The Metropolitan Transportation Authority Wednesday rejected a proposal by a White House-appointed board of mediators to settle a 3 1/2-year-long contract dispute with Long Island Rail Road unions.

At a Washington meeting of the National Mediation Board, Anita Miller, director of labor relations for the MTA, formally turned down the recommendations of the Presidential Emergency Board, empaneled by President Barack Obama in November.

As dictated by the Federal Railway Act, the LIRR and its unions now have a 60-day "cooling off period," after which Obama could appoint a second board to help reach a deal. If both sides are still at an impasse by July, the unions could legally strike.

Last month, the board called on the LIRR to give workers annual raises averaging 2.83 percent over six years -- shooting down the MTA's claim that it couldn't afford to do so.

The eight LIRR unions representing 5,600 of its 6,000 laborers agreed to accept the proposal. They have been working without a contract since June 2010.

Miller said the MTA's rejection of the deal "is based upon the flawed reasoning of the board and the dramatic negative consequences that would impact the entire New York metropolitan area, the most transit-dependent region in the United States, if these recommendations were implemented."

Miller said the board's proposal to leave intact LIRR disability provisions and work rules also would do nothing to discourage railroad retirees "from filing fraudulent applications" for federal disability benefits and would continue to "spike pensionable earnings and dramatically increase operating costs."

Avoiding the first organized work stoppage of most LIRR unions in 20 years is "in the hands of the MTA," according to Anthony Simon, general chairman of the United Transportation Union.

"While the [board's] recommendations did not give labor everything we hoped for, it will prevent a strike and labor will accept to not put any burden on the riding public," Simon said. "Based on where we are today, if a strike occurs, it will be the sole result of the MTA's unwillingness to accept [the] recommendations."

The MTA has repeatedly called on all its unions to accept a three-year freeze on labor costs. Under its proposal, any raises would be paid for through other union concessions.

The agency has said the "three net zeros" plan is necessary to keep the MTA solvent, and to avoid a fare hike three times the size of the 4 percent increase planned next year.

Miller said, with its proposed deal, the Obama-backed board is saying that worker raises "should come out of the pockets" of LIRR riders.

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