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A PAY FREEZE TO SAVE TAXPAYERS

Text of a letter sent to Governor George E. Pataki from Daniel B. Walsh dated April 28, 2003. (Similar letters sent to Senator Bruno and Speaker Silver.)

DANIEL B. WALSH
President/CEO

April 28, 2003

Dear Governor Pataki:

RE: A pay freeze to save taxpayers

Unions representing taxpayer-funded employees are creating enormous pressure on the Legislature to raise taxes on New York's workers and businesses. As you have said time and again, new taxes will drive private-sector jobs away – and thus reduce our ability to pay for vital public services – just as we saw in the early 1990s.

Fortunately, there are ways to cut the cost of government, and thus maintain services, while avoiding new taxes. One answer: Freezing the pay of public employees.

We estimate that a one-year freeze on state and local government wages could save the state, school districts and municipalities some $2 billion to $3 billion. (The figure is based on estimated cost-of-living and seniority increases to a current base of some $57 billion in annual state and local payrolls.)

Governors and legislators in other states are increasingly turning to employee pay freezes to save taxpayer dollars while maintaining services. In Indiana, Governor O'Bannon has implemented a freeze on state-worker pay administratively. Georgia, Maine, Minnesota, Oregon, Wisconsin and Washington are among those actively considering a freeze on both state and local government payrolls. In Oregon, teachers are working two weeks without pay; in Maine, public employees have been subject to involuntary furloughs.

Given the extensive authority New York's Constitution gives the Governor and the Legislature, state legislation could freeze salaries and wages for employees of the state, municipalities and school districts. Such a broad approach would be the most fair and reasonable way to ease budget problems facing the state as well as schools and local governments. At the local level, in particular, it could represent the equivalent of $1.5 billion to $2.3 billion in new state aid.

No doubt the public-sector unions that want you to raise taxes will oppose a freeze on salaries. Any such move by Albany would represent improper involvement in school districts' and municipalities' collective bargaining, their lobbyists will argue. These, of course, are the same groups that constantly pressure the Legislature to impose new pension, wage and other benefits, thereby stripping mayors and school boards of negotiating authority.

A pay freeze is unfair to workers, the unions will claim. But the truth is that a temporary interruption in salary increases could save jobs – potentially thousands of them across the state. If scheduled pay increases go forward, school districts and other public employers will have no choice but to cut costs by laying workers off. In many cases, important services could suffer as a result.

There is a phrase heard frequently around Albany these days – "share the pain." It comes from the unions whose membership grows as taxes go up. They want to impose more pain on taxpayers so that state spending can continue to grow, even in the face of a huge budget gap.

But the public-sector unions offer no sacrifice of their own. (They are willing to accept early retirements, of course. To private-sector workers and taxpayers, retiring at 55 doesn't seem like much of a sacrifice.)

Eliminating salary increases for a year is particularly reasonable given that New York is extraordinarily generous in the pay and benefits it provides public employees. Census Bureau data show, for instance, that state and local government workers in the Empire State are paid an average $46,687, more than 21 percent above the national average for state and local workers.

We recognize that your 2003-04 Executive Budget includes no funding for state-employee pay increases. Enacting a statutory pay freeze would go further by eliminating "step" increases and could simplify this year's complex negotiations with state-worker unions.

Your goal of avoiding state-employee layoffs is compassionate and understandable. Private business owners, too, prefer retirement incentives and other voluntary steps to reduce payroll when such is required. But in the last two years, as the national recession has hit home and we continue to feel the impact of September 11, more than 300,000 taxpaying New Yorkers have lost their jobs. Big job losses in the part of the economy that pays the taxes should, in fairness, lead to cost reductions in the sector that spends taxes.

All New Yorkers appreciate the vital services performed by public employees. Workers in the private sector, too, do essential work. When times are hard, it's only fair that neither sector bear all the cost. A temporary freeze on public-employee pay will save jobs, save taxpayers, and preserve services. We urge you to enact this sensible proposal into law.

Sincerely,

(Signed) Daniel B. Walsh