New York to Delay State Worker Raises During Covid-19 Outbreak

April 9, 2020, 5:38 PM

New York plans to delay a 2% pay raise for roughly 80,000 state workers as the financial cost of fighting the coronavirus outbreak continues to rise.

The across-the-board pay hikes that were scheduled to go into effect this month will be postponed for 90 days due to fiscal “uncertainty,” state Division of Budget spokesman Freeman Klopott said in an emailed statement.

The delay is expected to save about $50 million over the 90-day period, after which time the state will reassess its finances and decide whether the raises can take effect, state Budget Director Robert Mujica said at a Thursday virus briefing.

The freeze won’t affect longevity-based “step” increases, according to union officials briefed on the matter.

“The state is facing the unfortunate reality of $10 billion to $15 billion in lost revenue due to the COVID-19 driven economic downturn, and has received no help from the federal government to offset this loss even as Washington enacted a $2 trillion bailout,” Klopott said.

Leaders of the Civil Service Employees Association, a union representing roughly 63,500 state workers, expressed concern over the decision, saying it hits those working on the front lines at state hospitals, with the transportation department, and at correctional facilities.

“It’s inexcusable to require our workers to literally face death to ensure the state keeps running and then turn around and deny those very workers their much-deserved raise in this time of crisis,” CSEA President Mary E. Sullivan said in a statement. CSEA is Local 1000 of the American Federation of State, County, and Municipal Employees.

Fiscal Crisis Looming

The decision comes a week after New York passed its approximately $177 billion budget for fiscal 2020-21, which began April 1. It includes a $10 billion reduction in spending and permission for the state to adjust allocations throughout the year to cope with reduced cash flows. The spending plan also allows the state to issue up to $8 billion in short-term bonds and take out up to $3 billion in credit or revolving loans.

States and cities nationally are looking to short-term borrowing with the economy at a standstill and tax revenues expected to plummet due to the pandemic.

New York Gov. Andrew Cuomo (D) at a Thursday virus briefing said the virus has been more devastating to the state’s economy and budget than the Sept. 11 attacks.

“The options are you could do layoffs of state workers, option A. Option B, you could buy some time with freezing the raises to state workers,” Cuomo said. “I choose option B rather than lay off people which would only add to the unemployment claims, the stress, the hardships.”

The state has had more than 800,000 unemployment claims over the last three weeks, state officials said.

Cuomo said they will continue to fight for federal funding.

Provisions in the union contracts allow the state to withhold the payments, Mujica said.

The Empire Center, a fiscally conservative think tank, had been calling on New York to freeze both step and base pay raises for the public sector as part of the budget process.

“The crisis hasn’t fully begun,” said E.J. McMahon, the center’s founder and research director. “This isn’t going to be a 90-day issue,” he said, adding that the temporary delay was just a “stopgap.”

While McMahon said the temporary freeze, which affects about two-thirds of the workforce, was warranted given the state’s fiscal outlook, it should have been done through state legislation. “I would think the unions will legally challenge this,” he said.

McMahon called on the state to go further. “We’re entering a period of economic stress the likes of which we haven’t seen since the 1930s,” he said. “The feds are not going to make everybody whole.”

Sullivan of the CSEA recognized the state’s fiscal situation, and said the union would continue to push for federal relief. But the state should honor its commitments to its public employees, Sullivan said.

“People are failing to recognize the value of our state workers during this crisis and what they are going through to keep providing public services throughout the state,” she said. “They’re at the front lines keeping this epidemic from spreading further, caring for our most vulnerable and ill residents, helping people in our communities suffering from job losses, and keeping our state from wholesale economic and social collapse. We cannot value them enough right now.”

To contact the reporter on this story: Keshia Clukey in Albany, N.Y. at kclukey@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com

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