‘Exploding pension costs are the single biggest threat to local government’s ability to deliver needed services’

by Grace

It’s an issue that Democrats, Republicans and independents agree on: controlling skyrocketing pensions.

Politicians representing diverse constituencies are united under the umbrella of New York Leaders for Pension Reform, a group whose goal is cutting pension costs.  Members include New York City Michael Bloomberg, New Rochelle Mayor Noam Branson, and Westchester County Executive Rob Astorino.

“Exploding pension costs are the single biggest threat to local government’s ability to deliver needed services,” Astorino said in a statement released by the group Wednesday. “It will be impossible to provide any real property tax relief while operating under these debilitating labor costs that automatically increase every year at an unsustainable rate.”

In a small step to remedy this pension problem, last week Governor Cuomo won passage of Tier 6 reform legislation that he grandly labeled a sweeping pension reform plan that will save state and local governments and New York City more than $80 billion over the next 30 years.

Not so fast.

E.J. McMahon writing in The Torch calls Cuomo’s grandiose claims hyperbole, especially because taxpayers will see no benefit anytime soon since the changes only affect new employees.  And the “billions” in savings are based on the assumption that the Tier 6 structure remains unchanged for 30 years, a highly unlikely scenario.

Even using Coumo’s assumptions, New York City will only save 6% off the projected $359 billion in pension contributions over the next 30 years.  Clearly, this legislation only puts a small dent in the skyrocketing public pension costs that are eroding educational opportunities for New York children.  I foresee no change in time to help my child who is attending a public school where pension costs have risen more than 50% over the last two years and now account for 7.2% of the total budget, up from 5.1% in 2010-11.

The fundamental flaw in New York’s public pension system remains unresolved: like similar systems across the country, it exposes taxpayers to massive open-ended financial risks.  Pension accounting is incredibly arcane and opaque, setting up a proven moral hazard for elected officials who customarily have little regard for long-term consequences.  Unfortunately, the governor did not address this problem, or even acknowledge it.

You can read the entire LoHud.com article after the break.

Parties aside, New York leaders tout pension reform

Feb. 23, 2012, Written by GERALD MCKINSTRY

It’s an issue that Democrats, Republicans and independents agree on: controlling skyrocketing pensions.

Westchester County Executive Rob Astorino, New Rochelle Mayor Noam Bramson and Mayor Michael Bloomberg are among leaders from across the state who want to curb pension costs. Their group, New York Leaders for Pension Reform, will lead a campaign supporting Gov. Andrew Cuomo’s reform plan. They want state lawmakers to act on reforms.

“Exploding pension costs are the single biggest threat to local government’s ability to deliver needed services,” Astorino said in a statement released by the group Wednesday. “It will be impossible to provide any real property tax relief while operating under these debilitating labor costs that automatically increase every year at an unsustainable rate.”

Other supporters include Rockland County Executive C. Scott Vanderhoef, a Republican, and White Plains Mayor Thomas Roach, a Democrat, as well as leaders from across the state.

Annual pension costs for local governments have spiked 630 percent, from $1.7 billion in 2002 to $12.5 billion this year, according to the group.

Despite calls for reforms that they maintain have been opposed by leaders including Comptroller Thomas DiNapoli — he has defended the current system — these costs threaten to raise taxes and diminish local services, they say.

Cuomo’s proposal to change pensions will create a new level, Tier VI, of pension benefits for future hires and exclude overtime from a worker’s retirement formula while allowing workers to opt into a defined contribution plan.

Some, including Astorino, have said it’s a “good first step” in long-term savings but doesn’t address more immediate financial concerns.

Bloomberg, who is unaffiliated and spearheaded the initiative, said governments across the state are facing similar challenges.

“Passing responsible pension reform is essential to ensure that we can afford retirement benefits for tomorrow’s workers — and the public services that today’s citizens deserve and demand,” Bloomberg said.

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