Bloomberg Takes Coalition to Albany to Back Cuomo Pension Plan
Bloomberg and a coalition of two dozen local leaders, who collectively represent 15 million residents, are pushing legislators to support a plan proposed by Governor Andrew Cuomo. The governor wants to raise the retirement age to 65 from 62 for most new workers and allow for a voluntary 401(k)-type retirement plan.
Cuomo, 54, says his plan will save the state and local governments $113 billion over the next 30 years. The proposal has drawn him into a battle with public-worker unions and Comptroller Thomas DiNapoli, a fellow Democrat and sole trustee of the $140.3 billion pension fund.
“This is not anti-union, this is not anti-worker. This is about job preservation,” Westchester County Executive Rob Astorino said at a press conference. “The only tool we have is to have less jobs, and we don’t want to do that, because less jobs means less services.”
Suffolk County, home to Long Island’s Hamptons beach communities, dismissed 50 employees this week and another 678 may lose their jobs in the next four months, County Executive Steven Bellone said. Others echoed the concern that rising pension costs will lead to lost services as workers are fired. Cuomo has said pension costs will consume 35 percent of local- government budgets by 2015, up from 3 percent in 2001.
New York’s (STONY1) retirement fund, the third-biggest U.S. public pension, had 101.5 percent of the money needed to pay its obligations in 2010, better than any other state, according to an annual study by Bloomberg Rankings.
To keep it funded after losses in the financial crisis, the system has increased payments made by local governments. In order to smooth the spike in payments, DiNapoli in 2010 offered municipalities and the state the option of deferring a portion if public employers pay interest on the difference.
This year, about 165 of the state’s 3,000 local governments, school districts and agencies borrowed $200 million through the plan, up from $43.4 million a year earlier, according to Eric Sumberg, a DiNapoli spokesman.
The local officials pushing pension changes in Albany today, including those who took part in DiNapoli’s program, said amortizing the payments isn’t good fiscal strategy.
‘Road to Hell’
“The road to hell is paved in amortizing pensions,” said Thomas Roach, mayor of White Plains, a city of 70,000 and the county seat of Westchester, which borders New York City. “All you’re doing is taking a current operating cost and pushing it down the line.”
DiNapoli pushed the amortizing plan at a meeting of the New York State Conference of Mayors and Municipal Officials in Albany on Feb. 27, saying it has “many advantages from a cash- flow basis.” Unlike Cuomo’s plan, he said, it gives “you help right now, not 30 years from now.”
Joining DiNapoli’s plan isn’t an option for New York City, which has separate pensions, though the state sets the policy guiding the costs. The city paid about $8 billion this year, up from $1.3 billion in 2002, Bloomberg has said.
“The pension increase is more than a five-fold increase, amounting to more than the operations of New York City’s police, fire and sanitation departments combined,” Bloomberg said. “This is not a problem that affects only the five boroughs of New York City. It’s not a downstate issue, or an upstate issue. And it’s not a Republican issue, or a Democratic issue. This is a New York issue.”
New York’s mayor is the founder and majority owner of Bloomberg News parent Bloomberg LP.
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