State Super Control Board Taking Over Struggling New York Local Governments?

In recent news it has been stated that New York Gov. Cuomo and Comptroller Thomas DiNapoli are looking to propose legislation that would create a state super control board.  The board that would take over the finances of struggling local governments on the verge of bankruptcy, including cities, towns, villages, and counties.

Of course public labor unions oppose such legislation because it would allow the state to violate union contracts, which represent one of the largest local government expenditures.

Such control boards are not uncommon in New York and have been set in place at the local level.  The governments of Troy, Buffalo, Yonkers, and Nassau County have been under finance control boards because they were on the verge of an economic crisis.  It was reported that currently 300 local governments ran deficits and more than 100 local governments do not have enough to pay the bills.

The proposed legislation was described as not “…completely replac[ing] the locally elected official.  But it would provide them with the political ‘cover’ many privately say they need to stand up to the powerful unions, which have consistently resisted spending cuts.”

Conflicting reports show that Comptroller DiNapoli has not been in discussions with Gov. Cuomo and he believes it is premature for the installation of such a board.   In a press conference DiNapoli emphasized that the idea needs to be examined in more detail.

Colorado Regulatory Reform Embraces Community Collaboration

The Colorado Department of Regulatory Agencies (DORA) is charged with the task of “preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado.”  As a result DORA has developed the initiative, “Cutting Red Tape in Colorado State Government: Making Government More Efficient, Effective and Elegant.”  A report published by DORA in december 2011, “Pits and Peeves Roundtable Initiative,” examined government reform ideas by collaborating with various business organizations, local governments, advocacy and community groups, non-profit groups, and academic institutions in a roundtable forum.  This forum allowed senior government officials to hear directly from businesses and community members what problems are causing government inefficiencies.

The report examines the issues, common themes, suggested solutions, progress thus far, and steps to be taken with respect to government and regulatory reform.  A few of the issues discussed were the need for change in government culture to focus on customer service, regulatory inefficiencies and delays, the need for greater coordination among agencies, the need for better coordination between federal and local agencies, the need for periodic review of agency rules and regulations to evaluate continuous need and effectiveness, making better use of available technology, the need for a go to person in each agency to help “customers,” the need to pay greater attention to economic/unintended adverse impacts of proposed regulations, requirements and procedures, and the need to pay more attention to ensuring that new regulations reflect legislative intent.

This reform tactic is founded on the belief that the problem must first be identified for any government reform to be successful.  To that end, Colorado is listening to the people who are on the front lines of governmental inefficiency and molding government reform actions around their collaboration.

The report is available here.

Pension Reform in New York Expected to Save $80 Billion Over 30 years

Pension reform is a hot topic all over the country.  State and local governments are realizing that during this fiscal crisis they cannot keep pace with the current contribution scheme that was enacted when the economy was strong.  For example, Cuomo stated that in New York in 2002 pension payments from local governments was $1.4 billion, this was increased  to $12.2 billion in 2012.  This increase of 650% has come at a time of fiscal stress causing local governments to increase their taxes and layoff public employees.  Further exacerbating the situation is the recently enacted property tax cap, which places a percentage limit to yearly increases on the tax levy that a local government may asses.  High pension contributions, and limits placed on local governments’ ability to collect property taxes has created an unsustainable framework.

To ease the pension pressure that local governments are facing and in an effort to cut government costs New York has just passed legislation reforming their pension system.  The bill would increase public employee contribution rates for new employees in a progressive manner:

$0-$45,000 will contribute 3%

$45,000 – 55,000 will contribute 3.5%

$55,000 – $75,000 will contribute 4.5%

$75,000 – 100,000 will contribute 5.75%

$100,000 + will contribute 6%

The bill also includes provisions that increase the age of retirement from 62 to 63, readjust the pension multiplier, creates vesting after 10 years of services, protects local governments from state pension sweetners, creates a voluntary and portable defined contribution option, completes adjustments for SUNY and CUNY TIAA-CREF Plans, and limits pension benefits for high paid employees that earn above the governors salary ($179,000).

Comments on the new bill can be found here.

Article discussing the bill can be found here.

States Consider Removing Civil Service Protections for Employees

In light of the current fiscal realities states are faced with, government employees from around the nation have found themselves the object of increasing scorn from both the public and their own employers.  Most notably, Wisconsin became a battleground for labor issues beginning in 2010, as Governor Scott Walker pushed legislation which included provisions which cut benefits for government employees, including reductions in civil service protections.

Originally, civil service laws were enacted to remove patronage from government employment. The job protection measures included in civil service laws were meant to ensure that government employment is based on merit rather than political affiliation.  Theoretically, by insulating government employees from political influence, they could perform their jobs more efficiently and effectively—ultimately benefiting the public, who would enjoy an efficient government run by effective public servants.

However, a few states are now revisiting the idea of stripping civil service protections from government employment. In Arizona, Governor Jan Brewer recently proposed legislation which would require most new government employees to be hired under “at-will” contracts—meaning that these employees can be terminated at any time, and for any reason, as long as it’s not illegal. (It’s important to note that all states except Montana presume that employment is at will).  More significantly, the proposed legislation would offer a 5% pay increase to any government employee who voluntarily elects to become at-will. The Governor estimates that if this bill passes, more than 80% of the government workforce would be at-will within the next four years. The bill’s sponsor, Representative Justin Olson, touts that the bill “will implement common sense reforms,” while “bring[ing] Arizona’s state personnel system in-line with the most effective practices of the private sector.”

Arizona is not the first state to switch to civil service protection. Georgia switched to a largely at-will system in 1996, as did Indiana  more recently.

Other states are beginning to consider removing civil service protections as well. In Tennessee, Governor Bill Haslam proposed legislation which would remove most civil service protections. In Colorado, Governor John Hickenloop called for bringing “the state’s antiquated personnel system into the 21st century.”

Click here for a more in-depth overview of this issue.