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Murphy Inks Contract with CWA Without Knowing What It Will Cost Taxpayers

Governor’s ‘I don’t know the exact number …’ reflects confusion in general, since budget plan contains contradictory figures for union raises

Although Gov. Phil Murphy says he’s confident his administration did the right thing by providing members of a major state workers’ union with raises to resolve a longstanding contract impasse, he’s not exactly sure how much the newly ratified labor deal is going to end up costing state taxpayers.

The first-term Democrat announced earlier this week that a new four-year contract agreement with the Communications Workers of America had been ratified, ending a dispute with CWA’s roughly 35,000 state employees that was inherited from the previous administration.

Major elements of the CWA deal include two sets of 2 percent raises, and retroactively paying out step increases that had been frozen by former Gov. Chris Christie.

Setting the bar for other union contracts

In many ways the agreement was expected, as Murphy received robust support from the CWA – and its valued endorsement — during last year’s gubernatorial campaign. The new deal also sent a positive signal to other public-worker unions that make up Murphy’s base. Terms set forth in the state’s CWA contract tend to set the bar for other union agreements.

But Murphy also stepped on his own success yesterday by saying he doesn’t know exactly how much the new contract will cost taxpayers, which potentially contradicted a news release put out by his office that said the raises and other elements of the CWA agreement were “accounted for” in the current fiscal year budget, and his spending plan for fiscal year 2019.

“I don’t know the exact number, but our folks are working on the program details,” Murphy told reporters following a news conference in Trenton.

Unsure about full cost of contract

Meanwhile, state lawmakers also seemed uncertain of the full cost of the new labor contract, and some Republicans are criticizing the governor for forging a deal without having a strong sense of the full impact on the budget.

“This wasn’t as much a contract negotiation as it was a pure giveaway,” said Sen. Tony Bucco (R-Morris).

The state’s contract with the CWA ran out in 2015, when Christie was governor, and union-represented employees had been working without a deal ever since. Christie, a Republican who took pride in maintaining a rough relationship with public-worker union leaders, also declined to pay out increment or “step” increases that were part of the prior labor deal once it expired, triggering a lawsuit against his administration.

The deal with the Murphy administration provides the step increases retroactively, though some at the top of the scale will get a $650 lump sum. The raises that are also a part of the deal are effective as of August 2017 and July 2018.

Hetty Rosenstein, CWA’s New Jersey director, said in a statement issued after union members ratified the new deal that they were “unwilling” to let Christie “destroy collective bargaining.”

“We held our ground and are heartened that the terrible Christie chapter of New Jersey history is now over,” she said. “Our members were very supportive of CWA’s commitment to hold out. And we are ecstatic that they've overwhelmingly ratified this agreement.”

Public employees ‘in limbo’

The deal was also praised by Sen. Linda Greenstein (D-Mercer), a member of the Senate’s budget committee who represents a district where many state workers live. Working without a contract for so long left many public employees “in limbo,” Greenstein said.

“I think this means a lot to have this ratified and to have this done after so many years. It gives people a sense of stability,” Greenstein said.

Rex Reid, political and legislative representative for the American Federation of State, County and Municipal Employees, praised Murphy’s willingness to work with CWA in the wake of Christie’s tenure, and added that his union “would be happy” with the overall parameters of the deal reached with CWA.

“At least with this governor, he’s willing to sit down and talk and listen. He’s fair,” Reid said.

For his part, Murphy told reporters in Trenton yesterday that the deal was “not a big deal,” suggesting it simply restores the state’s tradition of being on good terms with its union workers.

“It’s the right thing to do for workers and working families,” Murphy said. “I’m very comfortable with where we came out.”

But he also stumbled when asked to go over the financial details of deal, which is something reporters had been pressing Murphy’s office to provide ever since the deal was first announced with the claim made that it was fully “accounted for.”

Elusive answers

State budget documents offer conflicting information about the potential costs, as one line in the fiscal 2019 budget suggests the state is planning to spend $75.3 million on “salary increases and other benefits,” which would likely include some portion for unionized employees. Another line item suggests $107.8 million is in the current fiscal-year budget for the same purpose, but a list of supplemental spending items for fiscal 2018 included a $55 million appropriation for “salary program retroactive payments.” Meanwhile, Bloomberg News calculated the likely cost to be $85 million, just to cover the salary increases.

Murphy press secretary Dan Bryan and a spokeswoman for the Department of Treasury did not respond to multiple requests for comment on which figure or figures would cover all expenses related to the CWA deal. A copy of the contract provided by the Murphy administration yesterday in response to a public-records request also did not provide any clarity on the budget hit.

Greenstein, the senator from Mercer County, said lawmakers had yet to be briefed on the full cost of the deal, and Bucco, the Republican senator, suggested the salary increases could end up costing more than 20 percent — rather than approximately 4 percent — when some of the other elements of the deal are factored in. In addition to the annualized raises and retroactive step increases, there are also new terms related to clothing allowances and healthcare.

“It’s especially egregious considering the $1.7 billion in tax increases the governor has proposed to fund his generosity with other people’s money,” Bucco said, referring to Murphy’s overall budget plan for fiscal 2019, which would raise the income tax rate on earnings over $1 million and restore a 7 percent general sales-tax rate.

Matthew Hale, associate professor of political science and public affairs at Seton Hall University, said he’s not surprised to see Murphy, who just celebrated his first 100 days in office last week, strike the deal with CWA, given the governor has been an outspoken proponent of organized labor.

“He sees himself as part of the labor movement,” Hale said. “He’s going to say ‘yes’ to labor unions more than he’s going to say ‘no.’”

Hale suggested the deal could also put the governor in a good position to ask for concessions in the future as the state continues to struggle to cover the cost of rising employee pension and health benefits. But Hale also said Murphy’s failure to provide a full cost of the deal when asked about it by reporters yesterday demonstrates his background as a newcomer to elected office. Murphy previously served as an executive with Goldman Sachs, and as the U.S. ambassador to Germany under former President Barack Obama.

“To say, ‘Oops, don’t know, that’s a fumble when you’re walking into the end zone,” Hale said.

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