T board OK's delay in paying back wages

Unions reportedly are owed $43m

In a further sign that the MBTA's financial problems have reached a critical stage, the transit agency's board of directors voted yesterday to delay paying $43 million in back wages to its labor unions.

Board members tabled a motion that would have funded the payments and said they would reconvene within a month to make good on a legally binding arbitrated settlement with the Boston Carmen's Union Local 589, the transit agency's largest union and the first to settle a contract.

In the meantime, board members said they want to do whatever they can to avoid using borrowed money to pay wages. The plan also would have exhausted the last $1 million from the T's emergency fund and spent most of what remains in a capital fund set aside to keep equipment maintained.

"We are going to have to deal with this. This iceberg is not going to go away," said board member Darnell L. Williams.

While the workers will eventually be paid, the vote to table their back pay puts further pressure on state lawmakers to help bail the T out. The agency has more than $8 billion in debt load and its primary source of funding, the state sales tax, has not met expectations established at the beginning of the decade.

The T's budget problems have been dissected and discussed for several years without significant action. Much of the debt comes from expansion projects required as part of environmental mitigation for the Big Dig.

Transportation Secretary Bernard Cohen, who chairs the Massachusetts Bay Transportation Authority board, asked for up to a month to look for another source of money for the back pay. But he acknowledged the short-term options may be few. He said at another point in yesterday's board meeting that the state budget is also facing shortfalls and may be deferring some of its yearly executive pay raises as well.

Union members had been without a contract for two years before an arbitrator ruled on July 7 on a four-year contract that awarded them an immediate 9 percent raise, as well as back pay for the two years they went without a cost-of-living increase. Some of the T's other unions have approved similar contracts, and others are expected to follow suit.

Jonathan R. Davis, deputy general manager and chief financial officer for the T, estimates that giving all the unions back pay will cost $43 million. Raising salaries by 9 percent this year will cost some $30 million.

Employees in the Carmen's Union - about 3,600 of the T's 6,300 employees - have already begun receiving their 9 percent raise. The board did not approve paying for the raise yesterday, but there is enough money in the budget to cover the higher wages until the end of May 2009.

"There's one thing you never want to play with, and that's people's pay," said Steve MacDougall, president of the Carmen's Union. "It's unacceptable."

He said union members expected to be paid back wages a month ago and that employee wages were being unfairly linked with larger structural budget problems at the T.

But the arbitrator did not set a deadline for paying the back wages, giving the T some leeway in paying union members. "We need to comply with that as soon as we can, but, given the financial constraints, we're moving forward with all due speed," said Brian Donohoe, assistant general manager for labor relations for the MBTA.

Davis told board members that the MBTA will not be able to fix its budget problems "without additional revenue sources, debt relief, or significant service cuts."

Paul Regan, executive director of the MBTA advisory board, said yesterday's board actions were an example of the "chickens coming home to roost."

"These guys are going to get their money. The T is obligated to pay," he said. "This is what we've been warning about at the advisory board. And I hope the secretary has some luck."

Noah Bierman can be reached at nbierman@globe.com.