In November, Judge Valerie Huling with the Second Judicial District in New Mexico ruled that “the city of Albuquerque can reduce the wages of its AFSCME union workers if there isn't enough money appropriated to pay them,” under the Bateman Act. See Dan McKay, “Court: City Can Cut Union Pay,” Albuquerque Journal (Nov. 12, 2010).
Under Section 3 of the New Mexico Public Employee Bargaining Act (PEBA), NMSA §§ 10-7E-1 et seq., PEBA supersedes most other State statutes in the event of conflict, with several notable exceptions. One of those exceptions is the Bateman Act, NMSA §§ 6-6-11 and 6-6-13 to 6-6-18, which prohibits any local governing body from “becom[ing] indebted or contract[ing] any debts … which, at the end of such current year, is not and cannot then be paid out of the money actually collected and belonging to that current year.” It further provides that “any indebtedness for any current year which is not paid and cannot be paid, as above provided for, is void.”
Under Section 3 of the New Mexico Public Employee Bargaining Act (PEBA), NMSA §§ 10-7E-1 et seq., PEBA supersedes most other State statutes in the event of conflict, with several notable exceptions. One of those exceptions is the Bateman Act, NMSA §§ 6-6-11 and 6-6-13 to 6-6-18, which prohibits any local governing body from “becom[ing] indebted or contract[ing] any debts … which, at the end of such current year, is not and cannot then be paid out of the money actually collected and belonging to that current year.” It further provides that “any indebtedness for any current year which is not paid and cannot be paid, as above provided for, is void.”
Essentially, then, the Bateman Act prohibits local government from contracting for what it cannot pay for that year, and it voids any such contract. While the Bateman Act may have seemed like “legal arcana” to outsiders for many years, it is likely to play an increasingly important role in today’s tough economic times, which some describe as “the new normal.” Moreover, it is already beginning to play a particularly important role related to the enforcement of collective bargaining agreements, or Union contracts.
Practitioners in the field of labor law have been speculating for years whether or not the Bateman Act could be applied in this manner. Although the issue may ultimately need to wend its way through the appellate courts for final resolution, Judge Huling’s decision is at least a starting point for analysis. It will also likely affect the bargaining behavior of unions and public sector employers going forward, until the Court of Appeals and/or Supreme Court review the issue.
As reported in the Albuquerque Journal, Judge Huling's ruling was “a legal victory for Mayor Richard Berry's administration,” which had cut city pay by about 2 percent “to help balance the budget.” Id. Meanwhile, AFSCME had “filed suit … to keep its expiring contracts in place” during negotiations, pursuant to PEBA’s “evergreen clause,” under which the provisions of expired contracts remain in effect until a successor contract is negotiated. Id. The City had agreed to maintain the expiring contracts in place in general, but argued that “any economic provisions had to be subject to the availability of funds and the budget approved by the City Council.” Id.
Judge Huling affirmed the City’s position twice, first in an emergency decision issued in July of 2010, then again when she granted summary judgment in the City's favor in November.
It can hardly be stressed enough how significant Judge Huling’s decision is, and will be going forward. As the City Attorney Rob Perry said, the ruling allows local government “flexibility to deal with the financial difficulties of today and tomorrow." To Unions, however, it will likely be viewed as a threat to other negotiated agreements.
If you are interested in neutral services such as arbitration, mediation or contract ALJ services, in labor/employment or other areas of the law, please contact Pilar Vaile, P.C. at (505) 247-0802, or info@pilarvailepc.com.
