ALBANY — State workers risk "massive" layoffs later this year if their unions don't

agree to concessions to help the state erase its deficit, the Paterson administration warned

Tuesday.

The threat comes as unionized state workers on Thursday are set to see their pay go up by 4

percent — creating an additional $400 million in payroll costs this year — under

the terms of a contract negotiated by former Gov. Eliot Spitzer.

At a time when public- and private-sector unions around the country have agreed to pay

freezes or cuts, the big public employees unions for state workers are refusing to go along

with efforts to cut what Gov. David A. Paterson proposed as $250 million in work force savings

this year, officials said.

"It's just frustrating that they won't even agree to the slightest bit of inconvenience,"

said an administration official with knowledge of the talks between the state and its two

largest unions — the Civil Service Employees Association and the Public Employees

Federation.

"I think they're disconnected from the real world," said the administration source, who

spoke on condition of anonymity.

Paterson last year agreed to a no-layoff deal with CSEA and PEF in return for their support

of a bill creating a new pension plan — with higher employee costs — for future

government hires. But that deal ends Dec. 31, an aide to the governor said, and CSEA and PEF

members could face layoff notices and stricter limits on things like overtime pay.

"Their contracts expire next April. I think they'll have very little public support behind

them when the public realizes that when the opportunity came, the unions thumbed their noses

at taxpayers and said, "OK, you suffer, I'm not,' " the Paterson official said.

Union officials sharply dismissed the claims, and said they have offered ways for the state

to cut spending, such as hiring lower-paid state workers to replace private consultants and

names of workers willing to take part in a $20,000 buyout offer from the state to leave the

payroll.

"This seems to be another measure of this administration's incompetence and learning

disability. They don't even seem to know what negotiations are," said Steve Madarasz, a CSEA

spokesman. He said Paterson has been talking up the same ideas for nearly two years, and won't

budge on ideas suggested by the union.

"I don't think they know what they're doing at this point," Madarasz added. "Management 101 is you don't threaten your employees, the people working hard

every day trying to make the administration look good, as if such a thing at this point were

possible."

The unions last year ignored a call by Paterson for a state worker pay freeze and to defer

five days' pay until the worker left the payroll. Unions, the source said, would go along with

a five-day pay lag plan, but only if workers could get two additional days' pay when they quit

or retired.

The administration source said the unions recently sought to reopen talks on the contract

that expires next April. The official said the unions wanted to extend a contract now for an

additional four years to be able to lock in the terms before a new governor takes office on

Jan. 1. Paterson is not running this year.

"We flatly rejected that idea. We said we're not going to tie the next governor's hands,"

the Paterson aide said. "They are scared to death the next governor coming in will still have

fiscal problems and will ask the unions for significant givebacks. So they wanted to lock in

for another four years to avoid that."

Darcy Wells, a PEF spokeswoman, denied any such move on PEF's part and Madarasz called the claim a "gross

mischaracterization" of negotiations.

"They have said no to being any part of the solution to close a $9.2 billion deficit," the

administration official said of the unions.

Unions aren't the only ones criticizing Paterson's plans for the work force. A week ago,

Assembly Speaker Sheldon Silver criticized both the governor's $250 million plan and $450

million by the Senate Democrats for "work force savings;" neither Paterson nor the Senate,

Silver said, provide any explanation for how those savings will be realized.

A Paterson official said it will be difficult to achieve even the $250 million because the

unions won't negotiate. That, the official said, will mean $250 million must be gotten from

other areas of the budget.

"Every idea they have offered is basically a plan for the state to hire more state workers,

which means raising more union dues," the official said.

But said the state has ignored most of the 1,000 names it provided of workers willing to take a severance package to leave the payroll. And she said PEF offered a $33 million overtime savings plan, which would include hiring more workers, but at a

lower pay than giving overtime to higher-paid workers.

The rhetorical wars by a lameduck administration and state worker unions comes as Paterson

and lawmakers are stuck over how to balance the 2010 budget.

Some Democratic lawmakers — who will be having to sell the idea back home of cuts to

popular school, health care and other programs — have agreed with the Paterson

administration's assessment of a state work force unwilling to make major concessions to cope

with the deficit. But most have done so in private conversations or closed-door meetings among

legislators.

The administration's hands are tied. Unless it breaks a deal it made with CSEA and PEF for

the pension bill, it can't force layoffs. And the existing contracts forbid any pay freeze or

salary deferral without union approval.

The Paterson official said it may have to offer an early-retirement incentive to reduce the

payroll this year, but said only about 500 people took the last offer. "People may be afraid

to leave their jobs in this economy," the official said.

Fiscal talks with the Legislature have been characterized as stalled at best.

The official said reducing the work force through attrition is an option, but said nearly

three-quarters of the payroll is at agencies running prisons and mental health and mental

retardation facilities — departments that need to fill jobs to continue critical

services.

"They've basically thumbed their noses at us," the official said of talks with unions.

The unions, the official said, have floated ideas such as a tax on transfers of publicly

traded stocks — a levy the official said would damage Wall Street at a critical time in

the economy.

The unions were perplexed for the timing of the rhetorical hit by the administration. "We

realize we're a target in the public," Wells said. But she said the state should more

seriously consider the union's ideas for payroll savings. "We're taxpayers, too," she said of

PEF members.