New York's Metropolitan Transportation Authority expects its five-year agreement with Transport Workers Union Local 100 to cost $525 million should it materialize, according to an authority document.
The authority and the TWU, which represents 34,000 bus and subway workers, announced their tentative agreement on April 17. Employees expect to receive ballots this week. MTA board approval is also necessary.
The contract, retroactive to January 2012, involves 1% retroactive increases for 2012 and 2013, plus 2% for each of the following three years. Costs break down to $126 million retroactive and $55 current for fiscal 2014; $116 million for 2015 and $114 million for each of the two following years, according to a supplement to an official statement for its April 10 sale of $500 million in transportation revenue bonds.
At Monday's finance committee meeting at MTA headquarters in midtown Manhattan, finance director Patrick McCoy said the transaction included a "very strong" $266 million retail sale.
Under the labor agreement, employees would contribute 2% of their gross wages on 40 hours per week toward health and other benefits. Authority officials say the contract improves optical and dental benefits.
Although the settlement would contradict the net-zero wage growth assumptions built into the MTA's four-year financial plan, the additional costs are manageable, according to Moody's Investors Service.
The settlement "would significantly improve the predictability of the MTA's financial plan with a minimal 1.6% cost increase and no new fare increases, a credit positive for the transit agency," said Moody's, which rates the transportation revenue bonds A2. Standard & Poor's rates them A-plus while Fitch Ratings assigns an A.
Transportation revenue bonds are the MTA's primary credit. The authority, which reported $33.4 billion of debt as of March 7, is one of the largest issuers of debt in the municipal marketplace.
According to Moody's, the settlement could set a precedent for agreements pending with other unions, notably eight Long Island Rail Road unions. After the establishment of a second presidential emergency, the parties submitted their final offers and the board held hearings last week.
The board has 30 days to issue a report to President Obama, followed by a possible 60-day cooling-off period. The unions could strike as soon as July 20.
