going to run into a huge amount of opposition from firefighter, police, and sanitation unions whose members are beneficiaries of that policy. What will most likely happen is that the formula used to calculate the pension will be adjusted.

Instead of the final year salary (or final three years) including overtime, the formula would be expanded to be the final 5 or 7 years - reducing the overall compensation and resulting in a cost savings to the city, but not nearly as much as Bloomberg wants, but one that still preserves part of the benefits package promised to existing workers.

It's further interesting to note that had Bloomberg maintained pension benefits at the 2002 levels, the city would not be in nearly the financial straits it is facing. The city would be on far more solid financial footing and would have been able to weather the recession with far greater ease. Simply put, the city needs to live within its means, and increasing union benefits to win elections is a short-sighted political ploy that damages the financial stability of the municipalities.

France Shuts Down Over Pension Reform Plan

The French lifestyle is under assault and pensioners aren't sitting back and letting the Sarkozy government impose the austerity measures that are designed to prop up the existing system. They're protesting in the streets, and the protests are getting increasingly violent. Indeed, it looks like the carbeque is making its return.

Among the changes are an increase in the retirement age from 60 to 62. Yet, riots have broken out around the country in nationwide strikes that have all but shut down the country. The strikes include major oil refineries, which has put a crimp on the transportation sector, including rail and air travel. Airlines have been told to reduce flights into the country because of scarcity of jet fuel.

Train operator SNCF said it expected 60% of trains to run on Tuesday, the Le Monde newspaper reported, with Metro and local trains around Paris also expected to keep some services running.

Despite the disruption, one opinion poll on Monday suggested that 71% of those surveyed supported the strikers, despite the increasing effect on people's lives.

There was more opposition among those travelling as the strikes began.

"We shouldn't think it's still acceptable to stop working at 60 years old - we should work until 65. Like other European countries we have to work longer than 60 years," insurance worker Frederic Deraed told the BBC's Matthew Price in Lille.

"It's completely useless," said housewife Nadine Gestas.

"We can't pay the pensions and we can't avoid increasing the age of retirement. Every country in Europe is raising the age of retirement."

But Olivier Sekai of the General Confederation of Labour (CGT) said he saw support increasing for the protests.

"The government is acting as if we didn't have a rich country, as if we didn't have the money. The thing is we do have the money," he told the BBC.
Crisis cabinet

The week-long fuel crisis has added a new dimension to France's public discontent.

Education Lobby Sues New Jersey Over Money State Doesn't Have

Despite the consensus that deep cuts to the budget are necessary in New Jersey and that it wouldn't have mattered who was in charge, the Education Law Center is suing New Jersey to restore more than a billion dollars in education cuts.

That's money that the state simply doesn't have.

The group is bringing suit

The New Jersey Supreme Court can't print money and it sure as heck can't tell the state to violate the constitutional requirement to balance its budget. So, what would be the outcome if the court rules in favor of restoring the cuts? Well, it will mean higher taxes and service cuts elsewhere - perhaps for the already poor transportation and infrastructure system or for cuts in essential public services like fire and police coverage around the state.

No, this is an agenda driven by unions seeking their cut of a budget that by consensus must shrink because revenues have fallen off the veritable cliff. The state can't afford the spending it has, and it can't tax its way out of this mess because it's already seen a shortfall even when instituting the temporary millionaires' surtax, which took in less money than anticipated and left the state scrambling for ways to make up the shortfall.

The fact is that New Jersey balanced its budget last year with more than $1 billion in stimulus money that was distributed to the states to avoid having the states make critical cuts last year. That, as I've repeatedly written, delayed the inevitable hard decisions to cut spending at the state and local level.

Those delayed decisions are now coming due - and the problem is just as bad as ever. In fact, I'd argue the problem is worse now because the budget deficits have exploded at both the state and federal level and delaying the cuts put the states in even worse shape than they would have been had they opted to cut spending last year.

Gov. Paterson's Plan B: Let The Next Governor Lay Off State Workers

After a federal court rejected Gov. David Paterson's attempt to furlough state workers in order to close a massive state deficit, the New York Democrat looked about for a plan B.

He found it.

It's called passing the buck to the next governor. He figures that the solution for the current financial mess is to start firing state workers beginning in January 2011, when the next governor takes office but that is due in large part to deals made with various unions.

The reason for the delay: the hazy legal status of the "memorandum of understanding" his administration signed last summer with two of the largest state worker unions, CSEA and PEF. The agreement included a no-layoffs pledge through 2010 in exchange for the unions' support for a Tier V pension plan.

The unions argue the memo is a binding agreement; Paterson contends the state fiscal crisis and looming $9.2 billion deficit justifies amending it.

"I don't think the memorandum of understanding is one that could not be changed because of events not within the contemplation of the parties," Paterson said Tuesday at a Manhattan news conference, using legal phrasing appropriate to his recent dealings with union leaders.

"Everybody was saying that the economy would change by the third quarter of 2009. That didn't happen," Paterson said. " ... Obviously if the situation got worse, we would look at perhaps speeding up the (layoff) plan and challenging the memorandum of understanding. But the reality is right now it takes a long period of time to schedule the layoffs, so I want it ready to go on Jan. 1 so that the next governor has this option, should the next governor choose to use it."

