Before the LIRR strike, the MTA sought overtime, healthcare concessions from unions

In its final offer to five Long Island Rail Road unions before the railroad's first strike in more than 30 years, the MTA sought significant concessions — including overtime reforms and a sizable increase in employee healthcare contributions — but achieved none of those in a settlement that gave labor leaders most of what they wanted, a Newsday analysis of negotiation documents shows.

Union leaders' last proposal before the strike deadline called for a 4.5% raise in the final year of the four-year contract — the percentage eventually settled on in the final agreement, according to the offer time-stamped 9:40 p.m. on Friday, May 15. It also included minor givebacks, including doing away with paper paychecks and workers performing some computer training outside of work hours.

Those terms all made it into the agreement ratified in June by the Metropolitan Transportation Authority board and the unions, which represent locomotive engineers, electricians, signal inspectors, machinists and ticket clerks.

What did not make it in were the MTA's demands.

The documents, passed across the bargaining table in the final hours before the 12:01 a.m. May 16 strike deadline and obtained by Newsday through a source not authorized to disclose details of the sensitive negotiations, offer the most detailed window yet into where the sides stood just before LIRR workers walked off the job. The strike stranded tens of thousands of Long Island commuters for three days before a settlement was reached giving the unions raises totaling around 15% over four years.

MTA officials have said their Friday night proposal, rejected by union leaders, would have effectively kept the value of the fourth-year raise at 3.75% — just 0.05 points below the 3.8% net value of the settlement reached the following Monday.

Fueling budget deficit

The contracts will cost the MTA an extra $180 million annually over what it had budgeted, the agency has said. Although Gov. Kathy Hochul and MTA leaders said they can afford the deal, the transit authority's chief financial officer said it is contributing to budget deficits projected to grow from around $300 million next year to $900 million in 2030. The MTA's latest looming fiscal crisis is again raising concerns about the potential for steep fare hikes and a taxpayer-funded bailout.

Zilvinas Silenas, president of the Empire Center for Public Policy, a free-market think tank in Albany that has been critical of MTA spending, said the final agreement's resemblance to the unions' pre-strike proposal suggests the unions "got what they wanted" and the MTA made "a bad deal for taxpayers, who will ultimately foot the bill."

"The deeper problem is that the people with the greatest stake in the outcome — riders and taxpayers — have no meaningful voice in the process," Silenas said in an email. "The unions understand that and have become highly effective at using it to their advantage."

Representatives from each of the five unions declined to comment or could not be reached.

Gilman Lang, general chairman of the Brotherhood of Locomotive Engineers and Trainmen, the union representing LIRR train operators, said in an interview last month it is "absolutely false" that the contract settlement should cause a financial strain for the MTA, especially given the agency closed out last year with a $765 million budget surplus. "They've repeatedly used this labor force as their scapegoat," he said.

MTA officials said privately they reject the notion that they made more concessions than the unions did, pointing out that the 3.8% value of the final raise was very close to their 3.75% target. They also noted that other concessions they were seeking, including those regulating overtime, were not about reducing costs as much as they were about safety and fairness.

"We were definitely standing our ground to make sure the real cost to the MTA was one that we could manage, and we accomplished that," MTA chairman Janno Lieber said after the contracts were ratified.

Hochul spokesman Sean Butler in a statement maintained the final deal would not force fare hikes or tax increases on riders.

Details of the final deal

In the months leading up to the strike, both sides had agreed on the terms of the first three years of any new contract — paying annual raises of 3%, 3% and 3.5%, as other LIRR unions had already accepted. A $3,000 signing bonus upon ratification also was agreed upon.

Where the two sides remained far apart was the fourth year. After initially resisting a fourth year, the MTA by September agreed to a 2% raise. The unions initially sought a 6.5% raise in a fourth year. After a White House-appointed mediation board recommended settling at 4.5%, both sides shifted slightly — the MTA to 3% and the unions to 5%.

The MTA's final three-page offer, designated as "v12" to signify the 12th iteration since the two sides began negotiating in earnest earlier in May, was marked "for discussion purposes only," and proposed the following:

• A 4.35% raise supplemented by a $500 lump sum.
• An agreement to "establish or improve overtime equalization procedures," aimed at ensuring that employees with the most seniority don’t monopolize overtime opportunities.
• A requirement that newly hired employees pay 10% of healthcare costs — up from the current 2%.
• A ban on employees working more than 18 hours of consecutive overtime "unless the president of the railroad or his/her designee" declares an emergency.

The memorandum of understanding reached on the evening of Monday, May 18, with the blessing of Hochul, included a 4.5% raise in the fourth year, and a few modest concessions. The unions agreed to shift to fully electronic paychecks — saving the LIRR money on printing and other related costs — and to undergo up to 16 hours of computer training outside of work hours.

The most significant concession, MTA officials have said, was a six-week extension of the contract term. Spreading the final year’s wage increases over an additional month and a half allowed the MTA to more easily absorb the cost and argue to other unions looking to get the same deal that the actual value of the fourth-year raise was 3.8%.

Although the transit authority had for months suggested a fourth-year pay raise of more than 2% could cause steep fare hikes, tax increases, service cuts and layoffs, upon reaching the settlement with the unions, MTA leaders insisted they could afford it. Even after the MTA's chief financial officer, Jai Patel, last month said newly projected nine-figure annual budget deficits "are primarily driven" by the new LIRR contracts and other uncontrollable costs, Lieber maintained the new contracts did not deliver a "big hit to the budget," even if given to the MTA's entire 70,000-member workforce.

"The deal that we made ... applied all across the MTA has fit within our budget," Lieber said on July 29.

Higher fares could follow

As the MTA has historically sought to fund growing labor costs in part through fare and toll increases averaging about 2% a year, the size of the LIRR unions' raises has raised questions about whether the MTA will seek higher rate hikes in the future. Its next fare and toll increase is expected next year.

Lieber said "riders should not have to bear the full brunt" of the rising costs. MTA board member Neal Zuckerman, who chairs the authority's finance committee, agreed, but also noted that there's not much else the MTA can do to raise revenue.

"Fares are the one lever that the MTA has in its control," Zuckerman said in an interview, adding that he thinks workers' demands for raises that keep up with inflation are reasonable. "I certainly recognize that workers need a living wage. That's the purpose of the unions — to protect and support their members."

Rather than address "permanent structural problems" — including the fact that LIRR unions are not covered under the state's Taylor Law prohibiting strikes — Ken Girardin, a fellow at the Manhattan Institute, expects the state and MTA will look to address the MTA's latest fiscal crisis as it has past ones: through a taxpayer-funded bailout.

"The pattern from Albany for the past two decades has been for state government to ignore the MTA's cost drivers, let the MTA get into trouble, increase the state's support for the MTA and then act surprised when the cost drivers get the MTA in trouble again," Girardin said.

By Alfonso A. Castillo

alfonso.castillo@newsday.com@alfonsoreports

Alfonso Castillo has been reporting for Newsday since 1999 and covering the transportation beat since 2008. He grew up in the Bronx and Queens and now lives in Valley Stream with his wife and two sons.