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Binding Arbitration Law: Don’t Extend It, Improve It

June 13, 2013

An important agenda item for the final week of the New York State legislative session will be whether and how to extend the law, expiring July 1, that permits police, firefighters and other unionized law enforcement officials to resolve labor contract impasses through binding arbitration.  Rather than renewing the statute as a matter of routine, as has occurred for decades, State leaders should amend the statute to address its key weakness: inadequate consideration of the fiscal condition of State and local governments.

State and local governments must pay an award made by the arbitrators, and experience has demonstrated that “ability to pay,” one of the criteria specified for determining an award, is not given sufficient priority in the arbitrators’ decisions. There is no guidance in the current law on how to determine “ability to pay.” It is rarely evaluated in terms of  economic competitiveness or the impact that a relatively generous award will have on governments’ ability to provide services to their citizens without raising taxes.  Arbitrators frequently cite the capacity to tax and borrow as indicative of an ability to pay for an award, regardless of the overall tax or debt burden. A recent report found arbitration awards, on average, have been greater than inflation in the past decade and have rarely included a wage freeze—even during the Great Recession.[1]

For large cities like Syracuse, Rochester and New York City, and large counties like Westchester and Suffolk, frequent trips to arbitration—and the relatively large wage awards that come with them— have heightened fiscal pressures.  The problem is particularly acute in Suffolk County, where the County Executive declared a fiscal emergency in 2012. Suffolk has settled 10 contracts with uniformed personnel through arbitration since 2000.[2]  Directly negotiated contracts with police officers, who comprise one-third of the full-time county workforce, have been rare in the last 20 years; the contracts have been decided mostly through arbitration, and awards have driven pay for Suffolk police officers above that of other law enforcement officers in the region.[3]

What should the Legislature do in its final week?  Assemblyman Peter Abbate and Senator Martin Golden have sponsored two bills that would perpetuate the status quo: one would extend arbitration for four years (A6713/S4910) and the other would go further to make the law permanent (A6714/S4908).  But the impact of binding arbitration on the collective bargaining process has been too serious for this to be treated as a routine extender of current law. 

The better option is to amend the statute to place greater emphasis on the ability of governments to pay the award.  At a minimum, the statute should be revised to define “ability to pay” as the capacity to pay all costs—including related fringe benefits— of the imposed contract from recurring resources without increasing taxes, making service cuts or employing fiscal gimmicks. Guidance and training should also be provided to arbitrators so they understand how to judge “ability to pay” based on this more specific definition.

Taxpayers have been at a disadvantage for too long in binding arbitration—reforms are needed in this legislative session to level the playing field.

By Maria Doulis

[1] E.J. McMahon and Michael Wright, “Police and fire pay keep rising, benefits sticky under arbitration,” Empire Center for New York State Policy, May 9, 2013,

[2] Not just for police officers, but also for correction officers, detective investigators, superior officers, and detectives.

[3] Citizens Budget Commission, “A Comparative Analysis of the Pay of Port Authority of New York and New Jersey Police Officers,” December 2012.