Sen. Mary Lou Rath, R-Amherst, is the chairman for the Committee on Children and Families in Albany. She has encouraged the governor to appoint a panel to study the arbitration issue.
Photo courtesy of Mary Lou Rath

Steve Levy, Suffolk County Executive, believes that salaries for police and firefighters set by state-appointed arbitrators are wrecking local budgets.
Photo courtesy of Steve Levy

Only in New York: 5

Salary arbitration puts
taxpayers in a bind

Albany Bureau
(Original publication: June 17, 2004)

ALBANY — With the average pay of police officers in Suffolk County at $105,000 a year, local government officials say a state-imposed system that takes the final decision on salaries for police and firefighters out of their hands and gives it to a state-appointed arbitrator is wrecking their budgets.

"How can you control property taxes if you can't control salaries?'' asked Edward Farrell, executive director of the state Conference of Mayors. "You can't.''

Steve Levy, the newly elected Suffolk County executive and former state lawmaker, agreed.

"Our experience on Long Island has been that there is a leapfrogging effect between Nassau and Suffolk counties, with arbitrators in one county using decisions in the other as a benchmark," he said, "ultimately leading to an uncontrollable spiral.''

Levy was the only "no" vote in the Legislature against extending the binding-arbitration statute last year. In fact, he made trying to slow the rise in police salaries one of the centerpieces of his county-executive campaign, after a state arbitration panel granted the Suffolk police a 20 percent pay raise over four years, driving the average pay over $100,000 for the first time for any department in the state, and possibly the country.

The system has led to Nassau and Suffolk having the highest top patrol-officer>salaries among the country's 200 biggest municipal departments, according to, a consulting company.

But there is little chance that legislators will change the law this year, despite the likelihood of steep rises in property taxes in many parts of the state, caused in part by state requirements that localities pay for a portion of Medicaid expenses as well as steeply rising pension expenses.

The law is one of the prime examples of what local officials call "unfunded mandates'' that help push local taxes in New York to among the highest in the country.

For years, the mayors have been trying to get state lawmakers to change the law governing police and fire contracts, first passed in 1974 when local government workers won the right to form unions.

As part of that deal, public workers relinquished the right to strike. But in addition, most uniformed workers got the right for a three-member panel to decide on a contract if they failed to reach an agreement with the local government for which they work.

The system has resulted in the average local police and fire salary increases awarded by state arbitrators exceeding the Consumer Price Index every year from 1994 to 2003, according to the mayor's group.

While the governments think the system needs to be changed, the unions generally are happy with it.

"We think for the most part they've been fair, absolutely,'' said Ken Long, legislative chairman of the state conference of Police Benevolent Associations. "Once we gave up the right to strike, (without binding arbitration) the employer could pretty much tell you what he's going to give you and you don't have any choice.''

A check of police salaries from around the country helps to explain why. While Suffolk and Nassau counties are at the top of the list of salaries for police departments nationally, other New York departments are also among the most highly paid.

The glaring exception has been the nation's biggest municipal police force, the 30,000-member New York Police Department.

Top pay for a NYPD patrolman is $54,048, compared to $83,766 in Nassau County and $84,545 in Suffolk County. The higher average-pay figure of $105,000 for Suffolk County, determined by the Center for Governmental Research, includes longevity pay, shift differentials and other add-ons.

That's due, in part, to the fact that New York City was excluded from the binding-arbitration law until 1998, when the Legislature passed and Gov. George Pataki signed a bill extending the statute to the city. The move was made over the vehement objections of then-Mayor Rudolph Giuliani, who said the city and the police union should have the final say over how much to pay its uniformed employees.

An arbitration panel awarded the NYPD officers a 10 percent pay hike over two years in 2002. That contract has expired and the process of another arbitration proceeding has begun.

The biggest bone of contention in the proceedings is deciding what a local government has the "ability to pay,'' which is one of the benchmarks laid out in the law.

That ability needs to be "something more limited than the countless authority to raise real property taxes or increase sales taxes,'' Levy said in a proposal to state lawmakers to change the law. He said earlier this year that his county faces a budget deficit of as much as $238 million next year, although that has since been reduced by tax revenues coming in faster than expected as the economy has recovered.

Arbitrator John Sands, who decided the Suffolk case, referred to what he called "the country's long established conservative budgeting practices of underestimating revenues and overestimating expenditures.''

"No one can doubt the importance of a well-paid and well-maintained police force of high morale,'' he wrote in a decision that granted the police officers the 20 percent raise over four years. "The state legislature has recognized the essential and distinguishing character of police and fire work by providing compulsory arbitration procedures that apply to no other classes of public employees.''

"The issue really is ability to pay, and no one wants to take it head-on,'' said Sen. Mary Lou Rath, R-Amherst, former chair of the Senate Local Governments Committee and a former Erie County legislator who has voted against extending the statute in the past.

She recalled that Pataki several years ago proposed a commission be established to make recommendations on what "ability to pay'' ought to mean. But then he did nothing to push it, she said.

The Senate doesn't want to change the law until such a group has studied the issue and made recommendations, said Senate GOP spokesman Mark Hansen.

"For years we have advocated that ability to pay should be looked at in terms of … the effect on other services,'' said Eva Hassett, a lawyer who works for the city of Buffalo, whose finances are in such disarray that a state control board is overseeing them. It's also the city where a state arbitrator recently ordered the government to reinstate about 20 blue-collar employees who had been laid off in a cost-cutting move.

"Police and fire wage increases have been far greater than in the other departments,'' she said. "While those are important departments, those raises have resulted in cuts in other departments. There needs to be some indication here who would be "hurt'' by granting the wage hikes to the police and fire unions.

Pataki has promised again this year to propose a bill "to require binding-arbitration panels to give priority consideration to a municipality's ability to pay,'' but doesn't mention a panel to examine the issue in detail.

"We're going to continue to encourage the Legislature to support the governor's reforms,'' spokesman Michael Marr said.

Rath said the governor needs to step up.

"The governor needs to get the political will somehow to appoint a blue-ribbon panel and hold hearings. We need to find out what taxpayers are expecting in relation to what they want to pay,'' Rath said. "As long as we have communities that are demanding high levels of service, but also demanding officials keep taxes low, until we take that on, I think this issue is going to plague us.''