Contract Fight not over for NYC Transit Workers

December 30, 2005 ( - New York Governor George Pataki's office said that he was inclined to veto a key provision of the New York City transit contract settlement giving 20,000 workers refunds of pension contributions.

The New York Times reports that the provision, which would require a change in state law, would give many workers refunds of payments they made to their pension plan between 1994 and 2001, when most workers contributed 5.3% of their earnings. The contribution was reduced to 2% in 2001. Pataki has vetoed similar provisions twice before, in 2000 and 2001.

The provision was expected to strengthen support for the contract among the union’s 33,700 members, who will vote on the deal by next month, according to the Times.

The transit workers began what the courts determined was an illegal strike last week, fueled in part by the Metropolitan Transit Authority’s (MTA) contract demand that new workers contribute 6% of salary toward their pensions during their first ten years of employment. The strike ended and a tentative contract settlement was reached when the MTA dropped its pension change demands (See Compromise Reached in NYC Transit Workers Contract).

The MTA believes the refunds, which have received much scrutiny, will cost about $132 million up front, or the equivalent of about $13 million a year over 11 years. Union negotiators have asserted that total refunds could exceed $200 million.In 2001, when Pataki vetoed a bill that would have provided those refunds, an actuary hired by the union estimated that the refunds would cost the MTA $7.5 million a year, and the MTA put the figure at $165 million in total. The New York City Employees’ Retirement System would pay most of the refunds and be reimbursed by the MTA, according to the NYT.

In his veto message in 2001, Pataki wrote that “the costly benefit that this bill would confer should be the project of collective bargaining negotiations” and that “imposing unbudgeted costs of this magnitude on the MTA would not be prudent in light of the budgetary and fiscal challenges that the MTA currently faces.”

In the settlement, both the union and the MTA agreed to “make every effort” to have a bill for the provision enacted by the first week in July. If Pataki vetoes the refund provision, there could be continued fighting over the contract, which was modeled on a proposal by state mediators who intervened after the strike began on December 20.