Paterson's Furloughs of 100,000 New York Workers Are Blocked by U.S. Judge

New York Governor David Paterson’s attempt to squeeze a budget deal out of lawmakers by furloughing 100,000 state workers to save $30 million a week ran into a legal roadblock yesterday.

Paterson “is temporarily and immediately enjoined from implementing any furloughs,” Judge Lawrence Kahn of the U.S. District Court for Northern New York in Albany said in a ruling late yesterday that blocks the governor’s plan.

Unions representing about 130,000 state workers sought to stop the furloughs that Paterson, 55, said would “ratchet up the pressure” on lawmakers to close a $9.2 billion deficit in an overdue budget for the year that began April 1. Lawmakers have agreed on about $7 billion of gap-closing measures, Paterson has said.

Kahn barred Paterson from submitting any additional spending bills that call for furloughs or that deny workers the 4 percent raise their contracts called for on April 1. The raises haven’t been paid. The judge gave Paterson until May 19 to respond and set a hearing for May 26.

Paterson has submitted six consecutive “bare bones” emergency spending bills to keep New York, the third-most populous U.S. state, operating while awaiting an agreement from the Senate and Assembly on how to close the budget gap. In February, the governor proposed a $135.2 billion spending plan.

No ‘Sacrifice’

“Until we go to court, the state workforce will not be making any sacrifice in our deficit reduction and I think that’s unfortunate,” Paterson told reporters in Albany yesterday.

“We were not allowed to have a hearing” and so had no chance to correct a mistake made by Kahn in his order, Paterson said in an interview on New York City radio station WOR today.

Kahn’s order stating that “the permanent 20 percent loss in salary or wages that directly follows from the furlough plan constitutes irreparable harm” was mistaken because the plan for one furlough day out of every five will last only eight weeks, Paterson said. “The total loss of the salaries is about 3 percent” on an annual basis, he said.

$250 Million Savings

The furlough plan would last long enough to accumulate the $250 million of workforce savings in his budget, Paterson and budget director Robert Megna have said.

Paterson declined to say if he would order dismissals if the furlough plan remains blocked. “If you remedy your own problem, the court rules against you,” he said. The furlough plan is better than firing people because it results in “shared sacrifices where everybody takes a little hit so some don’t have to take the ultimate hit,” he said.

At least 75 percent of U.S. states have eliminated vacant government jobs and more than half have used job cuts or furloughs to close budget gaps since the recession began in December 2007, according to a compilation by Stateline.org, a nonprofit research group. In California, legal challenges have prevented Governor Arnold Schwarzenegger from implementing as many furloughs as he proposed.

On May 10, lawmakers passed Paterson’s furlough plan, which was to take effect next week, as part of an emergency spending bill that couldn’t be amended. Legislative leaders said the plan had to be approved to keep the government operating.

Paterson’s plan spared state police, other essential workers, and managers who haven’t had a pay raise for two years.

“To avoid shutting down many of the state’s essential services, the Legislature has little choice but to vote for the provisions in the current emergency bill,” Senator Neil Breslin, a Democrat from Albany, said in a statement on May 10.

Contracts ‘Violated’

The Civil Service Employees Association and Public Employees Federation, the two largest unions for state workers, said in court filings that the furloughs would violate contracts and a written agreement with Paterson in June 2009. In that accord, they accepted a less-generous pension plan for newly hired employees. In return, Paterson said he wouldn’t fire workers, as he previously threatened.

The Senate recorded its disapproval of the furloughs by passing a resolution on May 10 saying “it is not reasonable or fiscally necessary to impose” what amounts to a 20 percent pay cut for affected workers as a way of resolving the budget crisis.

Kahn’s order said the Senate’s statement “strongly supports the court’s decision to grant the temporary relief” requested by unions. He said the unions showed irreparable harm would result from the furloughs and that their contracts with the state were impaired.

‘Reasonable’ Means

In evaluating the legality of the furloughs, Kahn said he will “analyze whether the means utilized by the government are reasonable and necessary.”

The Senate resolution said there are “alternatives’ to furloughs, without saying what they are. Unions have proposed limiting state hiring to only entry-level jobs, reducing overtime, slashing the use of outside consultants and improving workplace safety.

Paterson has said the unions rejected a five-day delay in pay, and wouldn’t give up part of the scheduled pay increase that he suspended last month.

Union leaders said Paterson has ignored their suggestions for savings that abide by existing contracts. The 4 percent raise that was supposed to begin April 1 is for the final year in a four-year contract that increased pay by 13 percent, before compounding.

Past Precedents

Legislative approval of wage freezes or pay cuts has been an important part of other court cases where governments were allowed to break contracts with workers, according to Terry O’Neil, a partner in the Garden City, New York, offices of Bond, Schoeneck & King, a law firm.

“The courts are very deferential” to legislated wage freezes or pay cuts, O’Neil told reporters last week. State and federal courts have allowed wage freezes “as long as specific legislative findings demonstrate that the scope and duration of the freeze is reasonable and necessary to protect the public,” he said in a briefing paper prepared for the Empire Center for New York State Policy, a research group that favors less government spending.

The case is Donohue et. al. v. Paterson et. al., 1:10-cv- 00543, U.S. District Court, Northern New York (Albany).

To contact the reporter on this story: Michael Quint in Albany, New York, at mquint@bloomberg.net.

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