New York government leaders reached an agreement Tuesday to create a Financial Restructuring Board for Local Governments.

Gov. Andrew Cuomo announced that he had reached an agreement with Senate Majority Co-Leaders Dean Skelos and Jeff Klein and Assembly Speaker Sheldon Silver on the legislation to create the board.

The board would provide plans to local governments struggling with financial problems. Local governments that turned to it and accepted the board’s plan would be contractually obligated to follow the plan.

The board would also offer a binding arbitration process for municipal governments, police, fire, or deputy sheriff unions, if both the governments and unions were to agree to use the board’s arbitration.

The 10-member board would be chaired by the state budget director and include the state comptroller, attorney general, secretary of state, and six others appointed by the Governor.

The arbitration panel would be required to give 70% of the weight of their decision to the ability of the municipality or county to pay.

Local governments would be eligible for arbitration if they met one of two criteria: the local government’s average full value tax rate was above the 75th percentile for all New York’s municipalities, or if its average general fund balance over five years has been less than 5% of its budget.

“Since 1974, the expensive mandate known as binding arbitration – which was originally enacted as a two-year experiment but has been deemed a ‘sacred cow’ ever since – has blindly ignored the fiscal ability-to-pay of local taxpayers and arbitrarily inflated the cost of police and fire contracts in every region of the state,” said Peter Baynes, executive director of the New York State Conference of Mayors. “Thanks to Gov. Cuomo’s leadership, for the first time this inequity will begin to change as arbitrators, in most instances, will be obligated to give taxpayer ability-to-pay the highest consideration, and also take into account the fiscal constraints of the 2% tax cap.”

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