Cuomo Urges Mayors to Take N.Y Pension-Overhaul Fight Home

New York Governor Andrew Cuomo urged the state’s mayors to rally their communities in support of his proposal to raise the retirement age for new workers and offer a 401(k)-type alternative to government pensions.

The measure would save $113 billion for public employers, including New York City, over the next 30 years, Cuomo said today at a meeting of the New York State Conference of Mayors and Municipal Officials in Albany, the capital. The pension changes have drawn Cuomo into a battle with the state’s public-worker unions and Comptroller Thomas DiNapoli, a fellow Democrat and the sole trustee of the $140.3 billion pension fund.

“If we have this argument in this town, we lose because they control the dialogue,” Cuomo, 54, said, describing Albany as a “company town” run by the unions. “I want to have it in communities all across this state because that’s where people get it, and that’s where people understand the facts and that’s where we will win. But I need you to make it happen.”

Mayor Michael Bloomberg of New York announced last week that 12 mayors and 13 county executives representing 15 million residents had joined a coalition to support Cuomo’s proposed pension changes. Bloomberg is coming to Albany to promote the plan on Feb. 29, the day lawmakers return from a two-week break.

Competing Globally

In a letter sent to legislative leaders today, Kathryn Wylde, president of the Partnership for New York City, a group of corporate chief executives, backed Cuomo’s proposal, saying the state and city can’t continue “to compete globally if we do not find ways to contain the growing costs of government.”

New York’s retirement fund, the third-largest 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 incurred in the financial crisis, the system has increased the payments made by local governments. By 2015, 35 percent of local-government budgets will be consumed by pension costs, up from 3 percent in 2001, Cuomo said today.

“This year is about pension reform,” Cuomo said. “We need to change the relationship with the special interests because we can’t afford to pay the pension because the taxpayers are broke.”

Budget Power

Cuomo put the pension changes into his budget proposal for the fiscal year that begins April 1. He said last week that if lawmakers send him a spending plan without the measure, he’ll force the Legislature to choose between shutting the government or passing his plan by using a so-called budget extender. The process is used to keep the government operating when there’s no agreement on the budget. The governor has the power to put any item in an extender.

The proposal to give new state workers the option of choosing a 401(k)-type plan has drawn the most fire, with unions describing it as an attack on the middle class and DiNapoli saying defined-contribution plans provide less security than a government pension. Cuomo also wants the retirement age for new workers to be 65, up from the current 62.

Cuomo is “flexible” on the measure, he said during a press conference today following his speech.

“There’s a negotiation with the Legislature, and at the end of the day it’s about the savings,” Cuomo said. “I was born flexible. I’ve gotten more flexible as governor. I’m a veritable Gumby.”

Talking to Unions

Even if the governor removes the 401(k)-type option from the proposal, unions should still be involved in the discussion, DiNapoli said during a press conference following a speech he gave to the mayors conference today.

“My biggest concern is the 401(k) option,” DiNapoli said. “If we keep it as a defined-benefit plan, we need an inclusive discussion of what the parameters of that plan should be.”

Cuomo said he won’t talk to the unions about it. Last year, the governor won pay freezes and furloughs from the state’s two biggest unions after threatening to fire almost 10,000 workers. The new contracts saved the state $450 million in the first year. Pensions aren’t part of the collective-bargaining process, and are determined by the Legislature and the governor, Cuomo said.

“I have nothing to negotiate with,” he said.

New York’s mayor is the founder and majority owner of Bloomberg News parent Bloomberg LP.

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