Paterson's executive budget proposal included $250 million in state work force cuts. The larger public workers unions have adamantly resisted concessions talks. Instead, union leaders offered suggestions for less overtime and cutting non-union consultants under state contract.

The unions refuse to recognize the financial reality of the state's situation and continue to demand their cut regardless of how much it hurts the state's financial future.

Apparently $9 billion in deficits is not sufficient to get the unions to come to the table - or get the courts to realize that we are indeed talking about a financial emergency that requires furloughs to avoid major layoffs.

Now, we've got a situation where there are not only no furloughs, but no layoffs for the foreseeable future. That means that the state can't close the budget deficit through workplace efficiencies - leaving the door open to more tax hikes and fees to close the gaping deficit.

Another Fail By the NJ Teachers

If you are going to complain about your salary to the Governor of the State of New Jersey and how you're not making anywhere near the $83,000 you claim you are, you better pray that your actual salary doesn't become public.



Too late.

Rita O'Neill Wilson was caught on video arguing with Gov. Christie earlier this week about her paltry salary and how she'd love to make $83,000 and Gov. Christie said that she was making quite a bit more than that.

But borough teacher Rita Wilson, a Kearny resident, argued that if she were paid $3 an hour for the 30 children in her class, she’d be earning $83,000, and she makes nothing near that.

“You’re getting more than that if you include the cost of your benefits,” Christie interrupted.

When Wilson, who has a master’s degree, said she was not being compensated for her education and experience, Christie said:

“Well, you know then that you don’t have to do it.” Some in the audience applauded.

Well, she actually makes quite a bit more than that. She's got a base salary of $86,386, plus a HS co-curricular stipend of $652, That doesn't include the health care and pension benefits that aren't figured into the salary. In other words, she's compensated more than $100,000 per year.

Gov. Christie was right. Again.

And that's yet another fail by the teachers and their union who think that they remain eternally entitled to raises and their benefits packages that are unfazed by the economic climate and the fact that the state is broke. They want their cut, and don't care about anyone else, let alone the taxpayers or the students.

Court Weighs New York Furlough Option

When is a fiscal emergency not a fiscal emergency? When one of New York's largest unions says so. New York faces a $10 billion hole in its budget, and the structural deficits are in the billions of dollars, and yet the CSEA doesn't think that the situation is an emergency so it's fighting Democratic Governor David Paterson's furlough proposal.

The Civil Service Employees Association says there is no emergency to justify setting aside negotiated contract terms.

A judge had temporarily blocked the furlough order, requesting additional information.

All the information you need to know is this:

1) New York has failed to have an on time budget for most of the past three decades, contributing to higher costs for taxpayers that become a burden on all taxpayers in the form of higher borrowing costs and higher outlays.
2) New York has a structural deficit because it spends far more than it hopes to take in.
3) New York's problem is that it has a spending problem, not a revenue problem.
4) The unions don't see anything wrong with the situation so long as they're getting their share of that spending.

It's little wonder that the unions get a bad rap.

It's well deserved.

For the CSEA to claim that there is no emergency is asinine. Of course, this has also been an emergency that has been growing steadily as the unions demand more spending despite revenues that can't keep up. Tax hikes are chasing people out of the state, and it's killing business opportunities, but the unions want their share.

Christie Vows To Not Let New Jersey Become Another Greece

Gov. Chris Christie continues the tough and frank talk about New Jersey's awful fiscal situation and lays out why he's sticking to the fact that New Jersey's problem isn't about insufficient revenues, but overspending. He refuses to let New Jersey become another Greece, even as he's acknowledged that the situation here is as bad or worse than other foundering states like New York and California that are swamped with multibillion dollar deficits and pension obligations running into the tens of billions.

This is the kind of talk that politicians across the nation must heed. All over the country, including at the federal level, spending is out of control and entitlements are only part of the problem. Controlling spending is critical to getting the fiscal situation under control.

In New Jersey, the situation is abysmal because spending is out of control from the municipal level on up. Curbing the hikes and putting tax hikes back in the hands of voters gives municipalities the discretion to limit tax hikes and works towards curbing the highest property tax levels (and highest tax burden) in the nation. He wants to see a constitutional amendment authorizing municipalities to increase spending by up to 2.5% and require arbitrators to take that cap into account when figuring out union agreements that leave taxpayers holding the tab. Collective bargaining enables unions to obtain raises that exceed taxpayers' ability to pay, and until arbitrators take this into account, spending remains out of control. Mandating that arbitrators take the cap into account will further curb spending growth.

Pensions for state workers also came under fire, along with the need for state workers and teachers to pay a portion of their health care benefits. The unions have demonized Christie over demanding that teachers pay 1.5% towards their health care costs - when they currently pay nothing. That's far below what the private sector demands, and the private sector in New Jersey is hurting something awful.

If Christie can get these proposals through, it may set up New Jersey on a path towards fiscal discipline and responsibility that has been sorely lacking for decades.

After all, New Jersey has previously sought to ease the property tax burden by instituting a personal income tax, raising sales tax rates to provide property tax relief, and even instituting temporary surtaxes on millionaires to balance the books, but each step is merely addressing the demand for more revenue and doesn't address the spending side of the equation. Christie is fundamentally altering the discussion by putting future spending in the crosshairs.