For New York taxpayers, there is another ticking time bomb: the state’s pension obligations.
So says the Empire State Center, an Albany think tank. And now local governments can hear it ticking—loudly.
This alarming report forecasts billions of dollars in additional pension costs for school districts and for state and local governments during the next five years. Does that get your attention?
For years New York State has promised its workers generous defined benefit pensions that double the amount of typical pensions in the private sector. Ten years ago, the state legislature relieved many public employees from contributing 3 percent of their income to their pensions. Now they contribute nothing.
When times are good, state pension funds earn good returns on their investments. But in these tough times, returns are down, and the state requires local governments to increase their contributions.
As a result, localities and school districts fear they’ll be forced to contribute billions more to pension funds, but won’t be able to raise property taxes to pay for it. That’s because Governor-Elect Cuomo and some legislative leaders have pledged to cap increases in local property taxes.
Consequently, The New York Conference of Mayors—with support from villages like East Hampton and Mineola—is demanding relief from such pension obligations, and from other costly state mandates. What to do?
First, current public employees should again be required to contribute to their own pension funds. And newly-hired public workers should receive defined contribution pensions, like the 401k benefits common in private industry.
Something has to change in Albany. This pension time bomb is ticking.
Leo Montagna
Northport, NY
The only sensible answer I can think of is to erase the black board and start over again if we want to prevent LI from becoming a ghost town. Besides cutting budgets, excessive pensions and ridiculous salaries, we need to put in place a more equatible way to tax citizens by replacing the corrupt property tax system with an income tax system.
Jeanne Weaver
Freeport, NY
Opportunity was once the benchmark of NY—the business capitol of the world, the epitome of the American Dream. But everything that made NY a great place to live and work is quickly disappearing. Governor Coumo cut 5 percent from his salary and that is commendable, but pay cuts and cutbacks never worked before. I would like to know what has changed that will cause the outcome to be different now? When state workers had to take pay cuts or lose their jobs; when local, NYC and state police lists were frozen; when firehouses closed; and sanitation budgets were severely cut—the only outcome was less services to an already overtaxed and overwhelmed populace. The governor and NYC mayor suggested a stay and/or reduction of taxes, to include property tax. Sure, okay, let’s do that, but first show me the job that pays enough to cover the current taxes being levied, and then show me how to plan a retirement on a pension or Social Security and remain in NYS. There are far too many issues to be addressed in any one area of government, whether it be on the local, state or federal level to initiate a “quick fix.” The financial crises that NY’s state and local officials are trying to alleviate plagues the entire country as a whole and unless there is a plan on the national level to put our economy back on track, there is little hope for an economic upswing that has anything but a faulty foundation beneath it.
A special report by the Empire Center for New York State Policy
A report detailing the recommendations of the Mayoral Task Force on Mandate and Property Tax Relief, a project by the New York State Conference of Mayors and Municipal Officials
New York’s Exploding Pension Costs
You Can’t Cap What You Can’t Control