nyc-otb-2128566For a second time, Governor Cuomo has vetoed a bill that would require the state to reimburse New York City for retiree health benefits paid to former employees of the bankrupt New York City Off-Track Betting Corp. (OTB).  That’s good.  Unfortunately, once again, he has left the door open to signing the bill in the future.  And that’s troubling.

The pledge of state resources to back up the OTB retiree health plan is a dangerous precedent with massive fiscal implications at a time when unfunded retiree health insurance obligations at every level of government in New York currently total $250 billion — and when many local government entities are in serious fiscal distress.

Cuomo, however, seems oblivious to the risk.  Instead, he’s been blocking the OTB retiree health reimbursement solely on fiscally technical grounds. When he first vetoed the measure in September 2011, he said he couldn’t sign it because it did not include an appropriation.

The Legislature responded this year by passing the bill again, this time with an appropriation of $7 million. This week, Cuomo vetoed the measure yet again — but effectively invited the Legislature to revisit the issue as part of the 2012-13 budget process.  From his veto message:

The bill does not identify a source of funds to finance this proposal and fails to take into account the State’s financial plan. The budget process begins in the next few weeks. The expenditure of money to serve this worthy goal should be considered as part of that process and should not be added outside the State’s fiscal plan. [emphasis added]

Huh?  ”Worthy goal”? The thinking behind the legislation sends a clear signal to government employees throughout New York — including workers in economically vulnerable municipalities now being crushed by retiree obligations: your benefits will be guaranteed by the state no matter what. This would take away the incentive for any union anywhere to negotiate retiree healthcare concessions, even with an employer that’s on the verge of insolvency.

Yes, it’s tough on the workers that they were left stranded after the chronically money-losing OTB went belly up.  But they will still receive their government pensions.  And, after all, the risk of losing benefits when an employer goes out of business is the same risk faced by employees throughout the private sector — most of whom never have any retiree health benefits in the first place.

Is anyone in the Cuomo administration giving any thought to the broader implications of this?

By the way, the measure passed the Assembly 93-42 and the Senate by a 56-4 margin.

About the Author

E.J. McMahon

Edmund J. McMahon is a senior fellow at the Empire Center.

Read more by E.J. McMahon

You may also like

New York’s Jobs Recovery Chugged to a Near-Halt in October

After rising sharply once the economy began to reopen, private payroll growth in New York ominously ran out of steam in October, according to the state's monthly jobs report. Read More

New York’s Rising COVID Curve Casts Doubt on Cuomo’s ‘Micro-Cluster’ Strategy

The ongoing surge in New York's coronavirus pandemic raises doubts about the effectiveness of Governor Cuomo's "micro-cluster" strategy. Read More

The Autumn Coronavirus Wave Is Hitting New York’s Nursing Homes, Too

Coronavirus infections are again rising in New York's nursing homes, a sign that blanket testing, tight limits on visitors and other precautions have not fully isolated their acutely vulnerable residents from conditions in Read More

DiNapoli Predicts $3.8B More in State Tax Receipts

New York State's tax receipts in the current fiscal year will exceed Governor Cuomo's latest projections by $3.8 billion—still down from last year, but a big improvement over the governor's worst-case scenario—according to updated estimates from state Comptroller Thomas DiNapoli's office. Read More

With Hopes Dashed for “Blue Wave” Bailout, Cuomo Needs to Deal With Budget Shortfall

With the national election results still unclear, Governor Cuomo can no longer put off tough decisions on how to balance New York's pandemic-ravaged state budget. Read More

A Fight Over COVID’s Toll in Nursing Homes Highlights FOIL Weaknesses

The legal fight over coronavirus data from New York nursing homes is putting a spotlight on weaknesses in the state's Freedom of Information Law. Read More

Here’s Why Coronavirus Infection Rates Are Rising as ‘Positivity’ Stays Stable

A growing disconnect between two coronavirus benchmarks – the positivity rate and the infection rate – is stirring confusion about New York's pandemic outlook. Read More

‘Clusters’ Drive a Widespread Surge in New York’s Coronavirus Infection Rates

New York's coronavirus infection rates have surged to their highest levels since May, pushing 10 counties – including Brooklyn, Rockland and Orange – above a threshold that the Cuomo administration uses to justify travel restrictions on other states. Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100
Fax: 518-434-3130


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.