Budget Crisis in New York

[by Marty Goodman]

City and State governments have been squeezed financially for decades by Democratic and Republican administrations. Massive tax breaks for the rich alongside under-funding of public services used by working people has left many City and State budgets under funded.

The Wall Street meltdown has brought it all to a head – with workers asked to pay most of the bill for a crisis they did not create.

Ground zero of the Wall Street meltdown is, of course, New York City and New York State. Job losses in New York City over the next two years are estimated at 175,000, 35,000 in the financial sector alone.

New York’s chief budget slasher is New York’s Democratic Governor, David Paterson, who says the State faces a $15.4 billion budget gap over the next two years. On December 16th, the Governor proposed $9 billion in cuts for this fiscal year alone, which ends in March. The total budget is $121.1 billion. The cuts include slashing billions in healthcare and education funding.

Paterson also proposes slashing pensions for new NY State employees, an effort that has won him the praise of the two leading capitalist newspapers, the conservative “Daily News” and the liberal “New York Times.” In addition, Paterson’s proposal will include ‘incentives’ to labor bureaucrats to re-open contracts and gut employee agreements; massive job and service cuts and an, as yet, unspecified layoff threat.

Paterson was elected as Lieutenant Governor on the Democratic Party ticket of former Governor Eliot Spitzer, who resigned in early 2008 after a prostitution scandal. The ticket was enthusiastically supported by Democratic Party labor bureaucrats, who told members both were “friends of labor.”

Mike Bloomberg, New York City’s billionaire Mayor, says he’s cutting $1.5 billion from the City budget, which includes 500 or more layoffs. Said Bloomberg, “We can’t print money. At some point, there is only labor left.”


On December 16th, 200 hundred demonstrators rallied outside the midtown Manhattan offices of the New York City subway and bus system to protest a proposed 23% fare hike, the threat of 1200 transit worker layoffs and massive service cuts, including the elimination of entire subway and bus lines. The attacks are part of what has been called the “doomsday budget” for 2009.

The protest was officially sponsored by Take Back Our Union, an election block, but also supported by independent activists. The protest denounced the MTA for making working people pay for a crisis they did not create. Speaker after speaker tied the attacks on working class riders and transit workers with other attacks on working people.

The Metropolitan Transportation Agency (MTA), a state funded agency which runs the New York City subway and bus system, is claiming a $1.2 billion deficit for 2009. 15% to 20% go to pay debts on tax free MTA bonds.

The rally was a unique coming together of transit workers, students and teachers. In fact, the largest number of demonstrators were from the City University of New York (CUNY) system, who protested earlier that day at Governor David Paterson’s mid-town office near the MTA. In 1980, students at City College of New York, a CUNY campus, shut down the college in solidarity with an 11-day transit strike.

The earlier CUNY rally was sponsored by the Professional Staff Congress (PSC) union and built heavily by the CUNY Contingents Unite!, an activist coalition of students and teachers who organize their own protests against hikes and cuts. The overwhelmingly working class student population of CUNY face a tuition hike of $600 and severe funding cuts as part of $1 billion in proposed cuts to the entire educational system from City and State budgets.

By pre-arrangement with CUNY Contingents Unite! and transit worker activists, demonstrators left the PSC rally as it ended and marched down 42nd street to the MTA, chanting loudly all the way to the MTA.

The “doomsday budget” was passed the next morning on Dec. 17th at a meeting of the MTA Board. One public speaker was arrested for allegedly attempting to throw a shoe at MTA Chief Eliot Sander.


Transit worker protestors were also anxious about the fate of their contract, which expires January 15, 2009. The Transport Workers Union Local 100 went on strike for 2 ½ days in December 2005.

Most members viewed the strike as cut short by the union’s leadership, which settled for a first-time 1.5% employee healthcare deduction and the loss of a pre-holiday contract expiration date that was pushed back to January, greatly reducing future union leverage.

The strike violated the Taylor Law, a bi-partisan, anti-strike gag act for public employees. Judge Theodore Jones (Democrat), imposed a $2.5 million fine and removed automatic “dues check-off” (i.e., automatic dues deductions by the MTA) as punishment, which began in June 2007.

The union was forced to fund operations by direct appeals to the membership. However, given membership dissatisfaction with the strike, only about 50% were current in their dues payments. In the meantime, the crisis was used by the authoritarian Local 100 President Roger Toussaint to purge dissident officers on manufactured dues arrears charges.

“Dues check-off” was restored last November by the State Supreme Court. The decision was widely viewed as the culmination of an ongoing truce between the union and the MTA. In January 2008, Local 100 President Toussaint announced at a joint MTA-TWU press conference, that, “We will resolve the next round of negotiations without crisis.”

Seeking dues check-off, the union submitted a court ordered affidavit declaring that it would not strike again. The union stated it had, “no intention, now or in the future of striking or threatening an illegal walkout.” While legally not air-tight, seen within the context of a budget crisis and contract negotiations, it served as a “no strike pledge.”

During 2008 there were no contract mobilizations of the membership. In addition, there was complete secrecy surrounding negotiations, further demoralizing members.

In November, Toussaint was elevated to TWU International Vice-President and director of “strategic planning,” while remaining Local 100 President. In 2005, Toussaint denounced the International leadership for encouraging Local 100 members to cross picket lines.

At the union’s yearly local-wide meeting on December 13th, Toussaint referred to pension buster Paterson as “our friend,” a doubly absurd assertion since the 2005 strike was called to prevent new hires paying more into pensions.

Clearly, Toussaint is gambling all on funding from capitalist politicians, with some trickle-down to the membership. Toussaint’s relationship with Governor Paterson and especially Barack Obama, is key to the leader’s strategy.

In 2005, in the days before the strike, Toussaint proclaimed, “a deadline is a deadline.” At December’s mass meeting, Toussaint calmly reported, “Negotiations may go past the expiration date.” The announcement was made without a warning about the danger of going beyond the expiration date. Layoff threats were not even mentioned.

Toussaint’s presentation cast a pall of confusion over a membership that had only three years ago shut down the financial capital of the world.

On January 6, 2009, both the MTA and the TWU announced an impasse in contract negotiations and were seeking an agreement in an arbitration court, a disastrous move for any union. The current contract was imposed by an arbitrator, after first being rejected by a slim margin in an early 2006 contract vote.

The Local 100 leadership has sacrificed the power of the membership to wait on Obama’s so-called stimulus package, which already promises billions in tax breaks for the rich. Whatever the fate of the bill, a contract imposed by a capitalist court will take transit workers further into financial crisis. The contract will likely be accompanied by renewed attacks on pension benefit rights in the State’s capital.

What’s missing in Local 100 is a mobilized rank and file with a recognized class struggle leadership that will fight independently of the boss class, their politicians and their courts. Right now, that’s a long way off.

Related Articles

Behind Sam Bankman-Fried’s Cryptocurrency Crash

FTX’s plunge from $32 billion to bankruptcy and the collaping value of cryptocurrencies shows the speculative casino nature of the capitalist economy, where unimaginable wealth is driven by fictitious capital.

Summer Strike Wave Hits Britain

In Britain, the working class is experiencing a wave of strikes and “Industrial Action” from some of the largest established unions in the country, activity that disrupts the economy. These striking unions have made political demands in recent years to renationalize mail, rail and the electric grid.