Article Image
Arbitration Options Increase Opportunities for NY Municipalities

Saturday, July, 27, 2013

In the wake of news from Detroit and other cities around the country struggling with their fiscal situations, elected officials have begun exploring options to provide relief.  New York has taken a leading role with the establishment of the Financial Restructuring Board, which aids municipalities in finance restructuring. 


The same legislation that creates the Restructuring Board also paves the way for binding arbitration, with the goal that public services can then be provided more cost-effectively.  After several years of economic downturn, many municipalities around the New York and the rest of the country were forced to make decisions in order to remain solvent.  As cities look to recover and keep property taxes down, becoming stable is a primary exercise. 


As part of the law, the Financial Restructuring Board will include 10 different members.  Some of the members will be the attorney general, the secretary of state, the state comptroller, and the state budget director, all working together to assist municipalities with their financial concerns. 


Localities can request assistance directly from the board once they have met the financial criteria.  The eligibility for the program is based on property tax rates and fund balances.  The board is authorized to research and review the data provided by the locality in order to make recommendations, like loans or grants. 


The board serves dual purposes, though, with the inclusion of the arbitration program.  The board will take on the role of an arbitration panel for fire, deputy sheriff unions, or police, and the board is required to issue a ruling within six months.  That ruling will then be binding for a maximum period of four years.  In the same legislation, the statute that allows binding arbitration is also extended for three years.  For those cities claiming financial distress, the arbitration panel must weight 70 percent of their decision around the ability to pay.