Richard Corenthal Quoted in Law360, “NYC Union Contract Push Could Impact Taxes, Private Sector”

Media Source: Law360

Corenthal_RichardNew York City Mayor Bill de Blasio’s vow to make new deals with 152 city unions presages a grueling and costly haggle that could force the hands of policymakers reluctant to raise taxes and, experts said Thursday, will be carefully watched in the private sector amid broader efforts to raise workers’ wages.

As part of a $74 billion, preliminary spending blueprint that precedes a full budget plan for 2015, the Democratic mayor said the city would no longer be content to let long-expired union contracts for workers including police, teachers, road crews and health care providers continue on stale terms.

The mayor wouldn’t talk specifics about how much the city intends to spend, but he has characterized the challenge as unprecedented, both in the number of outstanding contracts and the length of time they’ve been neglected, and said the effort would take city negotiators — including Bob Linn and Stanley Brezenoff of the city’s Office of Labor Relations — and unions into ‘the great unknown.’

His budget guru Dean Fuleihan added that the negotiations bring a ‘whole pile’ of risk to the city as it seeks fiscal balance.

The risk, according to New York’s Citizens Budget Commission, lies chiefly in how much back pay unions will demand for the years in which they’ve gone with no raises. The city’s huge teachers’ union, for example, has been without a new contract since 2008.

“The lapse of time makes it more difficult because, during that period, employees have not received increases and the cost of living has gone up — and along with it frustration on the labor side,” said Meyer Suozzi English & Klein PC partner Richard S. Corenthal, who represents public- and private-sector unions.

Back pay could run the city $3.5 billion, according the budget group — with some putting it higher still — and those awards build in additional costs related to pensions and current salaries, experts say. Projected increases in city revenue from job growth and other economic improvements aren’t seen as guaranteed to be large enough to cover that potentially high price-tag.

De Blasio has said he hopes only to raise taxes on the richest New Yorkers to pay for universal pre-kindergarten, but according to Citizens Budget Commission President Carol Kellermann and others, the negotiations cast doubt on that vow — not to mention over many other de Blasio policies his city budget will have to fund — because of their potential tax implications.

“I’m sure he doesn’t want to raise taxes. It would be difficult for him to tell the public that he is going to raise taxes to pay for salary increases, particularly retroactive salary increases,” Kellermann said, adding that much more will become known in coming weeks as the mayor’s team tries to gauge its contact-related costs prior to an early May deadline for a full budget plan.

For his part, de Blasio will say only that there are ‘no planned tax increases” to pay for renewing union labor deals.

Meanwhile, despite stark differences in the way the private and public sectors in New York deal with organized labor, the demands of public-sector unions — and the outcome of the negotiations — will be watched carefully by private industry, labor lawyers say.

De Blasio has struck many pro-union notes throughout his ascendancy to the mayor’s office, noted Buchanan Ingersoll & Rooney PC partner Brian S. Rauch, who represents employers in matters including labor relations and collective bargaining.

“Private employers are not directly affected by this, but any time you sit at a bargaining table, you talk about comparators — what other people are making — and the comparators with the most publicly available information are public workers,” Rauch said.

If the de Blasio administration starts handing out big victories to city unions, private employers will take notice, Rauch said, because ‘the leverage does change if comparators have gotten greater benefits.’

With negotiations being “fact specific,” Rauch and Corenthal cautioned against drawing too direct a line from public to private, but they nevertheless see one impacting the other in subtler ways.

Raises for some unions, for example — especially in the service- and repair sectors where city workers currently earn annual pay in the $25,000 to $30,00 range — could draw attention to a widening chasm between their compensation and those in the private sector earning minimum wage or just above it.

That may add ammunition for the many policymakers, including de Blasio, who are pushing for sharp minimum wage hikes that directly impact big private-sector employers, they said.

“When you are talking about low-wage workers, you’re talking about restaurants and car washes, workers who don’t have equivalents in the public sector,” Corenthal said. “They’re starting from the bottom, frankly, and are seeking recognition that their wages are substandard.”